Just like every coin has two sides, so does the real estate market. It may lead one to great heights but also make others fall down. Most of the people are carried away by the rumor and fall into the traps of myths which drive them away from the ground reality of the market.
Following is the list of myths one should be careful and aware of while dealing with the real estate sector.
Myth #1: Value of properties always appreciate
It is commonly believed that the prices of property always rise because of the high demand and low supply. But 2008 housing crisis in the U.S burst this bubble, concluding that, like every other market, even the real estate market can show a downward trend in the prices.
Myth #2: It is always a sellers’ market
The real estate market may seem very liquid but it isn’t. It takes around 3-6 months to sell off a property. The higher the rate at which one wants to sell the property, the more the time taken to do so. Therefore it’s not easy to unload a property.
Myth #3: Future development will increase your return.
Future development is highly unpredictable especially in developing countries like India. Often a rosy picture is painted in front of the buyers about the high returns they will surely get in the near future because of the development of the surrounding area. But one should keep in mind that the frequency of the delay and cancellation of these development projects, because of which one may lose instead of gaining.
Myth #4: It is a risk-free investment
Yes, indeed investing in the real estate market is a safer option as it provides a mid-way for investors who aim at balancing high-risk, high-returns (equities) and low-risk, low-return (bonds). But it carries its own risk factors with itself like – fraudulent developers, construction delays, land disputes, etc. Thus not leaving it a completely risk-free investment.
Myth #5: Real estate is only for high rollers
The fact can’t be denied that the prices are quite high in the peak and metropolitan areas due to population migration and growth opportunities. But the demand for affordable housing is higher and thus many options are being made available for middle-class families than for high rollers.
Myth #6: Local builders offer cheaper rates
Not judging a book by its cover, one must not feel that the local builders would offer them properties at relatively cheaper rates than the well-established builders. Sometimes these well-established builders may also offer properties at lucrative prices to build their brand value.
Myth #7: Renovating the house will invite higher returns
Generally, people refurbish their houses before selling them off with an aim of getting higher returns. However, it’s not always possible. The cost of property largely depends on the area where it is located. A lavish house with bad surroundings won’t yield a high return.
Myth #8: It is impossible to find a property below market rates
The rate prevailing in the market is the average price of the property. One can easily find a property above or below the prevailing market rate with the help of dedicated websites, forums, agents.
Myth #9: Renting is an unwarranted headache
Just like idle money won’t grow on its own, similarly keeping your property idle won’t yield you anything. The fear of finding a reliable tenant or the thought of not getting high returns, restrain one from renting out its property. But one should keep in mind ‘something is better than nothing.’
Myth #10: Real estate is unprofessional and unorganized
Day by day the real estate market is becoming more and more professional and organized. Even the government has passed ‘Real Estate Regulatory Act, 2016 (RERA) to make the sector more organized and dispute-free.