Do you know the difference between a home appraisal and a home inspection? Are you aware which home-buying costs are negotiable? What’s your understanding of legalities, such as when you can back out of your purchase agreement? Or, do you know when you actually, officially own your home?
Before the keys are actually handed over, there are so many different steps in the home-buying process and so many players that it’s not surprising many people are confused about key aspects of the process.
Just like NBC’s public service announcements from the ’80s stated — “The More You Know” — we here at Zillow think informed consumers make better decisions. Along with Ipsos, we fielded a survey to gauge how familiar potential home buyers were with the most common aspects of home buying. For the most part, we found buyers were fairly knowledgeable, answering questions correctly more than half the time. However, there were a few areas that tended to trip people up.
For example, 41% of prospective home buyer respondents think they are required to buy private mortgage insurance, regardless of the amount of their down payment. And 56% said the purpose of an appraisal was to determine if the home is in good condition, when in fact, that’s the purpose of a home inspection.
Perhaps most surprising was that 42% of buyers polled believe home values typically appreciate by 7% a year. In reality, home values have historically appreciated by 2-5% a year. It’s important that potential buyers not go into their purchase believing they will get a 7% annual return on their investment, especially in the coming years when little to no appreciation is expected in most markets.
So how much do you know versus those we surveyed? Check out our survey results to see how you measure up.