As we head into a new year, it remains a sellers market. No doubt, it will probably remain a sellers market with interest rates expected to go up again in 2016.  bankrate.com says, “sales of single-family homes will rise modestly, again, and median sales prices should be up 3% to 5%.”

With that said, bankrate.com gives some buying and selling tips for 2016.  

 

IF YOU’RE A BUYER, DON’T OVERSPEND

In a sellers market, there will be bidding wars.  And it’s tempting to overspend.  But if you pay an inflated price, you could have trouble reselling the home once prices stabilize or go down.  However, if you fall in love with a home, and plan to stay in it a long time, paying more might be worth it.  It’s best to look at comparable homes in the community and then set a bid ceiling.

IF YOU’RE A SELLER, DON’T OVERPRICE YOUR HOME

Setting a price 5-10% above the market is not unreasonable.  You’re more apt to get an offer.  But if you start too high, you might end up with an expired listing.  A lot depends on what other homes in your neighborhood are going for and whether your house has better qualities.  

Since it is a sellers market, bankrate.com says there’s no need to pay closing costs or offer other incentives such as letting the sale be contingent on the buyers selling their home.  If you do this, you’ll want to have a special clause called a “kick-out” clause so you can continue marketing your home instead of it being taken off the market.

 

BUYERS:  START SHOPPING NOW

Don’t go loan shopping after you find a home.  Get a pre-approved letter and start immediately.  Otherwise, you risk a home getting snatched up while you’re loan shopping.  Make sure to have an action-ready inspector ready, as well.  Have your agent find out what sellers want most and see if you can accommodate.  That’ll make you stand out from other potential buyers. 

 

BE CAUTIOUS IF BUYING NEW

Some builders are trying to crank out homes just as fast as they can.  But it might not always be quality work, especially if they don’t have trained workers who could end up doing a sloppy job and try to cut costs.  So it’s best to do your research on the builder and hire an independent inspector.    

 

SELLERS:  CAREFULLY CHOOSE YOUR UPGRADES

Rarely do upgrades pay for themselves.  But when it comes to the kitchen and master bedroom, you might get your money back when it comes time to sell.  

The kitchen is considered the “new living room.”  Make it look homey.  Upgrading to granite countertops and appliances is a nice touch, but even more important is upgrading the hardware for cabinets, getting new faucets and lighting fixtures, and adding fresh wallpaper.  

The same advice applies to master bedrooms/bathrooms.  It’s also important to scour appliances, bathtubs, showers, etc. and declutter. 

 

BUYERS:  LOOK FOR HIDDEN COSTS

Look for the origination fee (the amount you’re paying the lender).  Hire a home inspector, even if the mortgage insurers doesn’t require one. It’s good for peace of mind.  Keep in mind, you’ll probably be paying property taxes several months in advance.  You’ll also have to pay an appraiser and might have to get private mortgage insurance, depending on your credit rating and down payment.  Don’t forget about home insurance and HOA fees, as well.

 

SELLERS:  ARE YOU READY TO MOVE?

Since it is a sellers market, you should be able to sell your home quickly.  But if it does sell fast or faster than you anticipated, you’ll need to make sure you have a new home to go to.  If not, you can request a lease-back from the buyer, allowing you to stay in the home until you find another one.  Usually, lease-backs are limited to 60 days.

 

BUYERS:  LOOK FOR AN UP-AND-COMING NEIGHBORHOOD

bankrate.com recommends looking for a home with proximity to a new or resurgent business center, a new major employer, and new retailers/restaurants.  

 

DON’T PLAY THE BUBBLE GAME

Both buyers and sellers try to time their home purchase/sale to coincide with the “pop” of this housing bubble.  bankrate.com says most real estate cycles don’t explode like they did in 2007-2008 but rather deflate slowly.  Regardless, real estate continues to be a good, long-term investment.