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1. How much is my
home worth?
2. Why do some homes
sell quicker than others?
3. What are my options
if I am thinking of selling my home?
4. Which home improvements
will add decent value to my property and which won't?
5. Can I make my home
"better" looking without spending a cent?
6. Should I appraise
my home before putting it on the market?
7. What is an MLS?
8. Do I have enough
homeowner's insurance?
9. What is "escrow"
and what does it mean to buyers and sellers?
10. What does my Realtor®
mean when referring to a "closing"?
11. What are closing
costs and who generally pays them - the buyer or the seller?
How much is my home
worth?
In today's fluctuating real estate market, answering that
question can be extremely complex. Generally, there are four
criteria that can help homeowners determine an accurate (as
well as maximum) selling price for their home.
First, investigate area trends. Check with a real estate
agent to determine the current selling price of homes in your
area. Real estate firms generally survey properties in the
surrounding areas and translate that to computerized reports
divided into specific communities. Compare your home with
similar homes that have sold. This should provide you with
an idea of what homes are being sold for as opposed to what
they are listed for.
Next, pay attention to "migration" trends and see
if people (and businesses) are moving in-or out-of the area.
One of the best ways to track movement is to read the business
section of the local newspaper or talk to the Chamber of Commerce.
If there is a lot of movement into the community, chances
are home prices will be going up at a relatively rapid rate.
Obviously, if there is heavy migration out, prices will be
flat or could even drop.
Remember, as well, that two side-by-side homes can command
radically different prices. Part of the reason can be attributed
to certain features that may enhance the value of the home
in the buyer's eyes. For instance, older homes that have been
upgraded with new fixtures, windows or room additions command
higher prices than homes that remain unchanged. In many cases,
with minimal expenditure, these price-enhancing features can
be added and sellers can often increase the property's value
by thousands of dollars. Unchangeable elements such as lot
size, or single story versus two-story can, of course, impact
the value of adjoining homes.
Perhaps one of the most critical elements in selling a home,
is pricing. By carefully following the local real estate market,
or contacting a real estate professional, not only can sellers
determine the right time to sell but, more importantly, they
can also ascertain the correct price to list the property
to get it sold.
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Why do some homes
sell quicker than others?
They are priced right. Pricing is usually the number one
determinant as to how short or long a home will be on the
market. Obviously, the property has to be priced competitively,
but do not set the price based upon what you heard a neighbor
received for their home. Adjacent homes can be radically different.
They both may have the same floor plans, but improvements,
a more desirable location in the tract, and other seemingly
small variations can make a significant difference when it
comes to price.
In determining the right price, one of the most important
traits you need is objectivity. Homeowners, naturally, have
an emotional attachment to their home, and because of their
feelings they oftentimes overestimate what their home is worth.
Despite the attachment, try to be practical and logical. Make
a competitive study of recent sales that are comparable to
your home. Evaluate price per square foot, age, condition,
location, schools, and extras.
Remember, that the value of your home can be impacted by
developments that are not yet in place. Is there vacant land
nearby? If so, what businesses, or structures will be erected
there in the future? Is it a desirable addition to the neighborhood?
If there is vacant land, visit the local planning and zoning
commissions to see what might be built or, check with a local
real estate professional to help you find out what development
plans might be in the offing. He or she should also explain
the elements that go into pricing and why. And, ask the real
estate associate about a CMA (Comparative Market Analysis)
and what it means.
Remember, too, that little things can make a big difference
once the home has been priced. Cosmetics are crucial. Spruce
up the property as much as possible. A little exterior paint,
some new shrubbery, and making sure that the house is always
neat and clean can make a tremendous difference. The most
important impression is the first-and the first thing buyers
see is the exterior. It should look good.
To get an idea as to how price is determined, contact a local
real estate professional. Ask them to carefully choose an
associate who knows your neighborhood.
In today's market, there are buyers for homes that are priced
competitively. A lack of "action," usually indicates
that your property is one of those that has been priced incorrectly.
Most important, be objective. Try to look at your property
as if you were a buyer going through it. What do you like?
What do you dislike? How does it compare to other properties
in the area? Is it worth more? Is it worth less? Answer those
questions objectively and you will not only be on the way
to pricing your home correctly . . . but to selling it too.
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What are my options
if I am thinking of selling my home?
1. Sell it yourself.
Obviously, the advantage of selling the home yourself is
you do not pay a commission. But, statistics show when you
team up with a real estate professional, the chances of selling
your home in a shorter time span (and frequently for more
money) are much better.
There are pros and cons to each technique. To determine which
road you are going to take, start by asking yourself one question.
If you needed a medical operation would you perform it yourself,
or have a professional do it for you?
