Common Q&A About Selling Your Home
What is the difference between market value and appraised value?
The appraised value of a house is a certified appraiser’s opinion of the worth of a home at a given point in time. Lenders require appraisals as part of the loan application process; fees range from $200 to $300. Market value is what price the house will bring at a given point in time. A comparative market analysis is an informal estimate of market value, based on sales of comparable properties, performed by a real estate agent or broker. Either an appraisal or a comparative market analysis is the most accurate way to determine what your home is worth.
What’s a house worth?
A home ultimately is worth what someone will pay for it. Everything else is an estimate of value. To determine a property’s value, most people turn to either an appraisal or a comparative market analysis. An appraisal is a certified appraiser’s estimate of the value of a home at a given point in time. Appraisers consider square footage, construction quality, design, floor plan, neighborhood and availability of transportation, shopping and schools. Appraisers also take lot size, topography, view and landscaping into account. Most appraisals cost about $300. A comparative market analysis is a real estate broker’s or agent’s informal estimate of a home’s market value, based on sales of comparable homes in a neighborhood. Most agents will give you a comparative market analysis for free. You can do your own cost comparison by looking up recent sales of comparable properties in public records. These records are available at local recorder or assessor offices, through private real estate information companies or on the Internet.
How is a home’s value determined?
You have several ways to determine the value of a home. An appraisal is a professional estimate of a property’s market value, based on recent sales of comparable properties, location, square footage and construction quality. This service varies in cost depending on the price of the home. On average, an appraisal costs about $300 for a $250,000 house. A comparative market analysis is an informal estimate of market value performed by a real estate agent based on similar sales and property attributes. Most agents offer free analyses in the hopes of winning your business. You also can get a comparable sales report for a fee from private companies that specialize in real estate data or find comparable sales information available on various real estate Internet sites.
What standards do appraisers use to estimate value?
Appraisers use several factors when estimating a home’s value, including the home’s size and square footage, the condition of the home and neighborhood, comparable local sales, any pertinent historical information, sales performance and indices that forecast future value. For detailed information on appraisal standards, contact the Appraisal Institute at 200 W. Madison, Suite 1500, Chicago, IL 60606, 7 a.m. – 5 p.m. CT; 888-7JOINAI (756-4624).
Should I add on or buy a bigger home?
Consider these questions before making a choice between adding on to an existing home or moving up in the market to a bigger house:
* How much money is available, either from cash reserves or through a home improvement loan, to remodel the current house?
* How much additional space is required? Would the foundation support a second floor or does the lot have room to expand on the ground level?
* What do local zoning and building ordinances permit?
* How much equity already exists in the property?
* Are there affordable properties for sale that would satisfy housing needs?
Ultimately, the decision should be based on individual needs, the extent of work involved and what will add the most value.
What do all of those real estate acronyms in the ads mean?
If you find yourself stumbling over weird acronyms in a real estate listing, don’t be alarmed. There is method to the madness of this shorthand (which is mostly adopted by sellers to save money in advertising charges). Here are some abbreviations and the meaning of each, taken from a recent newspaper classified section:
* assum. fin. — assumable financing
* dk — deck
* gar — garage (garden is usually abbreviated “gard”)
* expansion pot’l — may be extra space on the lot, or possibly vertical potential for a top floor or room addition. Verify actual potential by checking local zoning restrictions prior to purchase.
* fab pentrm — fabulous pentroom, a room on top, underneath the roof, that sometimes has views
* FDR — formal dining room (not the former president)
* frplc, fplc, FP — fireplace
* grmet kit — gourmet kitchen
* pwdr rm — powder room, or half-bath
* upr- upper floor
* vw, vu, vws, vus — view(s)
* Wow! — better check this one out.
* HDW, HWF, Hdwd — hardwood floors
* hi ceils — high ceilings
* In-law potential — potential for a separate apartment. Sometimes, local zoning codes restrict rentals of such units so be sure the conversion is legal first.
* large E-2 plan — this is one of several floor plans available in a specific building
* lsd pkg. — leased parking area, may come with an additional cost
* lo dues — find out just how low these homeowner’s dues are, and in comparison to what?
* nr bst schls — near the best schools
* pvt — private
* “Real Estate’s Ambiguous Language You Ought’a Understand,” Glennon H. Neubauer, Ethos Group Publishing, Diamond Bar, CA; 1993.
How long do bankruptcies and foreclosures stay on a credit report?
Bankruptcies and foreclosures can remain on a credit report for seven to 10 years. Some lenders will consider an borrower earlier if they have reestablished good credit. The circumstances surrounding the bankruptcy can also influence a lender’s decision. For example, if you went through a bankruptcy because your employer had financial difficulties, a lender may be more sympathetic. If, however, you went through bankruptcy because you overextended personal credit lines and lived beyond your means, the lender probably will be less inclined to be flexible.
What are some tips on negotiation?
The more you know about a seller’s motivation, the stronger a negotiating position you are in. For example, a seller who must move quickly due to a job transfer may be amenable to a lower price with a speedy escrow. Other so-called “motivated sellers” include people going through a divorce or who have already purchased another home. Remember, that the listing price is what the seller would like to receive but is not necessarily what they will settle for. Before making an offer, check the recent sales prices of comparable homes in the neighborhood to see how the seller’s asking price stacks up.
Some experts discourage making deliberate low-ball offers. While such an offer can be presented, it can also sour the sale and discourage the seller from negotiating at all.
Do sellers have to disclose the terms of other offers?
Sellers are not legally obligated to disclose the terms of other offers to prospective buyers.
How do I prepare the house for sale?
First and foremost, put it in the best condition possible, especially if you are in a market with few buyers and lots of homes for sale. That means taking care of any major repairs that could deter a buyer (such as replacing any broken windows or replacing a leaky roof) if you can afford it. Next, work on your home’s curb appeal. Make sure your landscape is pristine. Mow the grass, clean up any debris and weed the garden beds.
Plant a few annual flowers near the entrance or in pots to be placed by the door. Other quick fixes that don’t cost a lot of money but can help you get top dollar for your home:
Clean the windows and make sure the paint is not chipped or flaking.
Be sure that the doorbell works.Clean and freshen up rooms, furnishings, floors, walls and ceilings. Make sure that bathrooms and kitchens are spotless.Organize closets.Make sure the basic appliances and fixtures work. Replace leaky faucets and frayed cords.Eliminate the source of any bad smells, such as the kitty box. Use air freshener or bake a batch of cookies before your open house to ensure that the house smells inviting.Invest in a couple of vases of fresh flowers to place around the house