Sales of single-family homes will rise modestly again in 2016 and median sales prices should be up 3% to 5%, trade groups and researchers say. While rising mortgage rates and a shortage of first-time buyers may temper that outlook some, the coming year should be another seller's market for real estate.
Despite an upsurge in construction, home inventories remain low and multiple offers are still common.
While a 6-month home supply is considered a balanced housing market, most markets are well below that, some significantly. Moreover, supporting fundamentals are far more solid than about a decade ago in the pre-bust years of 2006-2007.
With that as a backdrop, here are 10 tips for buying and selling real estate in a presumed up-market in 2016.
A bidding war might spur you to overspend, but paying an inflated price can make it tough to resell when prices stabilize or sink. (Read 2008-2009 real estate columns as a reminder.)
A decision to pay a premium isn't always an errant one, though, when you plan to live in the house long term. Rather than focus on overheated developments, look at comparable homes in neighboring areas with the same access to the schools and amenities that you value. Set a bid ceiling, and try to have a few other deals in the works so you're less inclined to overbid.
If you set a price from 5% to 10% above the market, you're more apt to get an offer close to your home's real value than if you start much higher and force your listing to go stale. However, if your home has better qualities than area comps, you have a bit more latitude.
No need to pay closing costs or offer other incentives to the buyer, especially if it means keeping your in-demand home off the real estate market. For example, a sale contingent on the buyers selling their home is reasonable but only with a contractual escape for you, often called a "kick-out" clause. That gives you the right to continue marketing your home. If a less-encumbered bid comes in, you then offer the initial buyers a set time of 48 or 72 hours to withdraw their contingency.
Are the best houses still getting snapped up quickly? Then don't wait until you find a home to go loan shopping. Keep your preapproval letter, as opposed to a basic pre qualification letter, in tow. Winnow your neighborhood choices before you shop.
Line up an action-ready inspector for an immediate property visit.
Have your agent ask what the sellers would value most in the sale. If you can accommodate a fast settlement or short-term, rent-back condition or fewer contingencies and conditions, that can make you stand out when that dream home is hanging in the balance.
4. Sellers: Know your influential rooms
Upgrades rarely pay for themselves, but there are 2 spaces that can make or break a home sale: the kitchen and master bath.
Because kitchens are the heart of the home, or the "new living room," make yours homey. Hide the coffee maker and toaster. Add simple decorative touches to the wall behind the sink.
Sure, new granite countertops and appliances are optimal, but new hardware for cabinets, new faucets, new lighting fixtures and fresh (neutral) wallpaper are inexpensive touches that carry weight. Thoroughly scour and depopulate the fridge and take magnets off it, please.
For bathrooms, always display a sparkling bathtub and commode. A new tub liner, or "shell," can make that marred tub look like new and save you from replacing it.
A new faucet, new lights, fresh caulking, a new towel rack or new mirror may be in order. Clean out the medicine cabinet. Of course, this doesn't mean you shouldn't declutter, depersonalize, paint and scrub the rest of your space, too.
When is a $250,000 house not a $250,000 house?
Answer: Always! Consider these and myriad other closing costs when buying:
Origination fee: On a $200,000 mortgage for a $250,000 home, assuming 3.5% interest and no points, you'd pay the lender about $1,800.
Home inspection: Even if the mortgage insurer doesn't require one, get one for peace of mind.
Property taxes: You'll usually pay a few months upfront.
Appraisal: The bank will need to determine how much the place is really worth.
Private mortgage insurance, or PMI: This depends on your down payment and credit rating.
Other pre-occupancy costs should include home insurance, title insurance and deed-recording fee, and possibly title insurance, survey costs, credit report fees, flood insurance and homeowners association dues/insurance.
On that $250,000 home, allow an extra $5,000 or more atop the sale price.
Buying or selling real estate in upstate New York requires an experienced realtor who understands real estate and who can help guide you through the process and help you avoid costly mistakes.