Where You Get Real Comparable Sales
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Top 10 Mistakes

 Serious about selling your home? Before you sign anything, read about these common mistakes that home sellers make:

1. PRICING TOO HIGH: It’s no secret, price is everything. Overpricing does more to discourage buyers than any other single factor. When you overprice, you put your home in competition with homes that may be newer, larger or have more amenities than yours. You help your competition sell their home. This leads to long days on the market, and costs you, the seller, money in the long run. Make sure you get your pricing advice from a professional agent who knows the market.

2. POOR CONDITION: A home that is in ill repair, or otherwise poor condition, does not excite buyers. A home like this is looked at by buyers as a work project and money pit. Having your home in good repair and great showing condition will significantly improve your chances for a sale at top dollar value. Having your home pre-inspected by a termite and dry rot inspector will also have a positive impact on buyers.

3. POOR CURB APPEAL: Most buyers today want to drive by. If your home is an attractive drive-by, it will gain more attention and certainly more showings. Doing the little things to help your home’s curb appeal will make a huge difference.

4. DREARY DARK HOMES DON’T SELL: Buyers like updated, light and bright homes. Dark carpets, paint, and curtains are often buyer turn-offs. Go through your home and remove clutter; touch up and update paint, counter tops, and carpets. Open your home up and make sure the sun shines in. Offensive odors from pets and smoking are also huge turn-offs to most buyers. Rid your home of offensive smells by burning scented candles and create a pleasant aroma. The most important rooms to concentrate on are the living room, family room, kitchen and master bedroom. Your entire home’s atmosphere is set off by these rooms.

5. DON’T OVER-IMPROVE: Get your home in good showing condition, but don’t over do it. Huge projects such as complete remodels of kitchens, adding decks, and expanding room sizes may not pay back your investment. Before you jump into a huge improvement project, get some good advice.

6. BE FINANCEABLE: Bad roofs, exterior paint, or structural problems may make your home un-financeable. The wider the scope of financing that your home can qualify for, the higher the overall market value. Remember — government programs like VA and FHA will be the most picky.

7. GET GOOD ADVICE AND GOOD MARKET EXPOSURE: Hiring a professional agent will help you get your home priced right, and will also get you started with the best fix ups. A strong agent will get your home exposed to the largest number of potential buyers. Paying the agent fee is often the least expensive part of selling your home. Trying to sell your home yourself can be costly. Most ‘for sale by owner’ homes close for less than comparable homes listed with an agent, and you have no representation.

8. DON’T BE PRESENT DURING SHOWINGS: When your home is being shown, go for a drive or a walk. Take yourself, your family, and pets and let the agent and their clients have the freedom they need. An agent can always do their best job of showing your home when you are not underfoot. Buyers are more at ease and much more likely to spend time looking at your home’s features and benefits.

9. LET YOUR AGENT DO THE NEGOTIATING: If there is ever a good reason to have a veteran agent working for you, it’s during the negotiation of your home sale. A good negotiator can mean thousands of dollars to you, and will protect your interests. Don’t let your emotions run wild during negotiations. Try to separate your emotions from your business side. Remain cool and calm during this time.

10. ACT FAST WITH OFFERS: When you do get an offer on your home, act quickly and decisively. Letting offers sit around without acting can be a huge mistake. Things can change quickly in the mind of a prospective buyer. Acting quickly while the excitement and interest level are at a high point can be very important. Typically, a buyer’s motivation level decreases with time. Buyers’ remorse can even set in. Acting in a timely manner is essential.

What Is A CMA?

CMA

This is the most commonly used of the three approaches in residential real estate.

Formula: Comparables plus or minus adjustments equals Appraised Value.

The property we are trying to determine the value of is called the subject property.

When using the comparable approach we start by establishing what the subject is and has. A two story home that has a 1,000 Sq Feet on the main floor, second floor and the basement, giving a total of 2,000 feet above grade and 1,000 below grade.

Then how many bedrooms, bathrooms… Then there are amenities, this is the tricky part for sellers. What may be an amenity to one person may not to another.

For example, being two doors from an elementary school is great if you have three elementary age children, but it doesn’t mean much to an empty nester. Same thing goes for a swimming pool, perfect for one and not the other.

