20 Real Estate Myths and What Is Actually True in California
By Matthew Martinez, Founder, CEO & Managing Broker, Diamond Real Estate Group. California DRE #01869679.
The real estate myths that cause the most damage in California are that you need 20% down, that the seller’s low property tax bill carries over to you, and that a high list price leaves room to negotiate. None of them hold up. Below are 20 common myths, each with what is actually true in 2026.
Some of these were half-true years ago. Others changed recently, such as how buyer’s agents get paid. A few are specific to California’s property tax rules, which surprise buyers who move here from other states.
Myths about buying
Myth 1: You need 20% down to buy a home
False. Fannie Mae’s HomeReady loan allows 3% down, FHA loans allow 3.5%, and VA purchase loans generally need no down payment if the price does not exceed the appraised value. Putting 20% down on a conventional loan avoids private mortgage insurance, but it is not required.
Myth 2: Renting is throwing money away
Not always. Rent buys flexibility and freedom from repairs, property tax and transaction costs. Buying usually pays off only if you stay long enough to cover the costs of getting in and out. Our renting vs. buying guide walks through the math.
Myth 3: Prequalified means approved
A prequalification is an estimate based on what you tell a lender. A preapproval involves documents and a credit check. Sellers take preapprovals far more seriously.
Myth 4: You should wait until rates drop
No one can time rates reliably. Freddie Mac’s survey put the average 30-year fixed rate at 7.32% for the week of October 22, 2026. Waiting can help or hurt, depending on prices and competition when rates move. Buy when the payment works for your budget today, and treat a future refinance as a possibility, not a plan.
Myth 5: Any loan over $832,750 is a jumbo loan
The 2026 baseline conforming limit for a one-unit home is $832,750, but FHFA sets higher limits in high-cost counties, up to a ceiling of $1,249,125. Check your county’s limit before assuming you need a jumbo loan. Our page on mortgages, loan limits and affordability in Sonoma County covers the local picture.
Myth 6: A buyer’s agent is free
Since August 17, 2024, buyers sign a written agreement with their agent that states how the agent is paid. California’s AB 2992, effective January 1, 2025, also limits these agreements to three months at a time. A seller may agree to pay some or all of the fee, but that is negotiable, so read your agreement.
Myth 7: New construction does not need an inspection
New homes can have missed flashing, drainage issues and incomplete work. An independent inspection is still worth it. See our comparison of new construction and existing homes.
Myth 8: Foreclosures are always bargains
Bank-owned homes are often sold as is, may have deferred maintenance, and can attract strong competition. Price the repairs before you price the offer. Our REO due diligence checklist lists what to check.
Myth 9: Buy the biggest home you can qualify for
Lenders approve a maximum, not a comfortable payment. Property tax, insurance, utilities and upkeep scale with size, and rural parcels add wells, septic and fire clearance.
Myths about selling
Myth 10: Spring is the only good time to sell
Spring usually brings more buyers, but it also brings more competing listings. A well-priced home can sell in any season. Local inventory matters more than the calendar.
Myth 11: List high, you can always come down
The first weeks bring the most attention. Overpricing wastes them, and later reductions signal a problem. Many overpriced homes sell for less than they would have at the right starting price.
Myth 12: Online estimates are close enough
Automated estimates cannot see condition, layout, views, permits or road noise. In wine country, where lots and homes vary widely, they can be far off. A valuation based on local sales is more reliable.
Myth 13: Renovating right before you sell always pays off
Repairs, paint and cleanup usually help. Big remodels right before listing often do not return their cost and can delay your sale.
Myth 14: “As is” means you do not have to disclose anything
In California, an as-is sale still requires the seller to disclose known material facts, and most residential sales require the Transfer Disclosure Statement and a Natural Hazard Disclosure. In high fire hazard zones, sellers also owe defensible space documentation.
Myth 15: Commissions are a fixed standard rate
Commissions have always been negotiable. After the 2024 settlement changes, listing fees and any buyer-agent compensation are agreed separately and in writing.
Myths about property tax and ownership
Myth 16: Your property tax will match the seller’s
Under Proposition 13, a purchase generally triggers reassessment at the price you paid. A long-time owner’s low bill does not carry over to you. Budget using your purchase price and the local rate, including any special assessments.
Myth 17: Parents can always pass their low tax base to their children
Not since February 16, 2021. Under Proposition 19, the parent-child exclusion generally applies only to a family home or family farm that becomes the child’s principal residence, and only up to a value limit ($1,044,586 above the factored base value for transfers through February 15, 2027). Rentals and second homes are reassessed.
Myth 18: Older homeowners lose their tax base when they move
Prop 19 also lets owners 55 and older, severely disabled owners and disaster victims transfer their tax base to a replacement home anywhere in California, up to three times, if they buy within two years of selling.
Myth 19: Any wine country home can be a vacation rental
Short-term rental rules vary by city and county, and some areas cap or exclude new permits. Check before you buy. Our guide to vacation rental rules in Sonoma County is a good start.
Myth 20: All agents are the same
Experience varies by property type. A condo in San Francisco, a ranch in west Sonoma County and a vineyard in Napa call for different knowledge. Ask an agent about their recent work with properties like yours.
Quick reference
| Myth | What is true |
|---|---|
| 20% down is required | 3% to 3.5% down is common; VA can be 0% |
| Seller’s tax bill carries over | Purchase generally triggers reassessment |
| List high, then drop | Early weeks matter most; cuts often cost more |
| As is means no disclosures | Known material facts must still be disclosed |
| Buyer’s agents are free | Pay is set in a written agreement and is negotiable |
Questions people ask
What is the biggest myth about buying a home?
That you need 20% down. Low down payment loans are widely available, though a larger down payment lowers your payment and can remove mortgage insurance.
Does buying a home in California reset the property tax?
Generally yes. A change in ownership triggers reassessment, usually at the purchase price, with limited exclusions under Prop 19.
Are real estate commissions negotiable?
Yes. Listing commissions and any seller-paid buyer-agent compensation are negotiated and put in writing.
If you are sorting fact from fiction before a move, our list of home buying myths goes deeper on the buyer side, and our buying process page lays out each step. Questions about your own situation? Contact us.
Sources & notes
- Fannie Mae: HomeReady Mortgage (3% down; FHA comparison)
- U.S. Department of Veterans Affairs: VA-backed purchase loan
- Freddie Mac: Primary Mortgage Market Survey (week of October 22, 2026)
- FHFA: Conforming Loan Limit Values for 2026
- National Association of REALTORS: The Facts About the NAR Settlement
- California Department of Real Estate: AB 2992 Initial Statement of Reasons
- California State Board of Equalization: Proposition 19
- This article is general information, not legal or tax advice. Talk to a tax adviser or attorney about your situation.
Last reviewed October 2026 by Matthew Martinez.
