“There are so many real estate myths out there that people take as being the gospel,” says Ron Abraham, president of the Ontario Real Estate Association. REM recently asked three people in the industry about some of these real estate perceptions.
1. Houses that are professionally staged sell for more than non-staged homes.
“Staging a home can add dollars to a property’s sold price but it is more important for the property’s features and functions to show well,” says Ann Hannah, president of the Toronto Real Estate Board. “Allocating funds toward a new countertop, a fresh paint job or a good cleaning may in fact be money more wisely spent.”
2. Realtors don’t make any money in first six months.
“You cannot make a blanket statement that says that nobody will earn any money in the first six months in real estate,” says Abraham. “There are some people who don’t make any money in their entire career in real estate. Some people are very successful in their first two months and then do nothing. Other people are not successful for a year and then they blossom.
“When we instruct classes to prepare new people coming into the business, we say you should be prepared for no income for six months. The theory is if you get a listing in your first week and it sells within the next 90 days and it doesn’t close for another 90 days, there is your six months. But it is a myth that Realtors do not make anything in the first six months, generally speaking.”
3. Buying any real estate is a great investment.
“Buy any property as an investment is definitely a myth. Not only is it wrong; it can be financially ruinous,” says Don R. Campbell, a Canadian-based real estate investor and founding partner of the Real Estate Investment Network and Cutting Edge Research. “This myth is often perpetrated by those in the business of selling real estate and has been debunked over and over, only to be re-invigorated when it serves those who are trying to sell properties that make current poor investments,” he says.
“One key determinant for any property purchase is: Is it speculation or is it an investment? A property that does not carry itself through the income it generates is speculative. That doesn’t make it wrong, but it does add a much higher level of risk. A property with income that not only covers all operations and financing costs but also provides an income is a true investment. With this additional income, you can afford to hang on if a market doesn’t perform on the equity appreciation side – without this income the emotional and financial roller-coaster is much more violent and in fact can throw you right off the tracks,” says Campbell.
He says a good question to decide if the property is worth adding to your portfolio is: “ ‘If I bought 10 of these and the market stayed flat, would I still be getting closer to my overall financial goal – or would it hurt badly?’ If it is getting you closer, then it is worth grabbing. If it isn’t, then it is a speculative purchase with high risk,” says Campbell.
4. Choosing to sell your home yourself instead of using a Realtor will save you money.
“Homeowners who choose to sell a property on their own should consider that for the most part, buyers prefer not to negotiate directly with sellers,” says Hannah. “Buyers might, for example, have reservations as to whether homeowners are representing the condition of the property in a forthright manner. More importantly, those who use the services of a Realtor can do so with the confidence that they are entering into one of their life’s most significant transactions with a knowledgeable professional who is governed by rules, regulations and legislation. As with most things in life, you get what you pay for.”
5. Spring is the best time to purchase a new house.
“That will depend on the market,” says Abraham. “Is spring the best time to buy a home in a cottage market? No – the best time for a cottage market may be in October or November when there isn’t as much activity. A lot depends on the kind of market that that particular area is enjoying or not enjoying. Many people feel that spring is a good time because if you buy a home in spring and you don’t close the deal until the end of June, the kids are out of school. Or you close the deal between the end of June and before September so you move before the kids go back to school. You don’t want to start them in school in September and have to move them around December. For a family with young children, that might be an easier way to buy a home but it doesn’t make this myth a blanket statement,” he says.
6. Homes with pools are harder to sell.
“Homes with pools can narrow the interest of buyers, particularly when they have young children, says Hannah. “Buyers don’t always want the risk or the upkeep of a pool. Conversely, buyers who want a pool generally regard it as a bonus. If there is a pool, it is best if it is situated on a lot that is big enough to accommodate both a pool and a backyard recreation space such as a patio for entertaining.”
Sometimes it pays off to not believe every myth you hear.