Real Estate Urban Legends

There are several television programs devoted to proving urban legends about hundreds of different topics wrong, and real estate is no exception. Seller’s basically handing their homes over to buyers, seller financing given out with no problems, and cosmetic work on the home for nearly nothing? All Urban legend! Real estate is definitely more affordable than it used to be and Realtor.com share a few myths that you may encounter in today's market.

Myth #1: Bad Credt,  No problem!

• Most sellers will need to pay their mortgage off before selling their home. If the sellers finance the home sale themselves opposed to requiring the buyer to take over the mortgage or providing other means to pay for the property, they then need cash available to pay the mortgage off.  Most buyers intend to use the earnings from their home sale to invest in the purchase of their next home.
• Even for the few sellers who are able to provide seller financing, they will more than likely opt out of the option because of the risk involved in collecting payments for 10-30 years.
• The sellers who will openly provide seller financing often want premium pricing and interest- some will also require not only a large down payment but a credit check.
• Although financing through a seller opposed to the traditional lender sounds like a great idea, you may be at risk as the buyer. If the seller fails to make a payment to the bank, you may lose your house to a foreclosure.
• A local attorney specializing in real estate to document the transfer and financing may be a good idea

Myth #2: “Fixer upper” saves money!

• Sellers typically update the painting and carpets to make the home look fresh and to get as much money as possible from the sell of their home.
• Homes in need of a little work aren’t selling as quickly today if at all, so they are doing more touch ups to make their homes look more appealing.
• It’s still possible to obtain a discount on a home in need of work but most discounts are going to be on homes with bigger projects needed such as a new roof, window replacement etc.

Myth #3: First time home buyer financing

• FHA loans are available to those whom qualify regardless of if they have owned a home (or two) before or even own one now.
• Most FHA programs still available involve down payments and/or closing cost assistance.
• The majority even require some cash be put into the transaction with the hopes that with the buyers own money put into the home, they will be less likely to walk away from the purchase. The other theory is, it takes some serious discipline and money management to save up for a down payment on a house, with that goal being obtained it appears a more responsible home owner would be present.

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