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Myths & Misconceptions in Today’s Real Estate Market

Myth #1: Sellers should still price their home higher than market value to allow for negotiating room.
Truth: Pricing too high is a big mistake. If your home is overpriced in this current market, then agents showing your home might use your property to sell one of the other properties currently listed and in competition with your home.

Three important things to keep in mind when pricing your home:
1. Is your home updated?
2. Does it need cosmetic touch ups like fresh paint and new carpeting?
3. Is your home in a location that will attract buyers or does it back up to a major highway?

These are all items that the buyers’ lender will use when doing an appraisal on the property. The bottom line is this: you can price your home at any value you feel is appropriate, however, it still needs to appraise for the selling price in the contract in order for the bank to approve the loan! A well-trained Maine real estate agent who looks out for your best interests will consult with you on your home’s fair market value and guide you accordingly. Remember, agents do not set the price of a home, sellers do. Agents are here to give you current market information in order for you to make an informed decision to price the home in line with what is currently selling. The worst thing to do is price it higher than what is selling—all you end up doing is chasing the market from a losing position.

Myth #2: The carpet needs replacing. Why can’t I offer a credit at closing for new carpet?
Truth: Today’s buyers are looking for houses online and first impressions are critical! More than 87 percent of today’s buyers are searching for homes online. They are quite Internet savvy and know what they are looking for. If your home looks great in the pictures, then chances are good that they will linger on your home’s listing a bit longer. When they see worn carpeting (and yes, it does show up in the pictures) or outdated appliances they immediately proceed to the next home for sale. They don’t read anything beyond that.

Before your home’s initial debut online, it is important that it show well to draw the potential buyers in—not turn them away! What seems like a savings for the seller in the beginning of your home’s market time might end up costing much more in the long run. Remember, buyers are comparing your home to other homes that are currently on the market. Your home should be inviting so that everyone who looks at it can see themselves living there.

Myth #3: We have a verbal agreement, so it’s fine.
Truth: No, it’s not. In Maine verbal means absolutely nothing. Get it on paper. Protect yourself and your goal, otherwise be prepared for the great possibility of being disappointed.

Myth #4 They won’t cash my deposit, will they?
Truth: Yes, they will. Now, they aren’t going to spend it; after all, it is a deposit. They’ll return it to you given the circumstance. But the seller and their agent need to know you have the funds you say you have to proceed.

Myth #5: I know my house is worth more than that. Is it?
Truth: Maybe. A house is only worth what a buyer is willing to pay for it, appraisals aside. Follow the real estate market; don’t challenge it. Just because your neighbor got what they got when they got it means very little. Why? Because the market changes every day. And because like snowflakes no two pieces of Maine real estate are alike. So while you can compare and contrast them they are more dissimilar than the same. Why? From lot size to the nuts and bolts of roofing, electrical wiring, plumbing, etc., real estate possesses the distinction of distinction. Apples and oranges all the way, though the biggest factor in value will always be the where and the unmistakable: location, location, location.

Myth #6: I don’t want to spend a lot on inspections.
Truth: And you don’t have to. But you get what you pay for, so pay for a professional’s opinion. It can save you a lot of pain and trouble further down the road, or it can provide you ease of mind as you navigate one of the biggest purchases you’re likely to make. Get a home inspection. Get a termite inspection. Get a video of the drain line. You’ll know just about anything you could ever want to know if you get these reports done and done by experienced and licensed parties.

Myth #7: If I paint my house, the money I spend makes my house that much more valuable, right?
Truth: Not usually. Just because you spend x number of dollars improving your home does not effectively make your home that much more valuable. It can. But no, not usually. Things like painting or other components like servicing or replacing AC equipment remains akin to preventative maintenance; you have to do it to maintain the value. Generally it does not up the value, and even when it might, you will be hard pressed to see it in dollar for dollar. Consider too, if you pay to paint your house, whoever buys it may very well repaint it – or worst case – it doesn’t sell at all. Then what? Clean and unclutter your house instead. A buyer tends to know right away in their gut when a house is right for them, and a coat of paint plays very little if anything into it. Save your money, seller, and hire a good listing agent before you spend your dough on any significant changes or improvements.

Myth #8: My agent isn’t a good fit but I’m stuck and have to keep working with them.
Truth: This is maybe the biggest misconception out there. Unless you as a buyer sign an exclusive contract with a Maine buyer’s agent you are not beholden to them. Even if you did, most agents will release you if you ask. Sometimes personalities don’t mesh, and sometimes communications get crossed. You as a buyer can work with whomever you want to. Do you have to fire the agent? Yes. Do you have to use the word “fired”? No. The phrases “decided to work with some one else” or “thanks for your help, but this isn’t working” or what have you are all fine. Buyer’s agents lose buyers all the time. Do we want to? Of course not. Is it all a part of the big equation? Absolutely. I’ve been fired, and fired and rehired, and I’ve even been second string lots of times to other buyer’s agent that the buyers parted company with.

Myth #9: In this market, our offer has to be a lowball.
Truth: Let’s assess the listing then decide if lowballing is the strategy that should be used. The surest way to lose out on a purchase is lowballing a new listing. It’s new! Why would a seller sell something to you for much less than what they’re asking when few may be exposed to it. A savvy seller would sooner lower their asking price by ten, fifteen, or even twenty thousand dollars before agreeing to sell to a lowball offer. Lowball bank owned listings that sit on the market. Those are usually your best bets at having a lowball offer accepted, or at least countered.

Myth #10: No rush; we have time.
Truth: No, you don’t. Conversely, timing is everything. You want something, you better take it and generally take your best shot too. Our real estate market is too active to pussyfoot around on price and terms, and as the state contract plainly reads “time is of the essence.” Get your loan queued, shop insurance, and use your time effectively. There happens to be a whole host of buyers out there with the same notions as you. Make your efforts count, and you’ll be satisfied. Refrain from “woulda-coulda-shoulda” and be diligent whether you are buying or selling.

Myth #11 Foreclosures are all great deals.
Truth: Foreclosures receive strong pressure from banks to market and sell properties at or above market value. Economic indicators currently point to a recovering real estate market. Yes foreclosures can be a great deal, however to assume they are all great deals is a common myth.

Myth #12: I put X amount into upgrades, my house should now sell for X amount more than the current market value.
Truth: A home is expected to have consistent upgrades with its nearby competitors. Just because you installed granite counter tops and a new roof does not mean that you will be able to add what you spent on those repairs or improvements to your property’s price tag. The truth is that a buyer will expect a good condition roof, and upgrades with no additional value added to the property’s market value. In fact, it several circumstances it is usually recommended to make no repairs and sell the property as is in order to receive the highest total final net gain from the sale.

Myth #13: You need at least 20% for a down payment when buying a home.
Truth: Many programs exist which allow for down payments as low as 3% and even 0 money down! Ask your qualified Maine loan officer for more information on these programs.

Myth #14: Banks aren’t lending unless you have perfect credit.
Truth: Banks are absolutely lending for home loans, and rates are excellent – 3-4% in many cases. Requirements are more stringent (which is a good thing) but people with good credit and job history should be able to get a mortgage. Ask your qualified loan officer for more information.