Myths are a waste of time. They prevent progression.
– Barbra Streisand
Real estate investment is the most crucial investment for an investor. It has become popular investment vehicle from last 50 years. It has been considered long sound investment and for a good reason. It is the biggest purchase by an individual. So, it was done by immense pressure and heavy research. But in this research people fall in various misconceptions to get this decision right.
In this article, we are going to debunk some common real estate myths that you should know so that you can make a wise decision regarding your property.
Here are the Top 10 myths about real estate which commonly people tend to believe
1. Without real estate agents, buyers can get better deal
The biggest myth while buying a property is that real estate agents’ commission is involved in selling price. The amount is paid by sellers to real estate agents for their work. As a result, agents’ services are free for buyer. So, real estate agents are helpful while investing in real estate. They use their experience and market’s knowledge to accurately price the property. Real Estate agents ensure a smooth transaction by taking care of all the hefty paperwork.
2. Brand name is not necessary
While investing in real estate, it is a buyer’s myth that brand name doesn’t matter at all. The foremost thought of buyer is price. Investors just think about price but branded asset will always give high return on investment rather than normal projects. Due to brand reputation, all the projects were timely delivered with high quality features and amenities. By evaluating their previous projects, you can also make a conclusion about whether the builder is trustworthy or not. On the other hand, if you invest in a lesser-known builder, you might face some issues in the future in terms of construction quality or timely delivery.
3. Expensive investment
The biggest misconception that people dissuade about real estate is that it needs a ton of investment. Only rich people can afford to buy flats. But the reality is far away. Home loans are easily available by the banks which make real estate investment accessible. Most of the home loans nearly pay 80 percent of the total property value. This means you only need to pay around 20 percent of the value of a property. You can repay this loan in the form of EMIs which are quite flexible and adjustable. Moreover, the government has implemented PMAY scheme for all income groups. Under this scheme, now property investment has become easier and more affordable.
4. Buy properties in fully developed areas only
This is another biggest myth that most people believe while they are planning to go for a real estate investment. People always want to invest only in the prime areas which are well-connected and properly developed. But you must know that properties on the prime locations are quite expensive and prices are already at their peak. So, only a few people can afford to invest in these areas or locations. That’s why you should invest in those areas which will witness high growth within a few years. Because in these areas, property prices are still low, but the price will go high in the near future. If you want to get a higher return on your investment, invest in suburb areas.
5. Wait for market to become favorable
Mostly people wait for recession time while investing in real estate. Real estate market is never stable. So, IF YOU DON’T BUY IT NOW YOU CAN NOT BUY IT LATER. Seller tightens the criteria in recession time because of tough economic times. Also, people miss excellent opportunities in the wait of real estate market crash
6. Real estate agents are all about sales
A common myth among people is that real estate agents can say anything about property to get a successful closure. Although in real estate market, the reputation of agent is critical to success. They abide by their ethical conduct and offer best to their clients as their reputation gives hike to their business.
7. Sellers quote higher price to keep scope for negotiation
Sellers usually quote higher price for the properties to reach willing price after bargaining. This is a myth that offering more prices to customers creates a room for negotiation. But this inflated pricing strategy leads to remain the property too long in the market. Fair price brings more customers to the market. So, most of the developers follow the fair pricing rule to sell off their inventories fast without much of a market competition.
8. Real estate investment is risky
Another kind of myth is that real estate investment is highly risky. Every investment involves risks but as compare to other fields real estate investment involves less risk. Real estate market is less volatile and unstable. It is secure investment as property always belongs to the buyer.
9. Vacation home is not a worthy investment
According to some people buying a vacation home is not an investment. They believe in a myth that it is just a lifestyle choice. But, it is a great opportunity to earn extra income by renting it. It gives a head start to retired people and creates easier transition to retirement. Not only this, properties in popular vacation areas tend to provide high return on investment. Those properties have chance to retain their value and appreciate.
10. Don’t Make any Investment when you are Young
Most people believe you need a lot of knowledge and skills before investing anything in the real estate market. That’s why young people should not go for any real estate investment. This kind of investment should be taken when you are older enough. But in reality, the scenario is completely different. It would be a wise decision if you make a real estate investment at a young age. Since you are young you will get more working years in front of you. This means you can easily repay your home loan. Moreover, once your career will rise, your EMIs won’t burden your savings. Most of the financial institutes offer low home loan rates for young people. These are some reasons which imply that it would be a great decision if you make a property investment at a young age.