New Study Reveals 10 Home Buying Myths, Sets The Record Straight On Real Estate Misconceptions
Home sweet (misunderstood) home. For many, owning a home is the emblem of the American dream. Yet, as house prices soar and interest rates spike, misconceptions are rife.
What are these myths and where do they stem from? We dive into recent data from a recent Real Estate Witch survey to demystify the dream of homeownership, which many people find increasingly elusive.
The survey by Real Estate Witch, conducted between June 21-22, 2023, captured the views of 1,000 Americans. As the real estate market continues its dynamic evolution, this study highlights the importance of enhancing public awareness and education to facilitate well-informed decisions, especially since buying a house is often considered the biggest financial purchase you’ll make in your life.
Zillow Syndrome
We’re a nation obsessed. Over half (53%) of us check Zillow weekly, according to the report. But here’s where reality bites: most first-time homebuyers believe they are fresh grads, when in fact, the average age is 36. As per the Real Estate Witch data, a whopping 73% of participants got this wrong. So, if you’re over 30 and considering your first home, you’re right on track.
The Home Buying Labyrinth
Think you know the home buying process inside out? Think again. The study highlighted that a massive 83% of homeowners were caught off-guard by at least one aspect of the process. The surprise elements range from unexpected costs, lengthy documentation, to understanding the intricacies of offers and counteroffers.
Reality Check on Home Prices
It’s not just the price tag on the house that can be a shocker. 60% of participants underestimated the real median price of homes. For the record, that’s $436,800. This highlights the importance of thorough market research before embarking on the home buying journey.
Budgets? More like Guidelines
Sticking to a budget is every homebuyer’s initial intention. Yet, the Real Estate Witch study indicates that 34% end up spending more than they originally planned. And those annual house maintenance costs? They average around $13,150. Unfortunately, many Americans vastly undervalue this amount, leading to potential financial hiccups down the road.
The Down Payment Myth
The 20% down payment is more guideline than rule. Despite this, 62% in the study believe it’s mandatory. A staggering 21% even think it’s above 20%! Diverse loan options cater to different financial situations, with some requiring as little as 3.5% down.
Navigating Agent Dynamics
Real estate agents are there to guide and facilitate. But, 65% in the study believe we should initiate contact with sellers. Moreover, 48% of potential buyers are under the impression that the highest bid is the golden ticket, neglecting other vital elements like cash offers or waived contingencies.
Commission Confusion
Realtor fees can be a gray area for many. According to the study, 51% underestimated these fees. While they usually amount to 6% of the sale price, only a small fraction (11%) had an accurate understanding. It’s essential to factor these into your budget when considering selling or buying.
The Closing Cost Conundrum
Traditionally, sellers cover the commission for both buying and listing agents. Yet, 62% in the study believed the opposite. This misconception, especially prevalent among non-homeowners, could lead to unexpected financial burdens if not clarified early on.
Mortgage Misconceptions
Mortgages are complex, yet 43% of non-homeowners think they’ve got them figured out. The study revealed some gaps in this confidence, with many unaware that the current 30-year mortgage interest rate lies between 6% and 7%. Alarmingly, a considerable portion believed rates were even higher, which could impact their home buying decisions.
The Pre-Approval Puzzle
Mortgage pre-approvals are a smart move. However, 47% in the Real Estate Witch study mistakenly thought this locks in their interest rate. Furthermore, the order matters! A significant chunk of participants believed it’s best to pick a home and then seek mortgage pre-approval, potentially causing delays or disappointments.
Go check out the full Real Estate Study on their website.