Everyone’s got an opinion when it comes to real estate, especially now, with the market so hot.
But just how many of the most common myths about real estate are actually true? We spoke with REALTOR® Kaleb Streeter to confirm (or bust) a few common myths about the industry.
Myth #1: It’s okay to skip the home inspection.
KS: That’s a two-part answer. Basically, market conditions will determine whether or not you can get away with a home inspection. I wouldn’t say that it’s okay to skip an inspection because it’s house-dependent, but I’ve actually been on inspections on brand new builds and found more issues there than on a home built in the 80s.
Normally the builder would forget things and come back—there could be grading issues, gutters not connected properly, weak spots in insulation. It’s not a knock on the builder—no one has lived in the homes yet to determine the deficiencies.
To me it’s not a good idea to skip the home inspection. However, if you were to include a condition on inspection in your offer, you’re likely not going to get the house. One way around that is to bring an inspector through on a second showing. Once you’ve determined that you like the house and want to make an offer on it, try to get in there before the offer date and bring a home inspector for a 1-hour visual inspection.
Myth #2: You can time the real estate market.
KS: I’d say that is false. Now, we’ve been a little spoiled in the last 25 years because there hasn’t been a major decline in the market, so we have kind of formed this attitude of invincibility that if you buy a piece of real estate it’s going to continue to go up in value—that’s why people are okay to pay over asking. But I’d say that is not true at all.
There’s more than just supply and demand that contribute to market value: one of the biggest is emotion, and that’s impossible to time. It’s about whoever wants it more. A keen buyer might not realize they’re creating a new neighbourhood value and emotion jumped the price of a certain house up on a certain street. That has nothing to do with market conditions.
Myth #3: Hiring a real estate agent is a waste of money.
KS: That’s both true and false—it’s situational. If you are looking for a traditional real estate transaction, it is much easier to go into multiple offers and secure a higher, more secure offer with a REALTOR®. More often than not, the net proceeds with a full-service agent who knows what they’re doing will be higher than a private sale without commission.
Let’s say you sold a million-dollar house on your own for a million bucks and you net a million dollars (just for argument’s sake, obviously there are costs, for example if you used a fixed-fee service). Or maybe you hired an agent that took you into multiple offers and got you $1.1M. After you’ve paid your 5% commission, you net $1,050,000—$50,000 more. You spend 5% to get 5% and those numbers aren’t uncommon.
Plus, you have to think about opportunity costs. What happens if you have to manage all your own showings and take time off work? That’s costing you money. If you go with a fixed-fee brokerage that just charges you for photos and listing your home on the MLS, if it doesn’t sell, you never get that money back.
With a REALTOR®, you don’t pay until you close. It’s a free venture. You’re in control of whether you accept an offer or not. Obviously if you do accept an offer, you’re happy. 9.5 times out of 10 you’ll make more money with an agent, because we also have access to buyers that the public doesn’t, and we have pools of investors that are secured with agents.
Myth #4: Real estate is seasonal. You should wait until spring to sell.
KS: This also requires a two-part answer. Yes, real estate is seasonal, absolutely, because of pivotal circumstances like a new year, a school season, summer holidays and winter. That affects real estate in a big way, but that’s not the whole story.
People say they want to wait until spring to list their house because that’s when it will show the nicest, when the flowers are blooming and the grass is green. But the problem is that you and every single other homeowner have been waiting until spring to list.
At any given time, there are always have-to-buy buyers on the market: corporate transfers, military relocations, separations, divorce, newlyweds. All these people have to buy. Your house is much more likely to get the asking price or higher when you’re one of one. When you do list in the spring, you’re tending to list with increased inventory. There’s a higher chance of another home on your street being listed, another home in the same value range or with similar features in terms of size, square footage and location. This spreads the buyers thinner, which reduces your chances of getting a higher number of offers or a higher price.
It slows down in the summer and becomes a better time to list. Basically, it comes down to this: you’ve got to have the best house to get the best price in the spring; you could have any house and get the best price in the winter.
Myth #5: Never accept the first offer.
KS: False. Now this is an American statistic, but 70% of the time, the first offer is your highest and best. Honestly and truly, my team would argue that that percentage is higher; it definitely is in Orillia.
The reason for that is because normally the first person to the table is the most excited, the most qualified and they’re trying to beat the market. That means they’re going to be willing to offer you an amount that they think would be worth taking without waiting.
Most people feel they didn’t have enough exposure on the market and are reluctant to take the first offer. It can help to put yourself in the buyers’ shoes: you may have only listed today, but your buyers have likely been on the market for two months. But there are pros attached to this—the ball is in your court.
If you don’t have an offer date, you’re just open to the market. If somebody comes in soon, that means your agent did their job properly. Always work with a bird in hand. If you worry you’re leaving money on the table, sign it back, because you have a hungry, excited, emotional buyer on the line. You don’t have to accept that first offer, but you should at least look at it seriously and possibly counter.
To search hundreds of homes locally, check out the Streeter Team's listings or call 705-323-9212.
