5 Misconceptions about Real Estate

Transcript:

Hi, my name is Zac Shipley with Keller Williams Realty in Milwaukee, Wisconsin and I want to tell you about five really weird misconceptions I hear about the real estate market here. 

Starting with number one: Paying over the asking price means I'll be overpaying for the house. Now, of course, if you think about the asking prices as the price for any other product you might have in a store, the price is what you pay and paying more than that, well you're not getting a good deal. And paying less than that, well, obviously that you're getting a steal. But realistically, with a price set for it by a seller it's not the price that the actual value of the house. It may just be the starting price for negotiation and it may be a little bit less than that or a little bit more, but if you have a hose that's listed for $300,000 and you make and offer at 320k and then the house closes at 320k, that's now the value of that house. It doesn't matter where is started, it doesn't matter what it sold for before. Actually doesn't really matter what it sells for later because if an appraiser comes by and looks at that house, they're going to see what's the most recent sold data for that house and that's what's going to help determine the value. It's determined  by what someone's willing to pay for that house.

Number two: Zillow says or Redfin says or any other major Real Estate Website. Now, there's a lot of real estate websites out there that are going to give you data, including our website levelupwi.com. You can put your address in there and it'll spit out some number about what they think your house is worth. And realistically, just like the starting price for listing house, it is a suggestion. It's based on some data around what other houses in the area have sold for or what maybe other three bedroom or four bedroom houses have sold for recently or all sorts of other factors. But think about it this way when you go on Facebook and Facebook probably has a lot of data about you, there's usually a suggested person that you may know that asks you to be their friend and you think to yourself, I hate that guy I don't want to be his friend. Well, Facebook has all that information about you and you're on there every single day and they get that wrong. How can Zillow or Redfin or the array of real estate websites know about your house without going in there. This is why you should always get their opinion of a professional.

Now, when talking with people who are thinking about selling, often times people tell me they'll need to make expensive updates in order to sell. And while it's true that an updated house with a new kitchen or new bathroom, new floor, paint, whatever is going to make it more attractive to buyers, it's not the only factor out there. There may be people out there who want to o put their own spin on things and you finishing up the bathroom in a color scheme that they don't like means that your house is now unattractive to them. This is why you see so many houses painted in these neutral grays, because that's what's popular right now and anyone can just paint over it. So the most important thing to do when thinking about selling your house is not necessarily to look at upgrades, but look at repairs, look at unfinished projects. When was the last time that you replaced an appliance; when was the last time you did work on one of the major fixtures, like your furnace or even the lighting in the house; the roof, the garage door. These are things that are not just necessarily things that are aesthetically pleasing but they could be major safety issues if they're not taken care of, so take care of the repairs first.

Another myth I hear is a home passes or fails home inspection. Now while it's true there are certain elements of a home inspection that are really important that a home checks out on, you don't want to have leaky plumbing or a hole in the roof or a light switch that give the electric shock every time you hit it. The home inspector is a generalist, he's not looking at the whole house and trying to give it a letter grade or a pass/fail. A home inspector is looking for problems that may arise in the future, problems that may exist now or things you may need to budget for for a near future replacement. You know if a furnace is like 15 years old, but it's working fine, old is not broken and so the home inspector will say things like this nearing the end of its lifespan, you may want to go ahead and budget for a replacement somewhere down the line or know that you're going to have to replace the water heater or change out the windows. There are certainly elements that are major safety issues that you want to take care of before you move in but almost everything is negotiable and everybody has a different level of comfortability on repairs they can do with the house.

The last myth I want to address is a doozy. I hear a lot: "I'll wait for the market to crash" or "the market's already crashed". So if someone's looking to sell they're thinking that the market's already hit its peak. If someone's thinking about buying they're waiting for it to hit rock bottom. We are kind of in the middle where interest rates are a little bit high right now but also the demand is still really high. There's no right answer. Realistically, real estate can be a great investment no mater when you buy. Holding onto it can yield huge financial results down the line. Even folks who bought during the height of the market2007-08 are seeing that their property is worth more now than it was. They paid more usually by a great amount more and even if the market takes a huge nosedive next year, which it won't because there's a lot of factor that come into play. Realistically five years from now, that house is still going to be a good investment 10 years from now. It's going to be a great investment, you are going to be able to hold on to your money and your house is going to be worth way more than what you owe on at that point. And you'll be able to sell it to get into your next house.