Selling a house in today's market is not like it was a decade
ago. The market, as well as consumers, are much more astute
and the laws more complex. Liability and disclosure can complicate
the sale.
Perhaps the biggest obstacle a seller faces when they decide
to market their own property is emotional attachment. Many
owners are blind to flaws that a real estate professional
can see. And, a good Realtor® goes further and recommends
steps the homeowner can take to make the property more appealing,
such as, a fresh coast of paint in the kitchen, replacing
a rusty mailbox, or removing clutter to make the home appear
more open. The objective view can be the difference in making
a sale.
2. Engage the professional services of a Realtor®.
An experienced Realtor® can also provide a seller with
a Comparative Market Analysis (CMA), so the owner knows what
the home is actually worth, instead of what they feel it's
worth.
It's important to interview at least three Realtors before
you actually list the property. Make sure they work full-time.
Part-time dabblers in the profession are people you should
avoid at all costs. Ask them if they have a marketing plan
for your home. Inquire about the number of transactions they
closed last year, and then compare those results to the other
agents you have interviewed.
The decision to sell your home is one of the most important
financial decisions you will make. Take it seriously.
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Which home improvements
will add decent value to my property and which won't?
While some home improvements can add significant dollars
to the resale value of a residence, others are barely worth
the investment. So how can homeowners decide which improvements
will add significant value and which won't? Here's a few tips
on cost-effective improvement; upgrades that can make the
difference in the sale price and add value to your property.
As a rule, kitchens and baths are the two areas that most
often make the difference in a sale. They make the most impact
on buyers, and definitely impact what buyers perceive the
property is worth. But, kitchens and baths are not inexpensive
to upgrade.
The national average for remodeling an entire kitchen is
more than $20,000 with some running upwards of $30,000. Complete
remodeling can include cabinets, floors, counters, sinks,
appliances, lighting fixtures and new windows.
But, there's a way to put a new look on this important area
without spending significant moneys. For a relatively low
cost, homeowners can make spot improvements. For example,
for as low as $1,000 the existing countertop can be replaced
with a Formica top. For $2,500 to $3,000, the existing cabinet
faces can be replaced with solid oak faces. Homeowners can
buy a new sink at a home furnishing store and have a contractor
install it for approximately $300 - $400. The end result is
improved appearance and usually a higher selling price for
relatively minimal expenditure.
Other areas that influence price: central air conditioning
is an important feature for which buyers will usually pay
extra. Room additions, on the other hand, may add value, but
may not end up paying for themselves. Upgraded carpeting,
top-of-the-line windows and vaulted ceilings can command higher
resale prices, but it is unlikely that the seller will be
able to recoup their original investment.
Existing features that have diminished with age can usually
be repaired without a lot of added expense. Hardwood floors,
for instance, cost $1.50 - $2.00 per square foot to refurbish,
but it is a good investment because buyers are willing to
pay more for the refinished appearance.
For older homes, people are more energy conscious, so improvements
in the insulation of windows, doors and storm doors are smart
investments.
In general, neutral, light and bright are the best rules
to follow for decor. Freshly painted walls and clean carpeting
also help to sell a home faster.
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Can I make my home
"better" looking without spending a cent?
One sure way for you house to appear larger and more appealing
is if clutter is eliminated and furniture and household goods
are reorganized.
In fact, the time to have a garage sale is before you put
your house on the market, not after it is sold! When you decide
to sell, start going through your closets and cupboards, eliminating
items you don't want to keep. Do the same in the garage and
backyard. Get rid of, or store, odds and ends. It's interesting
to note that the longer someone lives in a home, the more
used to the clutter they become.
Unfortunately, closets, cupboards and garages brimming with
"old treasures" make a home look small and cramped
to a prospective buyer. Sellers should also carefully examine
their furniture, and consign items that are not needed to
the storage or the garage sale. Most homes occupied by the
same owner for several years tend to be somewhat overfurnished.
Erring on the side of space, not clutter, makes for a more
marketable home.
Another "item" that adds to the clutter of a home
are excess knickknacks. Scrutinize the kitchen for rarely
used utensils/gadgets; miscellaneous items in closets and
cupboards, even small furniture and throw rugs, that can be
neatly stored. Pack or give away clothing that will not be
worn as well.
Rearrange and organize. Remove as many articles as possible
from the kitchen and bathroom countertops to the cupboards
below. They'll still be within handy reach in the newly created
space. Organize closets. Clear off your night stands and bureaus.
Size up the arrangement of your furniture.
