|Here are the top 3 most common real estate myths that I have heard from both buyers and sellers over the years:
3. “A fixed rate mortgage protects me from interest rate increases”. This is not entirely a myth, because there are some very specific circumstances under which that statement could be valid. Specifically, two things have to happen for a fixed rate mortgage to offer any significant amount of protection:
– Variable rates have to increase quickly in order for the fixed rate “protection” to kick in. This is because most fixed rates only last 5 years, so if the variable rates don’t overtake it until year 3 or later, then overall (taking into account the early years where a variable rate was lower) the protection would be minimal (if any).
In any other scenario (I.e. In most cases) you usually would have been better off with a variable rate.
2. “It costs 5% of the value to hire a realtor to sell my house”. Anyone who likes to shop around for bargains and has sold a house already knows this is a myth. Compared to helping someone BUY a house (which usually means a 2.5% commission for the realtor), the effort it takes a realtor to SELL someone’s house is minimal, which is why many of them will reduce their end of the commission (I.e. the other 2.5%) to as low as 1.0%, making the total commission 3.5%. Some of the more experienced realtors will not easily offer such discounts, banking on their experience and brand name as leverage to convince your they are worth it. However, if you can present yourself as a reasonable seller and convince them that you are willing to be competitive in your asking price and are willing to help them showcase the property as they see fit, that can translate into even less work for them and a big savings for you.
1. “If I wait long enough, I’ll get the price I want”. A lot of sellers (and some inexperienced realtors) believe that there is an inverse relationship between how quickly they want to sell their property and the price they will end up with. That is, they believe that if they can afford to wait long enough, eventually someone will come along and pay their high asking price. In most cases, this couldn’t be further from the truth. In well-developed, high-volume markets, it’s actually the opposite – the longer your property sits on the market, the more “stale” it becomes. Properties that have been on the market for too long cause potential buyers to wonder if there is something wrong with the property that is keeping others from buying it. It creates a feeling of insecurity and suspicion, which is the last thing you want a buyer to feel. Unless your property is in a remote market, or a very high-end market, where being listed for months on end is not unusual and it’s unlikely you would ever get more than one offer, then pricing high and waiting for “the right buyer” is not a wise decision. On the contrary, it’s usually the competitively priced properties that end up creating more buzz, attracting more visits and quickly ending up with multiple interested buyers that form an emotional attachment to the property. Once a bidding war starts, ego and emotion will do the rest and not only will you likely end up with a price higher than what you had hoped for to begin with, but you will have also sold your property in the quickest time possible.