October 2nd 2021

You’ve probably heard about some of the challenges of buying a home these days. Stories are splashed across news sites and whispered among friends and neighbors, about homebuyers mired in insane bidding wars, going way over asking price, and still not getting the house.

Daunted and dejected, homebuyers have also heard heaping earfuls on what to do, from “wait it out” to “waive your home inspection” and other extreme measures. Yet amid this frenzy of well-meaning chatter, the thing to remember is that real estate markets can change quickly, and much of what you’ve heard may not even be true—at least, not anymore.

Many homebuyers are coming in with some trepidation because of the media hype around the market. 

To help homebuyers navigate this ever-changing terrain, here’s a look at six myths you’ve probably heard about buying a home recently, and why they might not necessarily be the reality right now.

1. ‘It’s a bad time to buy a home’

Even though there are fewer homes on the market, higher prices, and intense competition, experts insist that, despite the odds, it’s actually still a good time to buy a home. For one, the market is finally starting to soften. Combine that with low mortgage rates, and this spells a fantastic opportunity.

Interest rates are at a historic low. If you can get a 30-year fixed-rate loan at an all-time low, it makes all the sense in the world to purchase property right now.  Inventory is also beginning to slowly increase, with increases in the last four months.  

2. ‘I’ll have to waive a home inspection for my offer to stand out’

Though it’s a risky move, many potential homebuyers have waived home inspections recently as a way to speed up their purchase and make their offers more attractive to sellers. But by now, most buyers have begun to change their tune on this.

As the market is starting to change, we are seeing fewer homebuyers being this aggressive, although competition still exists.

Waiving a home inspection can be risky for buyers since they’re responsible for any repairs or maintenance issues that come up after the sale.  Additionally, if you keep the inspection contingency, you are legally free to back out of the deal if you find something unacceptacle or if the seller refuses to do any repairs.  

3. ‘I’ll need to bid tens of thousands over list price’

Over the past year, median home prices in Cape May County have increased by 4.5% and inventory has decreased by about the same amount.  As such, bidding over the asking price is something most buyers still need to consider.

Yet buyers aren’t offering as much over asking today as they were a few months ago.

We are still seeing offers over asking price, but not that many compared to several months ago.

4. ‘I’ll end up in a bidding war’

Bidding wars for real estate have been common in 2021, as there have been more buyers than homes on the market. Some buyers were left disappointed when their bids didn’t make the cut.

While the market is still competitive, Arienti says homes in his area aren’t receiving as many offers these days—maybe one or two instead of dozens from a few months ago. That’s leading sellers to adjust their expectations.

Still, some buyers may still need to bid on several homes before getting an offer accepted, so don't get your hopes up too high about a home until you have a sales contract in hand.

5. ‘I’ll need extra money to cover an appraisal gap’

Mortgage companies typically require a home appraisal before approving a loan. But when a home appraises for less than what a buyer offers to pay, the buyer is often stuck paying the difference, known as an appraisal gap.

Over the past few months, it’s become common for buyers to pay for the appraisal gap, as many were submitting offers a lot higher than the home’s list price. Many buyers making cash offers waived appraisals altogether.

Yet waiving appraisals and agreeing to cover appraisal gaps aren’t happening quite as much anymore.

A lot of buyers just got fed up in the spring, and they hopped out of the market. That changed the stance of a lot of sellers.

6. ‘I need a perfect credit score to get a loan’

Today more than ever, a high credit score and a solid financial history are necessary for getting pre-approved for a mortgage. But this doesn’t mean your credit score has to be perfect.

Often homebuyers think they need a credit score in the 700s.

Although a 700 or above does help your interest rate, it is not a requirement for most lenders. If you have a 640 or above, you could potentially be pre-approved; you may just have a higher interest rate.

If your credit score is a little lower and you’re offered a higher interest rate, you can purchase mortgage points to lower that rate. 

So if you have the ability to save up and are worried about your interest rate, save up at least one point so that you can buy down your interest rate.  This will save so much more money in the long run.

Call Or Text Teresa DiPeso at 609-780-1434 for all your real estate questions and needs!