Examine the walls and windows. Do they need repainting or
new window coverings? For some expert, objective advice, have
your real estate professional go through the home. Realtors
know what enhances a property's appearance and what hinders
it. One last hint -- don't forget the outside. Sweep the garage
and sidewalks, trim the lawn and bushes, wash all the windows,
inside and out. It all helps to make your home look fresher,
lighter and larger.
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Should I appraise
my home before putting it on the market?
It isn't necessary, because rarely does an appraisal have
anything to do with the price the seller will actually get
for their property. Here's why . . .
First, to determine the asking price, a seller's agent will
look at the "comps", the price for which "comparable"
homes in the area have recently been sold. Based upon these
prices, the seller should adjust what they are asking. For
example, if similar properties in the area are selling for
$210,000, then trying to get $250,000 usually does not make
sense. Thus, before putting the house on the market, a seller
should review the "comps", which can be obtained
from a local real estate professional.
The appraisal process used by a licensed appraiser is more
theoretical than a "comp," and doesn't predict what
a buyer will be willing to pay. Why would anyone ever get
an appraisal then? Although rarely needed by buyers or sellers,
appraisals are normally required by lenders who are considering
making a loan.
However, sellers of expensive, custom homes may get appraisals,
because there may not be any homes in the area that compare.
Buyers of these one-of-a-kind homes will also have more confidence
in an asking price that is supported by an appraisal.
Before determining an asking price, sellers should give their
agent a list of major improvements done to the home, such
as a new roof or upgraded heating system. This will help the
agent consider all the factors when recommending a price.
It will also put him or her in a better position to sell the
house, and all of its features, for the best possible price.
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What is an MLS?
MLS stands for "Multiple Listing Service," which
is usually a computerized listing of virtually all the homes
that are for sale in a specific area.
When a Realtor® lists your property for sale, they pay
a fee and your home is placed on the MLS system. The big advantage
to sellers is that the MLS is the #1 resource used by buyers
(and agents) to locate homes. Properties that are not listed
(usually those being sold by their owners) are not on the
MLS, thus there are many buyers and Realtors who will not
be exposed to the home.
The MLS has become such a standard in real estate that no
serious broker would think of trying to sell real estate without
it. It would be like an accountant trying to work without
a calculator. About the only residential brokers who might
not use the MLS are those who exclusively handle foreclosed
properties, or high-end homes owned by celebrities and the
like.
The MLS provides a surprising amount of detail, depending
upon the area of the country it may include: the location
(by zip code), size of the home (square footage), size of
the lot, number of bedrooms and bathrooms, extra rooms (such
as a den, family room, formal dining room, or enclosed patio),
amenities (such as a backyard, fireplace, hot tub, pool, kitchen
features, new carpet and drapes), capacity of garage, age
of home, and of course, the selling price and terms.
Buyers can narrow their house-hunting searches dramatically
by using the MLS. For instance, their real estate professional
can do a computer search and ask for a listing of all homes
within a certain location and price range that have two or
three bedrooms and that are not more than ten years old. Not
only will this request generate a list of viable possibilities,
it also helps buyers gauge, roughly, what they can expect
to get for their money, and to compare the value of the homes
listed.
Thus, the MLS is more than a system that lists properties.
It's an aid to both buyers and sellers, and is a definite
asset to consumers when it comes to real estate.
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Do I have enough homeowner's insurance?
Unfortunately most homeowners are inadequately insured. In
fact, many not only lack financial protection for the equity
in their home, but for their personal property as well.
Why?
It usually happens because lenders only require home buyers
to carry enough insurance to cover the value of the mortgage.
Then, in the event of damage or destruction to the property
(fire, flood, etc.), the lender's investment is covered. Unfortunately,
this required insurance is only for the lender's money. It
does not cover the homeowner's personal property, or their
equity.
When deciding on insurance, homeowners should carry enough
to cover the replacement value of the home and all of its
contents. The key word is replacement. As the homes appreciates,
so will its replacement cost. Thus, the policy should be reviewed
every year or two, adjusting the amount of coverage if appropriate.
A word of caution, however. Do not insure for more than the
value of your real and personal property, because an insurance
company will not reimburse more than the replacement value
of the property. Consult with a reliable agent to ensure that
you have the correct amount of insurance.
The most common homeowner policies cover the home and its
contents without requiring an itemization of all furniture
and personal effects. Items over a specified value, such as
jewelry and artworks, are generally listed separately and
usually require an additional premium.
Remember, few homeowners think about the value of their home
or the replacement costs-until a disaster hits. The key is
to be pro-active. Get the coverage you need, before you need
it.
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What is "escrow"
and what does it mean to buyers and sellers?
Escrow is a process that begins when the purchase offer papers
are signed by both parties, and ends when the loan is approved
and all the necessary requirements have been fulfilled by
both the buyer and the seller.
