THE MYTHS OF REAL ESTATE EXPOSED!

Yes, we admit it. We REALTORS® sometimes do cringe when a client tells us "My friend says....". The enormous amount of incorrect information people are given by friends and relatives who, while trying to be helpful of course, can mislead buyers and sellers as to what to expect from a real estate transaction. We want to expose the myths, so that you (and those friends and relatives) will know the true story of how a real estate transaction works and how to get exactly what you want and expect. If you have a question regarding real estate, or have been told something that you aren't quite sure of, please call or stop by. We'll be happy to give you the straight answer.

These are real "myths" that people have heard about real estate transactions. While we cannot offer legal advice, the answers following are based on our knowledge and over 75 years of combined experience. If you have a specific question, please call our Broker, Roberta Urban. If she doesn't know the answer (which is very rare ), we will help you find it!

MYTH ONE: "BY LAW, THE SELLER HAS 30 DAYS AFTER CLOSE OF ESCROW TO MOVE OUT OF THE HOUSE."

FACT: The seller has as many days as you and they have agreed to in your purchase contract. Most purchase contracts now have the clause that says "Possession of the property will be delivered to the buyer on: ", (you can put a specific date, or "2 days after closing" or anything else you both can agree to.)

MYTH TWO: "BY LAW, THE SELLER MUST FURNISH THE BUYER WITH A PEST CONTROL REPORT AND FIX ANYTHING THAT'S WRONG."

FACT: Again, you refer to your contract clause regarding the pest inspection. Market conditions can dictate who pays for a pest inspection, but it is not required by law. When you are filling out the purchase contract with your agent, you tell them how you want it to be in your offer. The seller more frequently these days may limit the amount of repairs they are willing to pay for. Some people have gotten confused on this issue because loan companies will generally require a pest clearance before they will give you a loan to buy the house, but again it is not a law - it may be a lender requirement and something you negotiate with the seller before you have a final agreement to purchase the property.

MYTH THREE: "YOU REALLY NEED A LOT OF MONEY DOWN TO BUY A HOUSE - AT LEAST 20% DOWN!"

FACT: That may have been the case when your parents or grandparents bought their home. Not anymore. There are no money down programs; programs where a first time buyer can get a grant for their closing costs and much more. One example: A mother of two with a good job and good credit paid a total of less than $600 at closing for a $120,000 home!

MYTH FOUR: "YOU MUST HAVE PERFECT CREDIT TO BUY A HOME"

FACT: You do not need "perfect" credit. And in the case of a first time buyer, it's ok to have "no credit". Of course, the better your credit rating, the less down payment or interest rate you will pay. But even with "less than perfect" (including bankruptcy, if you have re-established credit) you CAN buy a house. If you are not sure about your credit report, we know several friendly and helpful loan officers you can talk to who will able to review your report with you, give you advice on improving your report and probably get you pre-qualified!

MYTH FIVE: "AFTER YOU'VE MADE YOUR OFFER, IF THE SELLER DOESN'T ACCEPT YOUR OFFER, YOU LOSE YOUR DEPOSIT MONEY"

And "IF THE SALE DOESN'T GO THROUGH YOU LOSE YOUR DEPOSIT MONEY".

FACT: In EVERY normal-type residential real estate transaction that we have done, the buyer has received back his deposit if the seller did not accept the offer. The deposit is towards the purchase price of the property, so if you are not purchasing the property, there would be no deposit.

Also, normally, if the sale does not go through and it is for a legitimate reason as provided for in the contract, the buyer DOES get their deposit back. Legitimate reasons can include: a.) The buyer has objected to some condition found during their home inspection and the seller does not want to fix the problem; b.) The property does not appraise for the purchase price AND that was a condition of the contract; c.) The buyer lost their job during escrow therefore no longer qualifies for the loan and qualifying was a condition of the contract; d.) The pest repairs exceed the seller's contractual limit and neither party wants to pay the difference; e.) There is an easement on the property that the seller was not aware of, that the buyer does not accept. In each of these cases the buyer would receive back their deposit under normal circumstances.

