As many buyers begin their shopping in the area they are surprised to find the selection lighter than they anticipated. Likewise, they are surprised to find the house they finally decided on is no longer available just days later. The truth is that the market has been changing with less properties available for sale and more buyers scooping up great prices at low interest rates. Sellers are gaining a bit more of an advantage than they have had in the last few years (Click here to check out the latest market statistics in the area). Buyers can still find great deals and get the house they are looking for by avoiding these 5 myths:
- “Sellers are desperate so I’ll make a low offer and see what happens.” We are currently seeing the number of sales increasing by about 35% with inventory levels down around a little over 700 houses for sale. When you are in this market climate buyers are often finding themselves missing out on the house they want by either being out-bid or taking too much time trying to rethink their offer. Plan your search, know your budget, and be prepared to make educated offers. If it’s truly the house you have your heart set on, don’t take too long to make your decision and make the fairest offer you can.
- “There’s a ton of ‘shadow inventory’ out there and I’ll just wait and see.” This ‘shadow inventory’ is an interesting term being used to denote properties that may or MAY NOT ever come on the market because of mostly delinquencies on loans. I tell buyers, that we’ll have to contact the ‘shadow sellers’ as soon as we find them. This is purely a gambling strategy in my opinion because you are 100% banking on a property which may or may not come on the market that meets your wants, needs, and budget. My suggestion is find the property you want that is available and don’t miss out on great prices and rates which may be higher later.
- “Zillow and Trulia says the house I’m wanting to buy is worth . . . “. Zillow and Trulia are good websites which have allowed for another place to advertise and buyers to shop, BUT the home value estimate systems are basically novelties especially if you read their disclaimers. The accuracy of those systems is very low. For example, Zillow’s latest for Flagler County is that their Zestimates are within 5% of the actual selling price only 21% of the time with a 12% margin of error. Statistically speaking . . . not even close to trustworthy. The best thing is to check real comparables in the area through our MLS system.
- “I’ll get pre-approved later.” The first step in buying real estate is always knowing what you can afford, and if you are planning on borrowing you’ll want to contact a lender and get pre-approved first. This pre-approval not only allows you to better target your home search, most sellers (especially foreclosures and short sales) will want to see that you are pre-approved so they don’t lose time with the property being off the market only to find out later you couldn’t purchase the home. If you are not sure who to speak with, contact us and we can provide you with local lenders to contact.
- “If I avoid agents, I’ll get a better deal.” There is a misconception that an agent’s commission raises the price. Good pricing strategy is always to set the price as close to market value as you can possibly estimate. If one was to raise that price by selling costs, the house would typically not appraise and would be very difficult to sell. There are two situations where this myth typically comes into play:
- For Sale By Owner. Some owners do choose to sell on their own, as is their right to do so, often in an effort to reduce selling costs (i.e. Broker Commission). Realize that you are dealing in a complex transaction for a lot of money directly with an owner. If anything in these situations, contact a real estate attorney to review all documents.
- Contacting the listing agent only. What many buyers don’t realize is that the seller and the listing brokerage contracted for a fee when the property sells. A portion of that fee (or commission) is typically offered to other area Brokerages that bring a buyer. BUT under this myth, the buyer is guessing that the fee will be reduced if they are not represented or deal only with the listing agent. The problem is that as a buyer you will have no negotiating leverage with the fee because the fee is contracted between the owner and Brokerage. Likewise, the non-represented situation puts you on your own and you’ll want to make sure that you have educated advisement. Having agent representation is always a good thing. Again, the agent is paid from the fee the seller and the listing brokerage contracted for.