There are many myths about buying a home. Here are five of the most common and pervasive beliefs.
1. The highest bidder always gets the deal
Many buyers and even real estate agents assume that they will assure success if they offer the most money for a property. However, there are several other aspects that will make a significant difference in who wins when there are multiple offers.
For example, the all-cash buyer with few and short contingency periods might be more appealing to the seller as compared with a buyer who may offer more money but asks for time to get a loan.
2. Price per square foot is the best way to decide the value of a home
It is common to look mainly at how a home is priced on a per-square-foot basis and appraisers also consider that as a major determinant of value. However, it can be a costly mistake to merely apply some number because other people have said it is the best method of deciding how much to offer.
Some examples of other significant factors affecting value are: lot size, condition of the home and property, specific location, quality of views, proximity to sound sources or other environmental issues and more.
Also, even if most of these types of factors are roughly comparable, if the actual size of the home is not within 10 percent or so of the averages used in applying an average price per square foot, then the estimate is likely to be in error.
3. You can get a better deal if you buy through the listing agent
The agent working for a seller has been employed to do their best job for that seller, whether they only represent the seller or also try to represent a buyer on that listing. In fact and in law, the agent who has accepted the responsibility of being the listing agent also has a fiduciary role on behalf of the seller.
Even if such an agent agrees to give some “kick-back” of a portion of their own commission to a buyer, the buyer may well end up paying more for the property because of the agent’s initial legal requirement to act as a fiduciary to the seller.
4. You don’t need an inspection when buying a new construction home or recently renovated home
A new home has most likely not been “hands-on” tested by people living in it. As a result, design or construction mistakes or oversights might not become known until the home has been lived in for a while.
A typically thorough inspection report for a new home may well have pages of suggestions and corrections noted. For example, you may be surprised to discover that there may be subterranean termites in a brand new house.
Other things that have been found with new construction include: missing/improper caulking around tubs and showers, inadequate ventilation under the house, insufficient drainage systems, improperly installed water heater or HVAC units, sewer line issues and more.
5. A real estate agent is not of much benefit in identifying or finding the right home, nor in assessing probable value of the property
Most buyers do their own searching online and many also feel they can evaluate homes with information readily available online. The drawbacks to this approach include a lack of expertise and experience in the process of carefully selecting “best fits” within buyers’ main purchase criteria, as well as the limitations inherent in not being involved in daily networking regarding new listings coming on the market.
Also, the reliance on one or even a few of the online automated evaluation systems to decide how much to offer can result in a buyer either paying too much or trying to buy for too little. A seasoned agent who specializes in the buyer’s area is usually more capable of evaluating any property than a buyer might be.
Michael Edlen has counseled hundreds of buyers about the purchase process and how to avoid pitfalls.