14 myths of home selling and home buying

myths of home selling

There is a certain amount of truthiness in real estate. There are myths about home selling and about home buying. There are truths, half-truths and there are falsehoods. Some falsehoods may have been true a generation ago, but some I think were never true. Some things we hear about real estate are urban myths perpetuated by those who hear them, believe them and retell them. Of course there are also flat out falsehoods, told knowingly, convincingly and passionately by those perhaps, who want them to be true. Some of the following are told by real estate agents and brokers. Others by home sellers and others by home buyers. The most flagrant half truths and myths are created and spread by FSBO companies, but those are the easiest to spot as they prey on home seller’s avarice and real estate agents’ brainlessness.

 

1. I have buyers for your home

Every house is unique and every home buyer is unique. What are the odds that I have a buyer for your home? Sight unseen?

At any given time there are about 2000 homes listed on the Kitchener Waterloo Real Estate Board. At the same time, we have about 1500 real estate agents working in Waterloo Region. If every agent is working with 20 buyers I suppose it is possible that one of us has a buyer for your home. But you don’t have to list with us for that. You can simply sign an agreement to cooperate with us for this specific buyer.

 

2. Divorce leads to underpriced homes

Often one side wants the divorce and the other doesn’t. If that’s the case, one side digs in and will not accept an offer, even a good one, not to mention an offer below market price.

But let’s say the divorce is amicable, even if they agree to sell, how one or both sellers may see it is that they are getting half of the equity from the sale and half is often not very much.

 

3. More and more houses are being sold using FSBO companies

Depending on who you ask, the percentage of successful sales through FSBO (For Sale By Owner) brokerages has either risen to 25% of the market (according to FSBO brokerages), or remained steady at about 10%-12% (according to most real estate boards and brokerages).

Credible sources report that between 10% to 15% of homes sell privately. They always have, even before FSBO brokerages existed. In the old days, you’d just get a For Sale sign and hammer it in your front lawn. Now you can spend more for a fancier sign and a lot of BS.

Personally I think the discount brokerages and boutique brokerages have eaten into the traditional brokerage business more than the FSBO companies have.

 

4. Retiring baby boomers will move into urban condos, tiny bungalows and gated communities along golf courses

I meet baby boomers from time to time with plans to downsize. But my experience is that the plans never becomes realities. Condo fees, lack of space and privacy are their concerns. Most of them stay in their homes or move into newer ones of comparable size.

 

5. Signs generate phone calls

Almost no one ever calls from yard signs anymore. No one even texts or uses QR codes on yard signs. I know this because my old brokerage bought into a program for this and no one ever texted me from the sign or contacted me through the QR code clearly displayed on the sign.

Face it. The internet is the be all and end all for home sales. Think of your own consumer behaviour.  When you see a home for sale, chances are you will whip out your cell phone and google the address (or go to realtor.ca) rather than call the agent for the information. Nobody wants to talk to the listing agent (yet).

Yard signs are simply display advertising helping realtors find the houses we are showing and alerting homebuyers that the house is for sale.

I sold a house last year without a sign or any print advertising or open houses. I had lots of interest – all of it coming from the MLS.

 

6. Updated kitchens and bathrooms sell houses

This one is partially true. Kitchens and to a lesser extent bathrooms are in fact very important to homebuyers. With the rise in home prices over the past 15 years, homebuyers are at the top of their budget when they buy a home and they simply cannot afford to put another $20,000 or $30,000 into their new home right away.

Renovating your tired old kitchen will make your home more valuable on the open market. But you won’t get all the money you spend back. Experts say if you don’t go crazy with your kitchen or bathroom reno, you may get as much as 75% of it back.

What I think is that flat surfaces sell homes. Painting has a 100% return on investment. Paint the walls and ceiling. Replace the old wall-to-wall carpeting with an engineered hardwood and take out the old kitchen countertop and cupboard doors and install new ones for a fraction of the cost of a full kitchen renovation.

 

7. Swimming pools are a negative when selling.

This one is sometimes true. Having a backyard swimming pool (or even a large fish pond) is sometimes seen as a danger for younger parents with little children. They will eliminate your house from their search.

However, other groups like and want a pool. These are normally middle aged home shoppers with teenage children.

However, just like kitchen and bathroom renovations you don’t get all the money back, depending on how much money you spent on landscaping, hardscaping and the pool itself, experts say you can expect to get 40% – 60% back.

 

8. New condo units can be flipped before they are finished.

This is a myth perpetuated by builders and developers. It’s not true and it doesn’t make sense. The builder, who is still selling units does not want to compete with you and 99 other investors before the building is even started. In most cases, the builder’s lenders stipulate that 60% – 70% of the units must be pre-sold before they will lend the money necessary to begin the project. Having the pre-sold units on the open market complicates this.

It is called “assignment”, the ability or right to sell the pre-sale contract to another party before occupancy. It exists, but is rare.

 

9. Real estate agents get kickbacks from lenders, lawyers and home inspectors.

We almost never do and if we do we are required to disclose this to you.

Honest real estate agents usually recommend two or three lawyers, mortgage lenders or home inspectors. We ask that you call and interview them and find some others to interview too. We refer our “go to people” because we know that they can be trusted to get the job done. I know that if I have a problem with a contract, I can call one of my preferred lawyers and they will take my call. This is gold, much better than a kick back.

 

10. Real estate agents make a lot of money.

Some do. Some don’t. The average annual salary statistics I’ve seen range from $36,000 to $42,000 a year. That is not a lot of money. I think the rich realtor myth is perpetuated by the industry – “fake it till make it”. Some realtors in their BMWs and fancy suits are living commission cheque to commission cheque. I even know a realtor who told me that she remortgaged her house during a couple of lean years.

 

11. Price a house high and leave a lot of room to negotiate.

No. The internet has brought the information to the people. Everyone knows what houses are worth or can easily find out. If you price your house 10% over market value, you are not going to get an offer at all.

 

12. Buyers come through open houses.

Neighbours come through open houses. Buyers come through the internet.

Ok, this one is sometimes true. Sometimes, just sometimes, maybe 1% of the time a homebuyer will wander into an open house and buy it.

Open houses serve two important roles for Realtors.

1) they demonstrate to the home seller that the agent is actually doing something to sell the home

2) they traditionally have been a way for new agents to pick up future homebuyers.

 

13. The number of days on market is important information about the property.

People make assumptions about the motivation of sellers based upon the number of days the home has been on the market. Although a good house, priced right usually will sell fast, the days on the market information is often misleading. I recently wrote that this is a corrupt statistic.

 

14. I will sell your home in 30 days or I will sell it for free.

#1 agent in town.

We sell a house everyday.

Your home sold in 90 days, guaranteed.

My houses always sell for with 1% of list price.

If it sounds too good to be true, it is. Read the small print. Specific conditions may apply.

 

Leave a Reply

Your email address will not be published. Required fields are marked *