The three main criteria an appraiser uses when comparing is

  1. Date of the sale of the comparable. 6 months is as far as an appraiser likes to go back, then they will adjust for time. Then the market condition comes into play. Which way is the market going? Is there consideration for the season?
  2. The proximity of the comparable to the subject. An appraiser doesn’t like to go more than a mile, however this is where local expertise comes into play. An appraiser will use natural boundaries, like I-215. If the subject property is within a few blocks of a highway typically they will not go on the other side even if it is within a mile.
  3. Similarity of the comparable to the subject. Are they the same type of home? Two Story, Rambler, Tri-Level… Above grade footage to below grade footage. Comparing the location, for an example a property located on a busy street is hard to compare to a property two blocks away on the end of a Cul-de-Sac with a park in the back yard.

Once you have you accumulated your comparable sales then you need to go through the adjustment period.

***IMORTANT*** When comparing and adjusting. You never adjust the subject, you always adjust the comparable to be the same as the subject.

For an example if the subject is a 4 bedroom house and the comparable that sold had 5 bedrooms. Then you need to adjust the comparable down by a number that is pre-determined amount for a bedroom. Typically it is around $1,000. So you would subtract a $1,000 from the comparable to adjust it down to 4 bedrooms. Please note that the square footage is adjusted too. The same is true if the comparable had 3 bedrooms. You would add $1,000 to adjust the comparable from 3 bedrooms to 4.

This method is used all the way down the list of items to come up with an adjusted value. Here is an example of a CMA, the adjusted values are averaged and then that value is assigned to the subject.

Top 25 Easy Fixes

 

INDOORS:

1. Clean the entire home thoroughly. Shampoo carpets, wash walls, clean sills, window screens and blinds. Clean out light fixtures and dust shelving. Get detailed here.

2. Clean the clutter from all closets, cupboards and cabinets.

3. Make your rooms look as spacious as possible. Store unnecessary furnishing items that make your home look crowded.

4. Arrange furnishing so that it is easy to walk through your home.

5. Scale down the number of photos, pictures, portraits and posters hanging on walls. Make sure you patch all nail and screw holes.

6. Keep your curtains and draperies open as a rule. You will want your home to show very light and bright. Find ways to screen any unappealing views.

7. Make your kitchen shine. Remove clutter from counter tops and cabinets and store it. Keep your sink clean and clear of any dirty dishes.

8. Clean your refrigerator, inside and out. Make sure that you do the simple things like putting an open box of baking soda in your fridge. Also, remove unnecessary clutter from the door.

9. Clean your oven. Degrease it and keep it looking as good as possible.

10. Keep scented candles burning in the kitchen and bathrooms. Pleasant fragrances will entice buyers to stay longer in your home.

11. Keep bathrooms scrubbed and tidy with fresh soap and neatly hung towels. Try to color coordinate your bathrooms.

12. Keep all sinks in the home clean and repair leaks or slow drains.

13. Go through your entire home and touch up paint. Pay close attention to corners where there is traffic wear. Touch up baseboards, trim and cabinets and cupboards.

14. Place plants or flower arrangements in strategic parts of the home. A splash of color from plants, flowers, pillows or small rugs can give your home some real flair.

15. Make sure that your home is well lit. Put higher wattage bulbs in dark areas or corners. Keep all lights on during showings, even in mid day.

16. Use mirrors on walls if necessary to reflect light and make rooms look larger.

17.Make sure that all door knobs and keyed entries are working. Replace any worn knobs or handles.

OUTDOORS:

1. Clean up all around the house. Remove any debris piles such as wood, firewood and landscape trimmings. Trim all hedges, bushes and shrubbery away from the house. Keep all garden beds weeded and mulched.

2.Put some color by your home’s entrance with potted flowers. Keep them watered and looking attractive.

3. Keep all walkways clear, clean and in good repair. This includes your driveways and any parking areas.

4. Keep all outdoor furniture clean and in good repair.

5. Clean your gutters and roof. Keep moss or algae from growing on, in or around them.

6. Keep your yard and lawn areas clean and in good health. A green lawn makes a home look great. Keep your lawn edged and free from weeds.

7. Repair any broken windows, screens, shutter or awnings.

8. Clean your garage area. Remove clutter and make it look organized and as spacious as possible. Try to have nothing in your garage but cars.

