There are so many misconceptions about the real estate industry, and these misconceptions only become more difficult to assess as such when agents are not completely straightforward and honest. Purchasing a home is one of the most significant fiscal decisions, if not the most important decision, a man or a woman can make, and it only makes sense that they seek out the advice of experienced professionals to lend some insight.
In light of such, I wanted to jot down a few pieces of invaluable advice you should take into account when you buy your home:
No matter what you may hear, real estate is not an investment.
Yes, many so-called ‘titans of business’ and ‘financial gurus’ will extoll the fiscal benefits of residential real estate, but in the end, a home is a place to live. It’s a place to raise your family and to make a life for yourself. It’s not equity.
Of course, purchasing a home is good for the overall economy. It supports home equity lending which in turn bolsters consumer spending. This eventually translates into returns for companies like Disney (think family vacations) and Home Depot (think home improvements). Yet, despite all the good it does the economy, houses are ultimately homes, not investments.
The idea that home ownership generates long-term gains for the average man or woman is mostly a misunderstanding. What you’re really buying is land. The house itself, the structure, is a depreciating asset that could end up costing hundreds of thousands of dollars in repairs and improvements. Just because you buy a house for $250,000 and sell it thirty years later for $600,000 does not mean you are seeing a $350,000 dollar increase in worth. In reality, the gain is far smaller once taking into account all the money you sunk into the house in the first place.
Real estate investors largely neglect this fact. In lieu of providing objective figures, they present home ownership as though it is buying shares in Facebook, or Google, or Tesla. In actuality, this is hardly the case.
Sale Contracts do not guarantee protection.
Unless a house is brand new, it will more than likely come with some material defects. Although these defects are often articulated in sales agreements, the language generally used leaves much to ambiguity. As a result, buyers can and do gain significant leverage to get more money out of sellers well after deals have been finalized.
It’s only right that sellers foot the bill for improvements and the like; but payment after the fact needs to be kept to a minimum. In the event you are selling a home, it may very well behoove you to hire a real estate agent lawyer who can add an addendum to your contract that protects you against potential attempts in the future to dip into your wallet.
Inspectors are not necessarily impartial.
The majority of inspections actually fail to show the full cost of needed repairs. This is because agents don’t want to advertise these costs. If a review of the home ends up revealing many flaws and potentially expensive repairs, the sale will probably not go through. Agents, incentivized by commission, will seek to hide these costs then by hiring inspectors who are likewise incentivized. This way, their report will not illustrate the full extent of costly repairs.
In order to circumvent this, buyers should hire their own inspector. By hiring a non-biased inspector, buyers are ensuring they will receive the most accurate report possible.
Buying a home is a complicated and stressful process. There’s no reason to let real estate agents make it worse by withholding information. Guard yourself and your interests. It’s for your home and your family, not your bank account.