The escrow holder is an intermediary, and an agent of both
the buyer and seller. The escrow holder is given the buyer's
deposit, and holds onto all funds until the agreement is finalized.
They notify the seller when the deposit has been received
and if the check has cleared the bank. The escrow holder also
draws up a set of instructions, itemizing things that have
to be done to the property before it is sold and the title
is transferred.
For example, if the seller is required to supply a termite
inspection, the escrow holder would track this obligation
and make sure it is fulfilled before any funds are transferred
to the seller. Findings in the termite inspection report must
be corrected on or before the close of escrow. If the report
calls for a plumber, roofer or other contractor, the agent
would advise the seller and get authorization for work to
be done.
The escrow company also interacts with the title company.
The escrow holder receives a complete ownership history of
the property and any liens on record in the preliminary title
report. Anything that is out of the ordinary, such as condo
liens, judgments, etc. against the buyer and the seller must
be clarified prior to the sale of escrow.
The escrow process can be any number of days depending on
what is agreed upon between the buyer and seller. To assure
a timely closing, the buyer should do things like, inform
the escrow holder of the name and phone number of their insurance
agent as soon as possible. The homeowner insurance policy
needs to be ordered early, so verification can be made with
the lender. The lender will not fund a new loan without a
homeowner policy. If there is a delay, the escrow process
may be held up.
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What does my Realtor®
mean when referring to a "closing"?
A closing is the meeting where title and money are exchanged
between the seller and the buyer, and the sale of a home is
finalized.
At the closing all the progressive steps in buying a home-from
the acceptance of the offer, title search, home inspection,
buyer's loan application to approval, etc.-come together in
a final transaction. The documents are ready to sign, the
buyer is ready to hand over the purchase price, and the seller
is ready to transfer title (and the keys!)
Usually held at the offices of a title company, the closing
takes less than an hour and sometimes less than 30 minutes.
The meeting is always attended by the buyer, usually the seller
(although his or her signature can often be obtained in advance),
the brokers and/or attorneys, and of course, the title company
representative-who acts as the intermediary for the seller
and buyer in the transaction.
What goes on during the closing? First the buyer reviews
all the loan documents, which describe the loan amount, payments
and itemization of closing costs, including impounds for tax
and insurance, etc. If everything is as it should be, the
buyer signs the loan papers.
Next, the buyer reviews and signs the title documents, making
sure the deed is recorded as desired (joint tenancy, tenants
in common, community property, etc.) By the time the closing
is held, the title company has already conducted a title search
and verifies that the title is held by the seller, and that
no liens are held against the property. If there are any obstacles
or other conditions that could potentially undermine the sale
of the property, the title company will tell the seller about
them (in writing) at the closing.
Assuming, however, that the funds are in order, the deed
is correct and the title is clear, the final step is the disbursement
of funds to the seller for the purchase price of the home,
and the presentation of the keys to the buyer. The buyer may
also receive a refund for overpayment of closing costs, which
were paid out of his or her deposit check.
What should a buyer be prepared to bring to closing? That's
easy: everything. The buyer should bring all of the documentation
relating to the transaction, including a canceled check for
the deposit paid with the offer, just in case the title company
or lender asks for it unexpectedly. The title company should
already have the loan funds in its possession, but the buyer
needs to bring a cashier's or certified check for the purchase
amount minus the loan amount (that is, the down payment).
Ideally, the closing will go through "without a hitch."
Some delays, such as receiving loan funds from the lender
or an error in the loan documents, are unpredictable and therefore,
uncontrollable. Other delays, however, can be avoided if they
are anticipated and, if possible resolved ahead of time.
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What are closing
costs and who generally pays them - the buyer or the seller?
First, the responsibility of who pays for closing costs is
always negotiable. Local custom may dictate which fees the
buyer will pay and those the seller pays.
Typically, the buyer pays for home inspection services and
escrow, deed preparation and recording fees. He or she may
also pay for title insurance, since this is required by the
lender. The buyer is also responsible for any fees or costs
associated with obtaining the purchase loan.
The seller customarily pays the real estate agent's commission,
as well as costs associated with transferring an unencumbered
title, such as a title search, reconveyance deed and documentary
transfer tax. Often, a seller will sweeten the deal by offering
a one-year home warranty.
Who will pay for what closing costs should always be clearly
spelled out in the purchase offer. A creative sales associate
will consider the cash, income and tax situation of the home
seller and the buyer when constructing an offer. For instance,
if the buyer is short of cash, the agent may ask the seller
to pay the buyer's loan points up front in exchange for some
other concessions from the buyer. In this scenario, the buyer
and seller benefit-and both get what they want.
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