5 Tips for Buying or Selling a Home in 2016

Buying or selling a home in 2016 can be both easier and harder than it’s ever been. For first-time home buyers or sellers, there is a lot to navigate. This is especially true for millennials, who are beginning to come out of their economic shells, get married, start families and buy their first home.

Buying or selling a home is easier because there are an incredible array of tools and websites to help you do it. In-depth information on homes, neighborhoods, prices, school districts, etc. helps to give you a full picture.

However, it’s also more difficult. There is so much readily accessible information that the average home buyer or seller can get caught up in “paralysis by analysis.”

Taken together, you’ve got a recipe for confusion and frustration.

But it doesn’t have to be this way. By avoiding these five common home buying or selling mistakes, millennials — and every other group of home buyers and sellers — can successfully tackle the real estate market.

Mistake #1: Assuming the real estate process is the same as when your parents bought their house

Not too long ago, the only way to buy or sell your home was to work with a real estate agent. That’s how your parents did it and their parents before them and so on. So why wouldn’t that be how you do it?

The answer is easy. You are most likely already working in a self-directed manner. If you visit real estate websites to see what’s for sale in your neighborhood, share a listing with a friend or ogle pictures of your dream house online, you’re gaining information that was until recently closely guarded. The California Association of Realtors^® reported in 2015 that home buyers are spending approximately four and a half months searching online.

There’s still definitely a place for the full service agent experience. But there are also a growing number of options where you can handle parts of the home buying or selling process that you’re comfortable with on your own using online tools and then access expert advisors when you need help with the trickier parts of the transaction, saving you thousands in commission along the way.

Consumers, especially millennials, are gravitating toward this approach. They instinctively understand it because it follows the unbundling trends we’ve seen in other industries, like people doing their own taxes or trading their own stocks.

Mistake #2: Forgetting that you can actually do a lot of this yourself — and save some money along the way

Many people, especially first-timers, don’t realize that when it comes to selling your home, there is a lot you can handle yourself. You can create your own listing, upload pictures of your house, set the price (with a little bit of comparative market research) and handle the showings. You can even conduct a lot of the negotiations yourself.

Remember, a seller’s agent typically charges six percent commission of the asking price of the home. (Half the commission is paid to the buyer’s agent.) On a $300,000 house, that’s $18,000. Sellers need to understand what the agent’s services include to determine if these are tasks they could do on their own to save a buck — for example, setting up the listing, getting the home on the Multiple Listing Service (MLS) boards where housing inventory is shown and perhaps managing some showings.

Instead of shelling out that six percent, take advantage of new online real estate options. There are brokerage services that will help you get your home on the MLS boards and more for a flat rate. Then you can decide how much more you want to take on or outsource. You are better prepared to do more in the real estate game than you might realize.

Mistake #3: Flying blind when it comes to pricing and neighborhood stats

When you’re buying or selling your home, which can easily be the largest financial transaction you’ll make in your lifetime, it’s not the time to take a dartboard approach to pricing. You need to do your homework.

Fortunately, there is a huge amount of information available on home pricing, neighborhoods, school systems — basically, everything you care about is easy to research. This is a moment where your Internet browser can be your best friend. Any of the major online real estate sites have pricing tools and deep information about trends. It also makes sense to read up on the neighborhood in the local papers and visit open houses of competing homes to make sure you’re pricing your home properly or making an appropriate offer. An informed buyer or seller is a smart one, and today consumers and pros have access to essentially the same data.

Mistake #4: Assuming you should buy at the asking price or, if you’re the seller, take the first offer you get

You might not be a born negotiator, and that’s OK. Many people are uncomfortable with the give-and-take of negotiation and feel unsure about how to approach it. For them, this is a time to work with a professional. Hedge your bets and choose the real estate service that gives you expert advice or help when you want it. For many others, getting through the negotiation to buy or sell a home is not really that difficult — as long as they’ve avoided Mistake #3 and know plenty about the pricing dynamics and trends in the area. Know the facts on comparable sales and competing inventory. Remove emotions from negotiations. And determine your highest/lowest price before you begin negotiations.

Mistake #5: Getting overwhelmed by the process (because it isn’t really that complicated)

This is the most important mistake of all to avoid.

The truth is that you can do this. Millions of people already are. In fact, 45 percent of home buyers say they alone found the property they purchased, according to the California Association of Realtors. And about one-third of real estate consumers no longer use full-commission or traditional listing agents, according to the National Association of REALTORS^®. These consumers are choosing ways to buy and sell homes that offer greater choice over the professional services they want to pay for and greater savings if they decide to take on more of the process themselves.

Market Update: It's a Seller's Market

Real estate agents that sell houses in La Jolla, Pacific Beach, Point Loma and Ocean Beach say that now it is a seller's market. It is a great time to sell because many buyers are looking for a house and there aren’t that many houses listed. 

“If a house is market-ready, clean and neat and has a good location, it sells fast. Many families don’t want to renovate a lot before they move in, so they buy a house that is ready to move in,” says real estate agent Michelle Serafina.