MYTH SIX: "THE SELLER IS RESPONSIBLE FOR REPAIRS TO THE PROPERTY FOR A YEAR AFTER CLOSE OF ESCROW"

FACT: This is an old myth that has resurfaced recently and might be a confusion due to the increase in popularity of home warranties. In truth the seller under normal circumstances has disclosed everything they know about the property and has made any repairs they agreed to make in the contract. The buyer has done the walk through to ensure the repairs called for in the contract are done. Once escrow has now closed, it is up to the buyer to fix anything from here on out. It's now their home! Which is why we highly recommend the one year home warranty on any property. The home warranty will cover a great deal of the home's systems for that first year, and can be renewed after the first year at the discretion of the home warranty company. With a home warranty, most companies charge a $35.00 service call and either have to repair or replace a covered system. A home warranty costs about $255 for the basic plan, and can be a lot of peace of mind for a new home owner.

MYTH SEVEN: "THE SELLER HAS TO BRING THE PROPERTY UP TO CODE BEFORE CLOSE OF ESCROW" and "THE SELLER HAS TO HAVE A PERMIT ON ALL STRUCTURES ON THE PROPERTY BEFORE HE CAN SELL."

FACT: This situation usually comes up on an older properties. The seller does not necessarily have to bring everything up to code. If the seller knows of something not to code, they do have to tell the buyer. But they don't have to fix it unless the contract specifically calls for it and the seller agreed to it. The same applies to permits, which can be a very common situation with barns or other outbuildings. If the seller built it without a permit or knows an existing building does not have a permit, they do have to tell the buyer, but they don't necessarily have to do any more than that, unless the have agreed to in the purchase contract.

MYTH EIGHT: "THE REALTOR® IS REALLY THE ONE WHO SETS THE PRICE OF THE PROPERTY."

FACT: A REALTOR advises the seller as to what other, comparable properties in the area have sold for, and informs the owner as to what the REALTOR thinks the probable sales price will be and what a suggested list price could be. But it is the seller's property and the seller makes the ultimate decision on what price to ask for their property. And it is up to the seller exclusively whether or not any offer presented is acceptable to them.

MYTH NINE: "THE BUYER CAN CANCEL THE SALE IF THEY DON'T LIKE THE CONDITION OF THE HOME AT THE FINAL WALK THROUGH."

FACT: Many buyers have had this false idea, and the real estate purchase contract wording has been changed several times over the years to clarify exactly what the purpose of the final walk through is. The contract now states that the purpose of the walk-through is to confirm that agreed upon repairs have been completed. That is the only reason for the walk-through now. Any other conditions of the property that the buyer may not like or agree to need to be addressed right at the beginning of the negotiations - when you write your offer to purchase. If the buyer wants the carpets cleaned when the seller moves out, it needs to state that in the offer to purchase. If the buyer wants the holes in the walls from pictures patched, the offer needs to say so. If the buyer expects the chimney to be swept, put it in the offer. As a buyer or seller, your offer should be as exact and specific as you need it to be to spell out your precise intentions and requirements for the sale or purchase of a property.

MYTH TEN: "IF YOU LIST YOUR HOME TOO EARLY - BEFORE YOU'VE FOUND YOUR NEW HOME - AND YOUR CURRENT HOME SELLS, YOU COULD BE OUT ON THE STREET WITH NO HOME AT ALL."

FACT: This does NOT have to happen at all, though people don't know it. A good, professional agent will help you prevent this from happening by putting a clause in your listing contract that states that the sale of your current home is contingent upon you finding another, acceptable replacement home. This phrase is also made part of any offer your receive, so that the buyer knows also that if you do not find another home acceptable to you, you will not proceed with the sale of your existing home. Most buyers are agreeable to giving the seller time - up to 30 days - to find another acceptable home. And with the current seller's market, buyers have been much more agreeable to working with the seller to accommodate the sellers needs.

MYTH ELEVEN: "I CAN'T MAKE AN OFFER ON ANOTHER HOME UNTIL MINE IS SOLD."

FACT: You can make an offer, again making your offer contingent on the sale of your existing home. With the market being so hot right now, some sellers are not as interested in a contingent offer. But quite a few sellers are going on to buy another place themselves, so understand contingent offers and the fact that you are trying to find your new home while marketing your old home. A lot of sellers are in the same position, and with the short market times in most of this area, they can be agreeable to contingent offers. You can also make it worth their while to wait for your home to sell, either by offering to share costs, pay for some of your own inspections, offer full price or a good price. And some people have offered a little more than full price to hold the property and give them time to sell their current home.
We hope this clears up some of the misconceptions that you may run across when talking about real estate. We are always happy to help you with specific questions or situations you may have. Please feel free to call us at any time. If we don't know the answer, we will help you find the right person (attorney, accountant, etc.) who does.