As we warm into spring and the real estate market heats up, I’ve been reflecting on some recent conversations with buyers, sellers, and lessees. Among the topics covered include agency, deposits, pricing, and on. Not surprisingly there are more than a few misconceptions in navigating the world of real estate, so please embrace the following 10 myths as a sort of primary guide.
(1) We have a verbal agreement, so it’s fine. No, it’s not. In Louisiana verbal means absolutely nothing. Get it on paper. Protect yourself and your goal, otherwise be prepared for the great possibility of being disappointed.
(2) They won’t cash my deposit, will they? Yes, they will. Now, they aren’t going to spend it; after all, it is a deposit. They’ll return it to you given the circumstance. But the seller and their agent need to know you have the funds you say you have to proceed.
(3) I know my house is worth more than that. Is it? Maybe. A house is only worth what a buyer is willing to pay for it, appraisals aside. Follow the market; don’t challenge it. Just because your neighbor got what they got when they got it means very little. Why? Because the market changes every day. And because like snowflakes no two pieces of real estate are alike. So while you can compare and contrast them they are more dissimilar than the same. Why? From lot size to the nuts and bolts of roofing, electrical wiring, plumbing, etc., real estate possesses the distinction of distinction. Apples and oranges all the way, though the biggest factor in value will always be the where and the unmistakable: location, location, location.
(4) I don’t want to spend a lot on inspections. And you don’t have to. But you get what you pay for, so pay for a professional’s opinion. It can save you a lot of pain and trouble further down the road, or it can provide you ease of mind as you navigate one of the biggest purchases you’re likely to make. Get a home inspection. Get a termite inspection. Get a video of the drain line. You’ll know just about anything you could ever want to know if you get these reports done and done by experienced and licensed parties.
(5) If I paint my house, the money I spend makes my house that much more valuable, right? Not usually. Just because you spend x number of dollars improving your home does not effectively make your home that much more valuable. It can. But no, not usually. Things like painting or other components like servicing or replacing AC equipment remains akin to preventative maintenance; you have to do it to maintain the value. Generally it does not up the value, and even when it might, you will be hard pressed to see it in dollar for dollar. Consider too, if you pay to paint your house, whoever buys it may very well repaint it – or worst case – it doesn’t sell at all. Then what? Clean and unclutter your house instead. A buyer tends to know right away in their gut when a house is right for them, and a coat of paint plays very little if anything into it. Save your money, seller, and hire a good listing agent before you spend your dough on any significant changes or improvements.
(6) My agent isn’t a good fit; do I have to continue to use them? Short answer: no. Long answer: this is maybe the biggest misconception out there. Unless you as a buyer sign an exclusivity with a buyer’s agent you are not beholden to them. You simply aren’t. Sometimes personalities don’t mesh, and sometimes communications get crossed. You as a buyer can work with whomever you want to. Do you have to fire the agent? Yes. Do you have to use the word “fired”? No. The phrases “decided to work with some one else” or “thanks for your help, but this isn’t working” or what have you are all fine. Buyer’s agents lose buyers all the time. Do we want to? Of course not. Is it all a part of the big equation? Absolutely. I’ve been fired, and fired and rehired, and I’ve even been second string lots of times to other buyer’s agent that the buyers parted company with.
(7) My credit score is fine. If you say so. But you aren’t the lender, are you? Let them make that determination. Know too your score is checked at least at the beginning and at the end of the loan process. So don’t go purchasing any other big ticket items when buying a house as it will impact your score. And stay employed too. Losing one’s job nixes the loan immediately. The upside would be unless the language in the contract was changed by an overzealous seller you’ll get your deposit back. Hey, glass half full, right?
(8) Let’s lowball them. Ooookkkkaaayyyyy, let’s assess the listing then decide if lowballing is the strategy that should be used. The surest way to lose out on an acquisition is lowballing a new listing. It’s new! Why would a seller sell something to you for much less than what they’re asking when few may be exposed to it. A savvy seller would sooner lower their asking price by ten, fifteen, or even twenty thousand dollars before agreeing to sell to a lowball offer. Time and place, people. Lowball bank owned listings that sit on the market. Those are usually your best bets at having a lowball offer accepted, or at least countered.
(9) I’ll shop insurance later. You’ll shop insurance now. Just like a kid and his vegetables you better clear your plate before you go for dessert. No acquisition via loan is complete without the purchasing of adequate insurances. Granted in Louisiana our options can be limited and pricey, but it’s still non-negotiable. Unless you are a cash buyer, in which case it is at least advisable. Remember hurricane season is only seven weeks away, and make note: you can’t purchase flood insurance any old time. It takes 30 days for a flood policy to go into effect unless you purchase it at the act of sale. Lastly, know this: no insurance gets written once a named storm enters the Gulf of Mexico. These are the brakes.
(10) No rush; we have time. No, you don’t. Conversely, timing is everything. You want something, you better take it and generally take your best shot too. Our market is too active to pussyfoot around on price and terms, and as the state contract plainly reads “time is of the essence.” Get your loan queued, shop insurance, and use your time effectively. There happens to be a whole host of buyers out there with the same notions as you. Make your efforts count, and you’ll be satisfied. Refrain from woulda-coulda-shoulda and be diligent whether you are buying or selling.
And that’s it for now. I hope these help. Real estate remains an ever-evolving industry, so take that to heart when you engage it. And good luck!
Jean-Paul Villere is the owner of Villere Realty and the Du Mois gallery on Freret Street and father of four girls. In addition to his Wednesday column at UptownMessenger.com, he also writes an occasional real-estate blog at villererealty.com and shares his family’s adventures via pedicab on Facebook and Twitter.