Real estate is a field that everyone at least knows something about. With all of the television shows, blogs and articles written on flipping houses, creating a fortune through a real estate empire, buying and selling, and all other aspects of real estate, in addition to our own personal experience, we all believe we are experts on the real estate market. That knowledge that is put out there works in one of two ways: it causes people to become excited and interested in real estate, or it scares people away from dealings in the real estate market. Unfortunately, some of the information commonly discussed is actually a misconception. If you are looking to get into the real estate market as a buyer, seller, investor or otherwise, do not let old wives tales deter you as there is not always truth to them all!
Misconception: You must put down 20% in order to purchase a home.
The rumor that 20% down is required often scares people away from even considering purchasing a home. In the Long Island real estate market, many desirable homes are often $500,000 or more, making a down payment of 20%, $100,000 or more. Although the mortgage is often less than what someone would pay for rent on Long Island, most people, especially first time home buyers who are often straddled with student loans or other debts, don’t have an excess $100,000 in their bank account. However, while there certainly are benefits to a 20% down payment (such as a lower mortgage payment and less interest accrual over time), it is not required! It is possible to get a mortgage with as little as 3% down ($15,000 on a $500,000 home). Keep in mind that while this option is certainly more affordable, you must have excellent credit, verifiable income and other assets. The bottom line: Most people will end up with a down payment much closer to that 3%, with 60% of home buyers putting a down payment of 6% or less (as of 2017).
Misconception: Your home will sell quicker and at a higher value if you put it on the market in Springtime.
It is often thought that home buyers seek a Summer move in date so that their family will be settled for the upcoming school year, making Spring the ideal time for a seller to put a home on the market. For many years, especially when the “Baby Boomer” generation was first time home buyers this was true. However, today many home buyers are not families with children, but also single individuals, the now-older baby boomers, downsizers and others who simply do not care about moving their family mid-school year. In fact, because this misconception is widely believed, most people do in fact put their home on the market in the Spring. The effect on the market is that prices drop due to high inventory. The true best time to put your home on the market is when inventory is low, which is usually in the Winter.
Misconception: It is just as easy, and cheaper, to buy a home without a real estate agent. (Everything you need to know is online!)
All of the data for a house on the market is online: number of bedrooms and bathrooms, whether or not it has fireplaces and central air, the square footage and yard space. You no longer need a real estate agent to tell you that. While that is in fact true, it is also true that despite that, a buyer should still use a Long Island real estate agent. Purchasing a home is not like purchasing a pair of jeans or groceries; it is not a daily, weekly, monthly or even yearly purchase for most people. Because of this, is it crucial to have someone who knows and understands the ins-and-outs and trends in the real estate market. Plus, at no cost to a buyer, why not have a Long Island real estate expert on your side?
Misconceptions: Open Houses are not worth the time and energy.
Twenty years ago, open houses were a staple of the real estate industry; on any given day, you would see signs and balloons all over a neighborhood, seeking to draw prospective buyers into an open house. However, since online listings have become the most popular method to get a feel of real estate offerings on Long Island, many sellers have foregone open houses believing no one will come. However, this is far from the truth. Open houses are necessary for quick, full-price sales. The more available a house is to the buyer market, the quicker it will sell. While photographs online do a great job is narrowing down the playing field for a buyer, nothing compares to being inside a house and feeling whether or not a buyer can picture himself or herself there.
Misconception: The value of the home is the amount it is appraised for.
The purposes of an appraisal is usually for the bank to determine how much to lend a buyer for a mortgage loan application. The appraisal amount typically comes in lower than the market value of a Long Island home. There is a strict formula that determines what a bank appraises a home at. However, the market value of the home is whatever a buyer and seller, with the assistance of their real estate agents, agree is a fair price for the home.
Before you make up your mind about whether or when to buy or sell, understand that many things you have heard about the real estate market on Long Island are exaggerated, no longer true or never have been true. If you have any questions about real estate or are considering buying or selling a home, it would be most prudent to contact a Long Island real estate agency to discuss your best options.