Debunking Popular Real Estate Myths: Separating Fact From Fiction

When it comes to real estate, at times it can be hard to tell fact from fiction when it comes to the do's and don’ts. Especially if you are just starting on your real estate journey, it can be very off-putting and daunting. 

There can be so much inaccurate advice and information out there. Here we will help you debunk some of the most common real estate myths so that you can make your decisions with confidence. 

Myth - you need a 20% deposit to purchase

Did you know that having a 20% deposit isn’t strictly necessary? This is one of the most common myths in real estate. 

Obviously, the larger the deposit the more beneficial but not having that 20% deposit doesn’t necessarily put you out of the game.  In this day and age with the cost of living and housing, saving that large deposit can be easier said than done. Having a 20% deposit can help you avoid mortgage lenders' insurance; there are also other lending options available. 

If being able to save that 20% is what is putting you off entering the real estate market, it may be worth talking to banks and lenders to see what options could be available to you and your individual circumstances. This will hopefully give you a goal that feels more within your reach. 

Myth - You don’t need an agent in this online age

This is perhaps one of the more damning myths out there. Many people believe that in this technological age, you no longer need a real estate agent and you can save on commission by doing it yourself with the help of the internet. 

However, this isn’t the case. The internet can be a great additional resource but in the end, it is no match for the in-depth local and market knowledge and experience of a real estate professional. Use the internet as a bonus resource instead of a be-all and end-all source of knowledge. 

Real Estate agents have also spent much of their careers honing their negotiation skills and have a vast understanding of all the legalities involved. It’s that human touch that you just can’t get from a website. 

There is no substitute for having a trusted real estate agent in your corner to make the process a lot smoother and more successful. 

Myth - You need to undergo major renovations before you sell 

A lot of people believe that before you put your home on the market you need to undertake large renovations and updates to the property to add value. 

Adding value to your home through major renovations sounds great in theory but not all renovations guarantee a great return on investment.  

It is important to prioritise improvements that increase the value or rectify significant issues and not just undertake huge renovations for the wow factor. Attention to small details is what will count.

It also pays to keep in touch with the market conditions. In a seller’s market with high demand and fewer properties on the market, you may not need to do much to move your property quickly for a good price. However, in a buyer’s market where there are more properties available, buyers will have more choices. This means you may need to undertake a few jobs to make your property stand out. 

Myth - Renting is cheaper than buying 

This myth has been around for a long time. Whilst renting may seem like the cheaper option when looking at the upfront costs, this isn't always the case. 

You also need to take into account the long-term benefits such as equity and appreciation. When renting you do not build equity in the property that you are living in. As a homeowner, you will build equity in your property over time. Property values may also increase leading to a return on investment when you look at selling the property. 

Weekly rent is mostly predictable, however, they will usually increase over time with the state of the market.  If you have a fixed-rate mortgage this can provide more stability over a longer time depending on your fixed period. This means you don’t have to stress about the sudden impact of interest rate rises. You don't have to scramble to find extra money, you can plan for the future and put aside funds for when the time arises. 

Myth - Overpricing your home leaves room for negotiation

Many people believe that by overpricing your home you leave more room for negotiation. However, the truth is that if your house is overpriced it can lead to: 

• less interest 
• fewer showings and an 
• overall longer time on the market.

Buyers will often stay clear of properties that appear overpriced or have been on the market for a long time. To a buyer it can be discouraging and ring alarm bells. It could also attract offers that are well under asking, even more than if the house was reasonably priced from the beginning.  

It’s important to have a competitive and realistic price set from the start. A knowledgeable real estate professional will be able to help with this. 

Understanding the truth behind these misconceptions can help you feel more confident when it comes to making decisions about buying, selling and investing in real estate. 

If you are looking for a trusted professional to help guide you through these myths, NXTGEN has over 35 years of experience and knowledge in real estate, contact our team today.