Over and over again, we hear the same questions, statements and hearsay, well I would like to set the record straight on a few Common Myths of Real Estate. Some of these were covered in our “How’s the Market” West Valley monthly market update, so just incase you missed it, here are the top 5 most common myths of real estate all right here for you.
MYTH: Buyers Market is the Best time to Buy a home: Makes sense doesn’t it? After all in a Buyer’s market, sellers would be more motivated to give you a better deal right?!? While that may be true, its also true for all the other buyers purchasing, which means prices could be stagnant of depreciating. The real estate market is driven by supply and demand, low supplies cause price to increase, while high supplies drive prices down. So you buy a home in a depreciating market, month after month your home could be loosing value, why would you want to buy a depreciating asset? When you become a homeowner what you really want is stable increasing market, which would be a Sellers Market. Thats a much better feeling when the home you purchase 1 year ago is worth $20,000 more than you bought it for than $20,000 less.
MYTH: Buying through the Listing agent saves the Buyer money: When the listing agreement is executed, the Seller and Agent enter into a Fiduciary agreement in where through agency relationship, the agent agrees to put the sellers best interest first & get the most amount of money for the seller the market will allow. The Seller’s agree to pay a set amount of commission in the listing agreement. The listing agent agrees to pay the buyers agent a portion of that commission, which means if they sell you the home, they get all the commission. Which also becomes limited representation for both buyer and seller, so you have to ask yourself, if Buyer and Seller are getting limited representation and the agent is getting twice the amount of commission, who is really getting the best deal here? Do you think that agent is going to do aggressive comps and try to get the home for a better deal for you? What about repairs, who’s side are they on? What if the agent agreed to take less commission if he procures a buyer, thats just a savings for the seller, not you as a buyer.
MYTH: Solar Panels add Value: Although this is what the solar companies use as a sales pitch, there is a huge caveat here, the panels must be owned, not leased in order to add value. I don’t recommend purchasing solar as an investment thinking its adding value, the added value is no where near the price of purchasing panels. The most I have seen on an appraisal was $10,000 for very large unit that the homeowner purchased for $45,000. On average there is an added value of about $5,000 on owned panels. Leased Panels, not only have no value, they could hurt value. Several reasons, one being we see lots of damage to roofs, in many cases the Homeowners insurance will not cover. Many buyers don’t want to take over the contracts. Some buyers don’t qualify to take over lease payments, as they count against the buyers debt to income ratio where electricity does not. Probably the biggest reason leased solar panels hurt a property value is that it eliminates many of the buyers in todays market. Investors, Snow Birds and Buyers looking to buy their future retirement home will not want solar payments year round. As well as the aforementioned, buyers tight on debt to income ratios.
MYTH: Pools give $10,000-$20,000 Value: I always joke that selling pools is my summer job, however these days it seems year round, home buyers are wanting pools. The hottest commodity on todays market seems to be single level with a pool is in all sizes and price ranges, not to say that two stories with pools aren’t also highly requested, pools in the Phoenix market have a much higher return than you would think. In fact when evaluating homes with pools, I try to use only comps with pools, because many buyers will only look at homes with pools. Check out a comparison in the MLS of some random size homes sold with and without pools and see for yourself.
Single level, 2000 square foot, average price, without pool $241,420, with pool $272,680 (+ $31,260)
Two story, 2800 square foot, average price, without pool $281,961 with pool $321,230 (+ $39,269)
Single Level, 2400 square foot, average price, without pool $302,796, with pool $331,058 (+ $28,262)
Two story, 2800 square foot, average price without pool $282,053, with pool $317,710 (+ $35,657)
Single level, 2400 square foot, average price, without pool $350,261, with pool $429,833 (+ $79,572)
Two Story, 2800 square foot, average price, without pool $330,338 with pool $367,887 (+ $37,549)
MYTH: I can get the value of my home from an Auto Value site like Zillow’s Zestitmate: There are several reasons why you should not rely on automated evaluation. One reason is very simply, not all homes sales are reported to these sites. The county assessors office doesn’t share an internet data exchange with companies like Zillow. They rely mostly on agents to verify past sales. I can tell you that very few agents, report all the sales to Zillow. So you could have a higher end sales comparable in your area that isn’t even being factored into the equation. Another thing to consider is location within the neighborhood, for example one home backing to the main street might sell for less than interior lot. It could have sold for less because inferior view, curb appeal, repairs were needed, stigmatized property, and many other things that determine a homes value can not be recognized by computer calculated system. Supply and Demand, perhaps your the only home with a pool, this might mean you could ask for more than your neighborhood comps. We see poor quality photos, messy homes- untagged homes, less than desirable floor plan, limited showing availability to the property, cat urine, cigarette smoke, high selling season or slow market time, a lot of reasons that could have caused a home to sell for under market value and all these things can not be factored into an automated evaluation system. As your real estate professional we look for all these things in order to suggest a marketable price for your property, its not as simple as price per square foot and previously sold homes in your area.