Real Estate Tips
It is important to remember that the seller, the buyer, and both the listing and selling agents all have one common goal, and that is to have the sales transaction proceed as quickly and as smoothly as possible.
- How do you set a good asking price?
- How much is the commission
- What is MLS?
- How long will it take for our house to sell?
- Can other Realtors show people our home?
- Appraising
How do you set a good asking price?
To sell your home at the best possible price within acceptable time frames.
Put yourself in the buyer's shoes. Our first priority is to help you set a realistic price on your property. But like most of us who have invested untold hours of time and energy into our property it may be difficult to remain objective when it's time to price it and put it up for resale. There's a good reason for this. Usually property owners have much more than dollars and cents tied up in a home -- an individual commitment that makes it a highly valued personal statement. But value becomes a reflection of the buyer's perspective when that property is put up for sale...and pride of ownership may not translate to market value.
Put yourself in the buyer's shoes when setting your price. When house hunting, you will shop the market, compare available homes, and try to find the very best value. Consequently, when you are ready to list your home, step back and sharpen your focus. Look at the home objectively and price it competitively.
Listing property at 5% above current market value gives it a sales advantage that is ten times greater than if priced at 15-20% above. That's a statistic that can't be overlooked. An overpriced home will suffer from lack of exposure, and the longer it remains on the market the more difficult it will be to sell. And it will remain so, even after price reductions are taken to attract buyers.
That is why it is very important to determine an accurate and objective market value for your property. We'll work with you closely to achieve that, and to maximize your opportunities to sell your home at the best possible price within acceptable time frames.
How much is the commission
In the Real Estate business, this is one of the most asked questions. The answer is as important to the home seller as it is to the listing agent. An important consideration when establishing commission is to find out what level of marketing your agent is willing to provide. Will it be on MLS, or will it be exclusive? It is imperative that your home be listed at a competitive rate of commission so that it is attractive to the agents that may bring in the buyer. Instead of asking what the rate of commission will be, ask yourself "How much do I want to 'net' from the sale of my home?"
If you receive the money that you need from the sale of your home at a competitive rate of commission, everyone will be happy.
What is MLS?
MLS, or Multiple Listing Service, is a service provided to Real Estate Professional whereby they can market your home to agents everywhere. The information on your home will be available on the MLS website, as well as in the MLS books. A good example of the benefits of this is to suppose that there is an agent in another province that has a client moving to Eastern Manitoba. The other agent can easily access the list of homes available either via computer, or by looking in the book. If your home is not listed on MLS, then that buyer may not find out about your home until after they've made an offer on another home.
How long will it take for our house to sell?
This is a question that your agent can never answer. There are many factors involved in the length of time it will take for a home to sell. The most important being price. Most people have an idea as to what their home is worth to them, and it can be tough to decide on the right price. Often people look at what they paid for their home, or what they have spent on the house while they've lived there. Your home must be priced according to what other homes comparable to yours have sold for. This is where the comparative market analysis becomes the most accurate way to determine the value. Your Real Estate agent will provide you with the information necessary to price your home according to the current market place. The best way to see that sold sign go up quickly is to make sure that your home can compete with the other homes on the market as far as appearance and price.
Can other Realtors show people our home?
Surprisingly, many people don't know that usually, any agent can show any home that is currently on the market. Often times people will jump from one agent to the next during their home search, not realizing that they can look at all of those homes with only one agent. Once you have your home listed on the MLS, you are allowing every agent the opportunity to bring clients in. When people choose to have their home listed on an exclusive listing agreement, their agent is able to co-operate with the other agents in the area so that they may bring their homebuyers to see your home as well. There are cases where a seller wishes to deal with only one agent during the sale of their home, but more often all agents can show all homes. Realtors have a moral obligation to their purchasers to show them every home currently on the market that may suit their needs, including the listings of other agents.
Appraising
Help the Appraiser - and Yourself
Provide your appraiser with any information or records that may help determine the proper market value for your home. Some examples include a property survey, mortgage, recent sales and listings in the area, the title policy, items remaining with the house and a "brag" sheet about the house. You should also provide the comparable listings and sales data from the BMA so it can be considered in the appraisal.
Factors Affecting Appraiser Valuation of Your Home
Appraisers use certain criteria in their evaluation to determine property value. Take a minute to assess your home in terms of the following:
- Local taxes.
- Plat survey: size of lot, topography and landscape, easements.
- Deed. (Is the title clear? Are there any deed covenants that would limit use or resale opportunities?)
- List of improvements, especially to kitchen and bathroom. Do you have permits, if required, for the alterations?
- Homeowner warranties.
- Value and condition of neighborhood houses.
- Zoning of, and plans for, any nearby vacant land.
- Age of neighborhood.
- Ease of access to work, schools, shopping and recreation.
- Adequacy and cost of utilities.
- Adverse influences (such as proximity to highways, high tension wires, commercial areas).
- Present and proposed assessments.
How Appraisers Estimate Value
To arrive at a market value estimate, an appraiser must consider both general and specific data as well as a comparison of similar homes. General data includes regional, city and neighborhood information and incorporates physical, economic and social factors that may influence property value.
After collecting the general data, the appraiser analyzes the relevant specific data. If the on-site appraisal inspection seems to move along at a relatively rapid pace, remember an appraiser is an informed professional whose trained eye misses little.
