First-Time Homebuyers Setting Records

Online searching is a popular means for home buyers to try and locate the right home for them. But while the technology is there for people to find the right house for them, a search of what the local market can offer may not tell them everything they need to know about buying a home.

First-time homebuyers have misconceptions, and their lack of experience — and their high enthusiasm — can put them in a potentially rough spot. Real estate agents have the tough job of educating first-time homebuyers on the process of buying a new home, including dispelling persistent myths.

1. It’s Cheaper To Rent Than To Buy

Many prospective first-time homebuyers think that it is cheaper to rent than it is to buy. These individuals tend to take an “apples to apples” approach when looking at their monthly expenses for renting versus buying a home. It is important take into account long-term financial benefits, such as building equity, large tax deductions, consistency of monthly payments and potentially huge appreciation. – Hunter Perry, Compass

2. Understanding Of The Marketplace Is Optional

Many first-time homebuyers fail to appreciate just how competitive the marketplace is for the best properties. To be prepared, they should become very familiar with recent sales in the targeted sub-market and have a loan approval secured from a reputable lender. Knowing property values and having the financing ready to go will give first-time buyers an advantage in competitive bidding situations. – Corey Burr, TTR Sotheby’s International Realty

3. Needing To Buy The House Of Your Dreams

The most common misconception, in my opinion, is that they feel they have to buy the house of their dreams. I tell all first-time homebuyers to buy equity while you can, especially younger first-time buyers. This is the only time in your life when life circumstances don’t control what or where you buy. Buy something you can get a great return on in three-to-five years. – Justin Bailey, Bailey & Co. Real Estate

4. All Real Estate Investments Are Equal

One common misconception: Are you buying a house for an investment or to be your personal residence? When someone is buying a house for an investment, one needs to take into account the type of investment. Is this a flip? Is this a house for rent? When buying a personal residence, there is an emotional attachment, and some financial decisions will not be as relevant. That can be very risky. – Carlos Vaz, CONTI Organization

5. Property Tax Increases During Ownership

One big misconception that first-time homebuyers have is budgeting for property tax increases over the life of their ownership. In general, I don’t believe most first-time homebuyers truly understand the true cost of ownership. – Chris Powers, Fort Capital, LP

6. Buyers Need To Deal Directly With A Listing Agent

The most common misconception first-time homebuyers have is that they need to deal directly with the listing agent on the home they have found online. This likely creates a dual agency relationship, which can be difficult to navigate for an inexperienced buyer. I suggest an interview process with two or more experienced agents that will act as the agent of the buyer and be paid by the seller. – Adam Attia, Marcus Millichap

7. Not Using A Real Estate Agent Saves Money

It’s so much harder to buy a first real estate property than the second and the next ones. Misconceptions people commonly have are: 1) It’s cheaper to rent than it is to buy. 2) You can save money by not using a real estate agent. 3) Adjustable rate mortgages are a bad idea. 4) It will be cheaper to buy a home that needs renovation. – Elliot Bogod, Broadway Realty

8. Property Value Will Always Continue Rising

First-time homebuyers often believe that the value of a house will always rise over the course of time. This may have been the case for prior generations, but buying a house in peak market conditions (low interest rates, rising stock market, etc.) like we are seeing today can lead to inflated home prices. Generally speaking, when economic conditions deteriorate, home values will fall. – Mark Fogel, ACRES Capital