The Today Show recently had real estate expert Barbara Corcoran on the show to discuss ten common real estate myths. The myths were broken up into the two groups they were held by, property sellers and property buyers. These myths are common misconceptions in the real estate market that real estate agents must deal with on a daily basis. With the economy in the current state it is in, it is important for everyone to understand that the real estate myths people commonly hold are in fact myths. Both buyers and sellers will benefit from these clarifications because they will both understand that sometimes you don’t have to have great credit to get a loan or that sometimes you can get the best refinancing rate from your current lender.

10 real estate myths for buyers and sellers

The truth about the housing market

In today’s uncertain market, fear runs rampant on both the buying and selling sides of the fence. Many myths need debunking. Here are five untruths held by buyers, and five held by sellers.

Buyer myth No. 1: The longer the house is on the market, the more you can negotiate.
When buyers ask, “How long has this property been on the market?”, they think “six months” means they can negotiate the price down. It more often means the seller is stubbornly holding on to their price.

Buyer myth No. 2: The sellers today are desperate.
Most aren’t. Always ask why the sellers are selling. It’s the key to finding how motivated and anxious they are. “I’m being transferred to Dallas” is a very different answer than “We’d like to find something bigger.” The first homeowner is hot to trot.

Buyer myth No. 3: You can’t buy a home today with less than 20 percent down.
FHA loans require only 3.5 percent down, and you can even ask the seller to pay the closing costs.

Buyer myth No. 4: You need good credit to get a good loan.
Once again, the FHA to the rescue! They’re happy to lend money to buyers with bad credit.

Buyer myth No. 5: You shouldn’t buy before prices have bottomed.
You can’t sharpshoot the real estate market. Once you identify the “bottom,” prices have already moved up.

Seller myth No. 1: Now’s the absolute worst time to sell.
Not necessarily. It depends upon where you live. Many of the worst hit markets, like Las Vegas, Phoenix or San Diego, are already beginning to turn around. And if you’re a homeowner who wants to trade up, the loss you’ll take on your current home will be more than offset by the bargain you’ll get on the next one.

Seller myth No. 2: Never respond to a low-ball bid.
All buyers today feel obligated to put in low-ball offers to see if the seller bites. If you respond with a reasonable counter offer, most buyers can be convinced to come up in price and make the deal.

Seller myth No. 3: The first offer is never the best offer.
Most sellers believe that it’s smart to hold out for something better. But four times out of five, the first offer is the best you’ll ever see.

Seller myth No. 4: ‘I can always reduce my price later.’
Sellers often price their home high for a few weeks just to test the market. But buyers shop by price bracket and if your house is in the wrong one, you’ll just help sell everyone else’s home while yours sits there overpriced. And reducing your price later in small increments puts you in the position of chasing the tide as it goes out.

Seller myth No. 5: Before you refinance, shop around.
You can if you want, but you’ll usually get the best deal from your current lender. And you’ll be able to negotiate your closing costs.

Source: Barbara Corcoran

People who buy in a buyers market are the smart ones.  Ask them if prices have dropped.  They’ll say yes.  Ask them if they think prices will ever go back up and they’ll say yes.  We can’t predict the absolute bottom or the absolute top in the real estate market.  Those who stay in it, make sound decisions, and actively pay attention will do well over time.

Watch for lowering interest rates and government incentives for buyers.  When my business partner, Ruthie, and I started selling real estate in the early ’80’s interest rates were over 14%.  Properties, especially, in downtown Charleston were still sellling.

It’s a great time to consider purchasing rental property as forcasters predict rental rates will be increasing.  Also, due to lowering interest rates, a buyer who is considering trading up will do well in this market.

The third quarter figures for Downtown Charleston in the area inside the Crosstown show that there have been fewer sales but at higher prices. The third quarter figures were compared to the second quarter figures of 2008. The third quarter figures show the time period stretching from July 1, 2008 to September 30, 2008.

In the third quarter of 2008, 38 fewer houses sold but the average list price increased by $271,900 and the average sold price increased by $218,480. In the third quarter there was a decrease in the percentage that sellers received of their asking price. In the second quarter of 2008 sellers typically received 94% of the asking price, but in the third quarter that percentage dropped to 90%.

For the third quarter of 2008 in the area South of Broad only one fewer houses sold but the average list price increased by $454,890 and the average sold price increased by $303,547. Despite the increase in prices sellers saw a decrease of 5% in the amount they typically received from their asking price. Also in this quarter, fewer houses went on the market but with a higher listing price.

Please Click Here for the full report.

The Associated Press reported that Americans felt better about the economy in August as a barometer of sentiment posted the biggest rise in two years amid falling gas prices.

Two reports suggested a bottom could be nearing for the housing market.

The Conference Board, a private research group, said Tuesday that its consumer confidence index rose to 56.9 from a revised 51.9 in July. That’s the largest gain since August 2006 and was above the 53 expected by economists surveyed by Thomson/IFR.

It’s also the second month in a row that sentiment improved, after a six-month slide since January, but it remains about half what it was a year ago.