Your appraiser will consider the following:
Supply and Demand
In appraising your property, appraisers will consider local supply and demand such as: how many homes are for sale in your immediate neighborhood, how quickly are they sold, what are the conditions surrounding the sale, the number of people buying homes and the number of homes on the market.
Economic Conditions
Economic conditions vary from region to region. Single-industry economies, strikes, plant closings, rezoning and outgoing corporations can have a negative impact on property values. However, new plant openings, incoming corporations or locally awarded contracts can have an uplifting effect.
Financing Conditions
Both cost (such as interest rates or discount points) and availability of mortgage financing have a substantial impact on housing prices. If financing is costly or scarce and your home has a high-balance assumable mortgage with a low interest rate, its market value may be enhanced.
Political Factors
State and local governments can affect property values. School bonds, zoning changes, property reassessment, new school appropriations, municipal salary increases, as well as taxes, all have an impact on housing prices.
View from the Outside
On first seeing your house from the street, what will a prospective buyer think? Does the general condition of the home and lot contribute to the home's attractiveness? If you can enhance your property's "curb appeal," do so. Other appraisal considerations include: Is there popular demand for your architectural style? Is your home on a busy or secluded street? Is the street paved? Does it have a sidewalk? Does your community have a public water supply and sewage systems, or do you have a well and septic system?
Inside Your Home
How will a prospective buyer feel when entering your home? Does the overall condition reflect pride of ownership? Does the floor plan afford a satisfactory flow of traffic? Is closet space ample, and is the kitchen spacious and up-to-date? The appraiser will record the number and dimensions of rooms. Quality of construction, floor coverings, paint, wallpaper, age, type and condition of kitchen appliances and other factors that reflect the overall condition of your house will be closely observed by the appraiser.
Other Factors
Appraisals are affected by many factors: a fireplace, lot size, a garage "under" versus one that is attached or detached, a screened porch as opposed to an open deck, a swimming pool, tennis court and even the electrical system (ample circuits for anticipated demand). The method of heating as well as energy savers, such as insulation, are significant factors in today's environment.
The Time Factor
The appraiser must consider the time element. Housing demand, mortgage money availability and interest rates can change substantially over a period of time. The appraiser will consider the recent real estate market as well as the future market in determining the sales price of your home.
Comparison with Similar Homes
An appraisal isn't complete unless your property is compared with similar homes - both in terms of current listings and recent sales. Current listings in a comparable price range being offered in the marketplace are your competition. These listings affect the marketability of your home and must be considered when determining value. As for comparable sale analysis, it's one of the most important elements in a professional appraisal. Appraisers are instructed to select at least three comparable properties for comparison. Ideally, each will be in the general neighborhood of the appraised home, similar in size, style and construction, and sold within the last three or four months. Such criteria can't always be met, but the appraiser will make every effort to find the best comparable sales. Appraisers use a comprehensive data bank of homes to find satisfactory comparables. Although properties that are substantially different are difficult to compare, appraisers have developed methods to adjust values for valid comparison.
By using the Broker's Market Analysis your real estate agent provided, you can give the appraiser a list of comparable listings and recent sales. While not absolutely bound to use them, the appraiser will carefully consider each in developing the market value of your property. Adjustments will be made to compensate for any differences that significantly affect market value, such as date and terms of the sale and location or architectural style of the home.
About Improvements
Improvement adjustments reflect the appraiser's estimate of market value rather than the original or replacement cost. Certain improvements, such as a swimming pool, may not be valued as highly by prospective purchasers as their cost would indicate. Surprisingly enough, a property may be over-improved. Your landscaping may be superior to that of your neighbors. You may have a cabana and swimming pool. However, it's often difficult to sell a house for $90,000 in an area of $60,000 homes. Along the same lines, your interior decor may be unique, but could have limited appeal. The appraiser is asked for an opinion: "Will this property sell without any modifications to its current conditions?" Because home selection is a highly personal and subjective process, an appraiser's estimate may be higher or lower than the eventual sales price. Nevertheless, the established value represents the most accurate means available for projecting what your house will sell for on the open market.
Satisfaction with an Established Value Offer
There are always circumstances where people believe their homes are worth more than the established values. An appraisal is only an estimate of value, and an established value offer is the average of the appraisals.
The Society of Real Estate Appraisers suggests you remember the following points when evaluating an appraisal:
- A seller won't necessarily receive a return on his or her entire investment when selling property. Money spent on repairs or maintenance usually cannot be recovered when selling.
- Improvements or additions to a home usually don't increase the value by as much as their cost. An improvement that appeals to one owner may displease another, or have no appeal at all.
- Appraisers have access to reliable information on sales that the average homeowner doesn't have. To ask a friend or acquaintance how much his house sold for and use that as a comparison of values can be misleading. Even if your friend is willing to disclose the actual price, conditions surrounding the sale may have been entirely different from those in the sale of your property.
- The rise of construction costs and prices in the real estate market since the purchase of your home might indicate a higher value today. However, the appraiser may find that these increases in value have been offset by depreciation of the property due to age, style changes, natural wear and tear or postponement of needed repairs.
- Remember to have your agent complete the Broker's Market Analysis form as part of the appraisal process. This ensures that comparable home sales will be considered.