Common Real Estate Myths Debunked

The world of real estate is riddled with myths that can leave both buyers and sellers feeling overwhelmed and confused. In an industry where every decision involves significant financial implications, it's important to distinguish between myths and facts. Whether you're a first-time homebuyer or simply curious about the housing market, understanding the truth behind these myths can save you time, money, and stress.

You need 20% down to buy a house.

Contrary to common belief, putting 20% down when buying a home is not required. With a 20% down payment, lenders will not require mortgage insurance, which protects the lender if you cannot pay your mortgage. However, you can put as little as 3.5% down on a home through programs such as FHA mortgages. Do not let this misconception stop you from buying a home!

Buy the nicest house in the cheapest neighborhood.

This piece of advice gets thrown around a lot in the real estate world, and it does not hold a lot of truth. Buying the nicest home in an affordable neighborhood can make it much harder to sell down the road. The nicest home in a neighborhood may also have very little room for adding value, while an average home will see improvements that add much more value. Lastly, the neighborhood may not improve, and you are likely to see a bigger increase in value from buying a less expensive home in a nicer neighborhood.

Working with a realtor is a waste of money.

Many people underestimate the value of a real estate agent. Whether you are buying or selling a home, a real estate agent has the expertise and experience to get you the best deal and make the process as smooth as possible. The facts speak for themselves: an independent study in 2016 found that homes for sale by owner sold for 5.5% less than agent-assisted sales. When it comes to buying a home, agents have access to MLS, professional negotiating skills, professional contractor relationships, an objective viewpoint, and years of experience to guide you toward your dream home.

Getting pre-approved for a mortgage will hurt your credit.

Many people believe that getting pre-approved by a lender will hurt or even ruin their credit score. The truth is, getting prequalified is considered a “soft hit” and has minimal impact on your credit score. Applying for a pre-approval does cause a hard pull on your credit score, which will drop it from one to five points. If multiple pre-approval applications are submitted in a short period of time (typically two weeks), it will likely only count as one hard pull on your credit. If you are shopping around for a mortgage, ensure applications are done in a short period of time to limit the impact on your credit.