Last time, we highlighted 5 Real Estate Myths for Home Sellers in the current housing market. This week, we want to turn the tables and focus on some of the common myths and misconceptions facing today’s home buyers.
It’s no secret that buyer demand has been high and there is a lot of competition for limited housing inventory. It is still a seller’s market. However, we are already starting to see a shift this year as mortgage rates go up, more new housing is being developed rapidly and more sellers are coming onto the market. Let’s take a look at some of these common home buyer myths and how this ever-evolving real estate market is truly impacting people who are ready to make a move.
I Have to Have Cash to Win an Offer
Many home buyers are under the assumption that cash is always king. The more cash you have to offer, the better chance you have of getting a home in this ultra-competitive market. More cash can allow you to make a larger down payment, cover certain closing costs and give you more bargaining power overall. There is some truth behind this idea, but cash isn’t the only thing that a home seller will consider. They will look at your overall offer price and your financing, in general. They want to sell to a buyer who presents the least risk possible. Cash can often simplify the transaction, but it can also add complications—especially if major contingencies are attached.
For example, if you have to sell your current house to generate the cash necessary for your purchase offer, that may be a red flag for some sellers. You are probably better off selling your existing house first and renting for a little while until you find your next home. This removes the complicated contingency that could turn off sellers. More cash in hand is generally a good thing for any home buyer. It just may not be the only thing that matters to the seller.
Online Home Listings Are Currently Available
Even as the pace slows down a little bit, this is still a very fast-moving market. When you start searching for properties online with internet sites, you may find a number of great listings that meet your needs. Unfortunately, not all of these homes may still be available. Some may already be in contract or have sold. These sites take feeds from the MLS. They have a time lag before being updated. Online home searches are a good place to start as you look for your new home, but don’t get your heart set on one property as it may not be available. Working with an experienced real estate agent will help you to be more dialed into current market activity. They may know of new listings not yet posted on the MLS or they’ll connect you into the MLS so you can see listings as they come on the market. This can save you some time and frustration as you search for your home in such a fast-paced market.
I Have to Waive Home Inspections
This is a very touchy subject to address in the past few years of such a strong seller’s market. Many home buyers have been willing to waive home inspections as part of their purchase offers. They believe it will make their offer more attractive to the seller because it removes a significant contingency, may reduce closing costs, and simplifies the transaction. We generally do not recommend waiving home inspections unless you weigh the potential risks very carefully. Without a professional home inspection during the closing process, the buyer is assuming all the risk. The seller is legally obligated to disclose any known problems with the property upfront. However, there may be major issues they don’t know about. Or, they could be withholding information and you won’t know about it until it’s too late. Your legal recourse can get cloudy after the sale is completed, especially if you waived any home inspections. This essentially implies you were willingly buying the house in its present condition without any opportunity to have repairs made by the seller. Consult with your real estate professional to craft the best possible purchase offer and avoid waiving inspections.
It’s Easy to Renovate a House
On the heels of the myth above, this is one reason why some home buyers are willing to waive home inspections. The TV shows make home renovation look so fun and easy. You get to redo the property in your own style and bring it back to life. The truth is it’s never this simple. Those are experienced contractors backed by television budgets. And, of course, the process is highly edited down to only the entertaining stuff.
Before you buy a house with plans to renovate it, make sure you have a detailed renovation plan and budget. Understand the time and expenses it will take to get the property remodeled and upgraded the way you want it. Then, add some cushion to your budget because there will almost always be some surprises along the way. In other words, don’t go into a home renovation unprepared. This is how you find yourself in a bad “money pit” situation!
Higher Rates = Lower Buying Power
Throughout 2022, mortgage rates have steadily been climbing upward along with economic inflation. Overall, they are still relatively low by historic standards. However, they are creeping higher and higher. This may cause some potential home buyers to wait and hope interest rates come back down, or at least wait until home prices stop rising. Or, it may lead to a home buyer acting too quickly and making a panicked home buying decision because they want to buy before the rates go up again. Either way, you shouldn’t let prevailing mortgage rates hinder your home purchase too much.
Mortgage rates and home prices are all relative. Higher rates may drive away some buyer competition and allow you to get a house at a better price. You must also consider your own home equity if you are selling your current house and moving up/down. There is rarely ever a bad time to buy real estate because it is such a dependable long-term investment, plus it is going to be your home for years to come. The important thing is to make your move when it’s right for you and your family—both financially and emotionally. When you are a home buyer motivated by the right reasons, you are more likely make smart decisions. Don’t wait too long if now is the best time for you to buy. Don’t panic and do something rash if now is not a good time to move.
For help with all your home buying needs in Southeastern Pennsylvania or Northern Delaware, contact The Cyr Team today. Let us help you make the right real estate decisions in today’s market.