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Although the internet can be a helpful resource, it is also full of misinformation and sound bites that lack context. When it comes to our industry, there are many misconceptions about real estate, so we thought it would be helpful to address six common ones.
1. Renting is cheaper than homeownership
If you frequently relocate, it may be more cost-effective to rent than to buy a home. However, if you want to put down roots, homeownership can be beneficial. Investing in real estate is often a positive financial move to make, with appreciation typically occurring over a five- to nine-year period. While you don’t have the flexibility you have with renting, you are building equity, accumulating wealth over time. You’re investing in your future versus living in the present. Granted, there are other factors to consider, like the local housing market, your financial situation, and your personal and professional goals. But, overall, homeownership can be quite advantageous.
2. As a first-time homebuyer, you need to have a 20% down payment
Many first-time homebuyers think that they need to have a sizable nest egg in the form of a 20% down payment to even consider buying a house. But 20% isn’t mandatory across the board. In fact, conventional loans can require as little as 3% down for qualified borrowers. Additionally, there are zero down payment loans such as the VA loan for those who qualify. It is, however, important to keep in mind that the larger your down payment, the less you will need to borrow. If you borrow less, you lower your monthly mortgage payment, and that means less interest paid over the life of the loan.
3. Selling a home FSBO (For Sale By Owner) will save you money
If you’re considering selling your property, you may think selling it yourself will ensure that you save money. Sure, you won’t have to pay a real estate agent’s commission fees, but there are many risks to consider. In some FSBO cases, the home isn’t properly priced and the owners miss out on potential buyers, increasing how long the property is on the market. In other cases, the home is undervalued and the owners lose the money they could’ve made on it by selling it for too little.
A great deal goes into effectively preparing a home and strategically marketing it. A highly-rated, local seller’s agent can conduct a free Comparative Market Analysis (CMA), discussing it’s current value, how it compares to similar homes, and developing a comprehensive approach with next steps. A great agent knows which updates will benefit your home before putting it on the market, how to properly prepare it, and the advantages of partially or fully staging it. They will ensure that it’s expertly advertised with professional photography, a brokers’ tour, and print and digital marketing campaigns. Furthermore, FSBO listings are not found on the MLS so you’re really limiting your pool of potential buyers.
Selling a home yourself also comes with the risk of legal issues. Negotiations and a variety of legal forms are also part of this complex process. You want a knowledgeable advocate in your corner. Your home deserves to be sold with a professional’s expertise, and your wallet will thank you. In fact, FSBO homes usually sell for less. According to the annual survey conducted by the National Association of Realtors in 2024, “FSBO homes sold at a median of $380,000 in 2023, still far lower than the median selling price of all homes, which was $435,000.”
4. All real estate agents are the same and simply deal with paperwork
While these transactions do require a lot of paperwork, a good real estate agent does so much more. Whether you’re buying or selling, you want someone who knows the local market and the nuances of different neighborhoods. A well-connected agent has access to a wide range of listings, can compile comparative data, and is connected to the local community. They also have excellent resources and local vendors, and will project manage the entire process as your guide. Because real estate is so tied in with big life changes, many agents serve as a trusted confidant, and help in various ways from renegotiating after an inspection (more on that below) to helping with lenders, repair workers, and movers. Many bend over backwards when it comes to preparing the home for sale or finding their clients that dream home that will be the perfect fit. Whether you’re wanting to buy or sell, our highly rated Windermere Poulsbo agents are ready to assist. We say we’re “all in, for you” and we truly mean it.
5. Home inspections aren’t necessary
Home inspections are valuable for both homebuyers and sellers. If you’re selling your home, a pre-listing inspection can prevent any surprises from popping up when the home goes on the market. If you’re a buyer, a pre-listing inspection can give you peace of mind, identifying any maintenance issues that need to be completed right away. It creates transparency and builds trust between both parties. Also, it can help the real estate agent properly price the home if you don’t want to do an expensive repair before listing it. If you’re the buyer, and the seller had a pre-listing inspection done, you can accept that one or have your own done. This inspection can also be used in negotiations with the seller to ensure your needs are met and any concerns are addressed.
6. Fixer-upper homes are always a great investment
Some buyers think that fixer-upper homes are easy to spruce up with a few cosmetic improvements. But there is quite a range when it comes to fixer-uppers. If you haven’t seen the old Tom Hanks movie “Money Pit”, we suggest checking it out. Some of these homes have serious structural issues. Others may not be a sound investment based on the scope of repairs, the location, the local market, and/or your financial situation. For example, a fixer-upper may need all new flooring, new siding, and a new roof while another might only need minor roof repairs, a fresh coat of paint, new lighting fixtures, and some landscaping.
If you are looking for a fixer-upper needing a smaller-scale renovation, avoid homes for sale that would require re-roofing, replacing HVAC systems, and full-scale room remodels. While fixer-uppers are enticing to handy individuals or people who know great, local contractors, there are always different possible outcomes to consider. Projects may run long and over budget. The costs of supplies may increase and the market may change once the house is ready to move into or to rent as an investment property. We suggest talking to your homeowner’s insurance beforehand to understand what’s covered and what isn’t. Yes, fixer-uppers have a lot of potential, but you want to ensure you’ll get that return on your investment.
