The Myths of Real Estate!

There are several important Real Estate myths that you should be aware of. Here are a few of them:

Myth #1: Discount brokers can do an adequate job selling real estate.

Truth: Promotional costs such as photos, full color brochures, media advertisements, MLS insertion fees, printing and direct mail costs, directional signs, effective Internet placement, etc. are all paid for by your independent real estate broker as a cost of selling your home.

Myth #2: Lower commissions mean a higher net to the seller.

Truth: It sounds logical, but it’s not always true. You get what you pay for. A lot of sellers like the idea of a discounted commission until they learn that the salesperson won’t do much marketing, advertising or negotiating. This means the sellers might not reach their ideal outcome on the sale.

Myth #3: You should select the Realtor® who says they can get you the highest price.

Truth: This is the oldest myth in real estate. Tell the seller what they want to hear, not what they need to hear, compliment the home to get the listing, then ask for a price reduction within 30 days. Instead, insist on a written, well researched computerized market analysis to determine the realistic amount your home will bring in today’s market and price it accordingly. Select your Realtor® and work together with them to determine the best price for your home.

Myth #4:  It’s OK to test a high price on your real estate just to see if anyone will buy it at that price.

Truth: If you’re serious about selling your home, don’t play games.  In this buyer’s market you have a very small window of opportunity to pull in serious buyers when your home first enters the market.  If you play games, like overpricing your home just to test the market, buyers will stay away in droves.

Myth #5:  You should price your real estate higher than the market value to allow for room to negotiate.

Truth: No matter what your reasoning or rationale, overpricing your home is never a good idea.  When your home is overpriced, very few potential buyers inquire about it or visit it.  If no one wants to buy your home, you won’t have anyone to negotiate with.

Myth #6: The Neighborhood Realtor® is the best one to sell your home.

Truth: Realtors have been promoting themselves in neighborhood farms for years and promote themselves as the Neighborhood Expert. The truth is that a neighborhood expert has no advantage in selling your home faster or for more money. Most likely your home will be sold to someone from outside of the neighborhood or even from out of state. The Realtor® that can do the best job of selling is the one with the most comprehensive and effective marketing plan.

Myth #7: If the house sells in a few days, it was under priced.

Truth: Not necessarily, a quick sale may mean the house was priced correctly for its market and that buyers did their homework.

Myth #8: Property condition is not important to buyers.

Truth: WRONG! A property is superior condition will always sell faster and for more money than a home in average condition with a lower price. Many sellers recognize this and repaint and re-carpet their homes in preparation for selling. These sellers know that home buyers purchase value and will perceive a clean, fresh home as more appealing than an average, lived-in, forgive-the-mess home.

Myth #9: If you don’t want to make repairs, lower your price.

Truth: Not the best idea. A house that doesn’t look its best may attract few or no offers. Condition remains critical to getting top dollar and moving a property fast. Although it can be difficult to decide which repairs to tackle, the best advice is to focus on those that offer the quickest payback, such as fixing a leaky roof.

Myth #10: Empty homes don’t show as nicely as furnished homes.

Truth: The important consideration is whether or not a home is properly staged; that it is clean, in good repair and available to show. If you must move to your new home before your old home is sold, take measures to ensure it shows well empty. Repair/replace worn carpeting, oil or paint all woodwork, wash windows and replace broken or fogged windows and clean or paint the walls. It will probably appear larger without your furnishings and the buyers can envision their belongings in each room more easily.

Myth #11: Pricing a home is a mysterious process.

Truth: Your home will sell for whatever the market will bear. To determine the range of value, you simply need to see what similar homes are selling for. Because every home is unique, the final selling price will probably be determined by its condition. The RealtyColorado Team researches the Multiple Listing Service (MLS) database to collect data to help you decide where to put the price. It is not a mysterious process.

Myth #12:  The appraisal value of your home has no impact on the sales price of your home.

Truth: Lenders consider the value of your home to be the price for which the home is appraised.  For example, if you and your buyer have agreed on a sales price of $900,000, but the appraisal comes in at $860,000, the lender considers the value of the home to be $860,000, not $900,000.   When this occurs, buyers will often want to renegotiate the sales price of the home to match the appraisal price.

Myth #13:  Real estate agents want to price homes high because they’ll make a higher commission.

Truth: If you’ve done the work needed to find a great real estate agent, you should trust him or her to price your home correctly.  Because of their experience, real estate agents understand more than anyone else the importance of properly pricing your home.  If they’ve incorrectly priced your home, it won’t sell, and the agents earn nothing.

Myth #14:  Real estate agents want to price homes low because they’ll sell faster and easier without the agents having to do any work.

Truth: Professional real estate agents know that setting the price too low can be almost as harmful as setting the price too high. Buyers who are looking in a specific price range may not consider your home because of the low price tag.  They assume it will not fulfill their needs or worry that there’s something wrong with it.

Myth #15: Selling your home yourself will save money.

Truth: First, a real estate agent that expects to receive a co-op fee of 2.8-3% represents over 95% of buyers. If you agree to pay the co-op fee you have already paid most of the total real estate marketing fee. Second, those buyers that are not represented by an agent are looking at FSBO sellers to sell their home for less so that they, the buyer can save money. The National Association of Realtors has determined that the average FSBO sells for an average of 9.2% less than comparable homes sold by a Realtor®. Finally, when a home is sold without representation, huge legal liabilities come into play that could impact you long after the home is sold.