An article published August 26, 2008 in the New York Times stated that home sales across the United States, in the month of July had increased 3.1% since June. One third of the properties that sold in July were properties that had gone through foreclosure, but banks were still able to sell the properties at a reasonable price. The prices of previous owned homes were 7.1% lower than July 2007 but the inventory of homes and apartments increased 3.9%. The 3.1% increase in sales of previously owned homes for July was the biggest increase on a month-to-month basis since February 2007. The demand for condominiums has risen 3.4% while prices of apartments have fallen 2.7%. One economist quoted in the article thought that prices have already bottomed out but no one knows how long they will stay at the bottom. The increase in the number of home sales in July will hopefully boost the number of sales that we will have in August.

Please click here to read the entire NY Times article.

The second quarter figures for Downtown Charleston in the area inside the Crosstown reflect the current trend in the housing market. The statistics spanning April to June of 2008 show an increase from the first quarter in certain areas, and will be compared to the quarter preceding as well as the same quarter of the previous year. As the number of sold properties increases in the second quarter, the number of listed properties begins to decrease and listing prices begin to climb.

As the market continues to change, we notice that the second quarter of 2008 leads in number of sold properties in relation to the first quarter. The sold price in relation to the asking price remains a constant 94% during the 2nd quarter of 2007 as well as 2008. South of Broad continues to sustain an average return of 94% of the asking price despite lower listing prices from 2007 to 2008. Please click here for the full report.

Note: The second quarter for 2007 had an average price per square foot of $1,011 which is abnormally high. This is because in June 2007 four houses inside the Crosstown sold between $3,955,000 and $7,200,000 which increased the price per square foot for the entire area. In the second quarter for 2008 no houses sold for over $3,200,000.

Realtors are working very hard to get our State Legislators to rescind the point of sale increase in property taxes. Read about all the details of Point of Sale Tax Increases. We have met with our local Charleston delegation recently to get their support and pass new legislation next year. Everyone needs to be aware that taxes are now based on the new sales price. For millage rates for Charleston County see Millage rates.

A recent article published in the New York Times discussed the statistics associated with the housing market in the U.S. as of May 2008. Standard and Poor’s has a housing market index called The Case-Shiller Home Price Indices that measures monthly changes in home prices in specific areas. The home prices that they use are only single family dwellings and do not include any new construction. The index uses statistics from both a 10 city composite and a 20 city composite. Nationally the Case-Shiller index found that home prices were down 15.8% since May 2007. The closest areas to Charleston that the index measures are Charlotte and Atlanta. The report shows that in Atlanta the percentage change in the past year was –7.9% and the percentage change from April to May was .6%. In Charlotte the percentage change over the past year was -.2% and the percentage change from April to May was 1.0%. The report also stated that there had been no increase in home sales in the areas that they research since August 2006. Charlotte, NC has had positive returns over the last three months, which attributed to their change of only -.2% over the past year. The article in the NY Times pointed out that some areas in the U.S. have seen a rise in prices, which should give both home buyers and sellers, hope. The article was quick to take away the hope that buyers and sellers may have by suggesting that home prices will probably not rebound for another year or two. Buyers and Sellers in our area should not become pessimistic because we have not suffered as much as other areas. Las Vegas’s real estate market has suffered to the extent that their sold home prices have fallen by over 28% and New York’s prices have fallen by 15%.

The Charleston Peninsula has seen a decline in home prices over the past year but they have not been as drastic as other areas in the U.S. Houses sold in the area of the Peninsula below the Crosstown have seen a decline of 5.91% since May 2007. In May 2007 the average sold home price was $1,233,510 and in May 2008 the average price was $1,151,136. The average days on the market since May 2007 have almost doubled from 123 days to 260 days. The area above the Crosstown has seen sold home prices decline approximately 23.1% since May 2007. In May 2007 the average sold home price was $426,293 and in May 2008 the average price was $327,680. The average days on the market for houses in that area have declined from 150 days to 128 days.

Home Prices Fall in May; Consumer Confidence is Flat click here

Over the last two weeks there have been some subtle changes going on in our Charleston real estate market. Since June 6, four houses have sold in the Charleston Peninsula and some prices have gone up. As you look at the following chart you will notice that I have broken down the Peninsula into the different neighborhoods and listed the average price of both active listings and the sold listings since January. I have also provided a price range for the active listings and the sold listings along with an average price per square foot. In both the French Quarter and Harleston Village the price for the average active listings have increased $7,000, while the average active listings price has decreased $84,000 in Ansonborough. In Wraggborough the average active listing has decreased $101,000 because a very large property was taken off of the market,which brings the average price back down to a reasonable price. Elliottborough-Cannonborough has seen the most movement in the last two weeks with the average sold price going up $15,000 and the average active price going up $70,000. Radcliffeborough has seen its average active list price climb up $15,500 and Wagener Terrace has seen its values rise as well. The average sold price in Wagener Terrace over the last two weeks has risen $4,000 and the average active list price has increased $10,000. There are more houses on the market now than in previous months but the good news is that prices in our area are not suffering with the economy.

Full Charleston Housing Market Report here.