Agents Tony Franco and Lionel Silva note that the hot buying season has been early. It started already in December, although it usually is in March to June.

In 2015, the prices were at the same high level as in 2007, and now the prices have steadied. Buyers are active, but they don’t buy anything. Some sellers check what other sellers in the same area have gotten and try to get their prices higher. Agents note that buyers are smart and that they notice when a house is overpriced.

Interest rates are also quite low, so people are willing to take a loan on a house. Some people also buy houses now with cash.

“One out of 10 deals I sold, a buyer received a loan. That also saves buyers money. For many years, people invested in the stock market, and after that, they are now willing to put the money for a house or apartment,” says Franco.

Listing agent Chris Mannerino says there will be a correction in the prices at some point.

“Nobody knows how shortly markets change, because global events are usually a chain reaction. But banks don’t give out house loans so much than they used to, so some kind of bubble with loans is avoided for the most part,” he says. 

Lionel and Tyler Silva say that during the last 12 months, rents have raised 20 percent or more, so families that rent want to buy a house. Meanwhile, Michelle Serafina says families are paying attention to comfort.

“They want quality of life: a house that is in good shape, large yard, space that they need and short distance to schools,” she notes.

Agents say that some homes are now sold even before listing. Lionel Silva notes it’s not always wise to sell a house that way.

“Why would you sell before every potential buyer has seen it?” he notes. “With more buyers competing, it is possible to get the price that you want, or even more.”

US Cities With the Fastest Growing Rent Increases

The cities with the fastest-growing rents in the U.S. probably are not the ones you’d expect. That’s because they’re not the most expensive cities for a renter to live in (e.g., San Francisco, New York City, Washington, DC). Instead, rents are shooting up in places that seem like bargains compared to those high-priced metropolises ($3,550 for a one-bedroom, San Francisco? Really?). But if they keep up the pace—and they probably will—these cities won’t be bargains for long.

Rents rose 2.7% across the country in March compared with a year earlier, according to Apartment List, which analyzed its own data for the report. That brought the median rent of a one-bedroom apartment to $1,150 and a two-bedroom to $1,300.

And they jumped the highest year over year in Colorado Springs, CO. Rents in the fast-growing city, about an hour away from Denver, surged 11.4%, according to the report. That brought the median rent for a one-bedroom to $790 and a two-bedroom to $1,010.

“Rents are going to continue to increase very quickly,” Andrew Woo, data science manager at Apartment List, says of the Colorado city as well as other fast-growing towns. “There are so many millennials moving there. They’re really attracted by the quality of life there and strong employment opportunities.”

Colorado Springs may have the biggest annual rent hike, but these other cities weren’t far behind:

1. Orlando, FL: 8.9%

2. Providence, RI: 8.7%

3. Tampa, FL: 8.6%

4. Vancouver, WA: 7.3%

5. Reno, NV: 7.3%

6. Salt Lake City, UT: 7.2%

7. Austin, TX: 6.7%

8. Portland, OR: 6.6%

9. Fort Wayne, IN: 6.4%

It’s gotten so nuts in Colorado Springs that a day after local real estate agent Monique Allison-Vollmer put up a listing for a rental house in a good school district, she received 15 phone calls and 30 emails.

“It’s overwhelming,” says Allison-Vollmer, at Keller Williams Partners.

She blames the housing bust for the pinch. New development stalled in the aftermath of the financial crisis, when builders struggled to secure financing. It didn’t pick up until a few years later—leaving the city without enough homes to go around now that people are flocking in.

The large military community (nearby Fort Carson and the U.S. Air Force Academy) as well as the state’s legalization of marijuana (drawing not only stoners but also those in need of its medical benefits) have also proved to be big draws, she says.

“I’ve had several [people] call me and say we’re looking for rentals in the area because of the marijuana laws,” Allison-Vollmer says.

In Orlando, the jump in prices can at least partly be attributed to a high number of foreclosures turning homeowners into renters, says Ken Anderson, a local landlord and real estate broker at ApexOne Realty.

There is also a steady influx of new residents moving into the home of Disney World, drawn to its attractions, golf courses, and year-round warm weather, he says.

Many smaller landlords, who rent out just a single unit or property, are keeping prices steady because they don’t realize what people will pay to live there, Anderson says. But savvier property managers have begun to jack them up.

Since October, Anderson has begun to raise rents by about 10% on his nearly two dozen rental homes.

“And I’ve been getting [them],” he says.

The median monthly rental price in the Florida city is $980 for a one-bedroom unit and $1,110 for a two-bedroom apartment, according to the report.

Despite the hikes, putting a roof over one’s head was nowhere near the heights of San Francisco or New York City, where a one-bedroom rents for $3,300. In nearby Jersey City, NJ, it’s $2,550. Boston, at $2,500, and the Silicon Valley city of San Jose, CA, at $2,200, rounded out the top five most expensive cities to find a one-bedroom apartment.