“Trust me, even the most straightforward transaction is going to have at least one hiccup on the road to closing,” says Irene Keene, a realtor in Connecticut.
Keene was approached recently by an undisclosed production company to ask if her clients were interested in participating in a “house-hunting type show,” but only after they’d already purchased a property.
“The point is, these are not ‘real’ buyers from the get-go,” Keene told me. It would “simply take too much time and cost too much money” to document the actual process of buying a house.
At one time or another, we’ve all gotten into house-buying reality television shows, and whether it’s because you love seeing inside other people’s houses for inspiration or you are starting to itch to buy your own home, you won’t learn about the dirty details of buying property by sitting on your sofa. These property-purchasing shows just make it look too easy.
Myth #1: You have complete control over buying the home you choose.
According to most experts, all numbers point to a seller’s market for the current housing market, which means there are more buyers than houses to sell. This leads to an increase in home prices, a shorter length of time spent on the market, and a lower overall number of houses listed.
In a seller’s market, buyers don’t have the luxury of time when considering different houses to compare. They are often pressured to make an offer more quickly, and they are competing with other buyers, some of whom can make cash offers or are not waiting on another house to sell. In other words, you don’t have time to bicker with your spouse over which house to choose, as they do on reality TV!
Myth #2: The cost of the house is the only way to measure whether or not you can afford it.
Although home-buying television shows introduced the sale prices of homes as a way to boost ratings, the overall price of the home is only part of the equation to whether or not you can afford it. You’ll also have to consider:
- The Appraisal:In a seller’s market, houses are more often appraised lower than their selling prices. In some cases, the buyer is responsible for the discrepancy between the appraisal and the sale price (for example, if the owner and buyer agree on a $240,000 price, but the house is appraised at $220,000, the buyer may have to come up with the extra $20,000 out of pocket)
- Closing costs: At 2-5% of the price of the house, closing costs need to be factored into any budget for a home-buyer using the services of a real estate agent. If your purchase is FSBO, it can be wise to hire an attorney for the transaction, which also comes with a cost.
- Insurance: The house’s exact location often determines the price of insurance, and if it is located in an area prone to environmental issues—like flooding, for example—the cost of insurance can be prohibitive for some buyers.
- Property Taxes: Taxes also play an important role in determining whether or not to purchase a home in a particular location, and you’ll need to consider your particular needs when purchasing the property: what amenities do residential taxes pay for, and do you need them, or should you be looking elsewhere?
- Homeowner’s association fees: These fees pay for the maintenance of common areas in particular housing complexes or developments, and they can increase your monthly payments as part of the privilege of owning property.
Myth #3: Buying a home is as simple as having your offer accepted.
Irene Keene points out that the process of buying a home takes months and months, far too long for a camera crew to tagalong with you. She outlines the timeline as follows:
- Touring properties: a month or more
- Contract negotiation: up to two weeks
- Home inspection, which often leads to more negotiation: another two weeks
- Underwriting the mortgage: 45 days from the date of the contract
“And at the closing, the real estate agent for the buyers sits there as the clients sign copious amounts of paperwork. Real sexy stuff, let me tell you!” She joked.
Purchasing a property might not be as glamorous or as simple as it appears on TV, but that doesn’t mean you should be discouraged. Not at all! Prepared with the right knowledge and expectations, you will have the upper hand when you finally foray into the housing market. The sometimes difficult process is punctuated with exciting victories. Touring homes can be fun and enlightening, and having your offer accepted feels great. But nothing will compare to holding the keys to your new home, knowing that you have made a solid financial investment in your future.