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.
Why do some homes sell quicker
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
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.
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
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
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
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.
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
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.
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
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
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
Do I have enough homeowner's
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
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.
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.
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
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 downpayment).
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.
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