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.
Just look out for these major mistakes — and happy house hunting!
By Steve Udelson