By following these 25 fix up tips, you can do a lot to increase the perceived value of your home and make it stand out above the competition!

Appraising

Appraising

What is an appraisal?

An appraisal is simply an opinion of value.

First and foremost, appraising is an art and not a science. Science is more defendable so appraisers tend to stick with as much science as they can.

Appraising Real Estate is done for many reasons

  • For obtaining a mortgage
  • To determine the replacement for insurance
  • For tax assessing and appealing
  • For negotiations between a buyer and seller

When appraising Real Property there are three approaches an appraiser can take.

Comparison

Cost-Depreciation

Income

Comparison Approach

CMA

This is the most commonly used of the three approaches in residential real estate.

Formula: Comparables plus or minus adjustments equals Appraised Value.

The property we are trying to determine the value of is called the subject property.

When using the comparable approach we start by establishing what the subject is and has. A two story home that has a 1,000 Sq Feet on the main floor, second floor and the basement, giving a total of 2,000 feet above grade and 1,000 below grade.

Then how many bedrooms, bathrooms… Then there are amenities, this is the tricky part for sellers. What may be an amenity to one person may not to another.

For example, being two doors from an elementary school is great if you have three elementary age children, but it doesn’t mean much to an empty nester. Same thing goes for a swimming pool, perfect for one and not the other.

The three main criteria an appraiser uses when comparing is

  1. Date of the sale of the comparable. 6 months is as far as an appraiser likes to go back, then they will adjust for time. Then the market condition comes into play. Which way is the market going? Is there consideration for the season?
  2. The proximity of the comparable to the subject.  An appraiser doesn’t like to go more than a mile, however this is where local expertise comes into play.  An appraiser will use natural boundaries, like I-215. If the subject property is within a few blocks of a highway typically they will not go on the other side even if it is within a mile.
  3. Similarity of the comparable to the subject. Are they the same type of home? Two Story, Rambler, Tri-Level… Above grade footage to below grade footage. Comparing the location, for an example a property located on a busy street is hard to compare to a property two blocks away on the end of a Cul-de-Sac with a park in the back yard.

Once you have you accumulated your comparable sales then you need to go through the adjustment period.

***IMORTANT*** When comparing and adjusting. You never adjust the subject, you always adjust the comparable to be the same as the subject.

For an example if the subject is a 4 bedroom house and the comparable that sold had 5 bedrooms. Then you need to adjust the comparable down by a number that is pre-determined amount for a bedroom. Typically it is around $1,000. So you would subtract a $1,000 from the comparable to adjust it down to 4 bedrooms. Please note that the square footage is adjusted too. The same is true if the comparable had 3 bedrooms. You would add $1,000 to adjust the comparable from 3 bedrooms to 4.

This method is used all the way down the list of items to come up with an adjusted value. Here is an example of a CMA, the adjusted values are averaged and then that value is assigned to the subject.

Cost Approach

Cost Approach

Sometimes it is difficult to locate comparable properties. Therefore, there has to be another approach that will allow one to arrive at a professional estimate of value. Essentially you are asking what it would cost if the building being appraised were built today.

  1. Cost reproduction: How much would it cost to build an exact replica of the building? This approach to appraisal can be difficult and costly since accuracy is important.
  2. What does it cost to construct a building having the same utility as the subject property? Since the utility is the key factor, the building may vary in non-essential ways.
  3. Formula: Land + Improvements - Depreciation = Value NOTE: The building is depreciated BUT the land is not.
  4. The cost approach is the only one of the three approaches which gives a separate, specified value to land. To find the value of the land, the comparison or Market Data Approach used.
  5. Methods to determine cost of improvements:
    1. Quantity Survey, The formula is: Materials + Labor + Management Fees + Profit = Value
    2. Unit -in - Place: with this method, the appraiser determines the cost of components or estimates of subcontractors. For instance, what would it cost to have an arched entrance built between the living room and the dining room (component) or what would an electrician charge to do the electrical work (subcontractors).
    3. Cubic foot method: A value is assigned to each cubic feet times the cost per cubic foot. This method is used when vertical space is considered as valuable as horizontal space, such as in a warehouse.
    4. Square foot method: This method is the most common method used in the cost approach.
  1. Depreciation refers to any problem that may cause an actual or accrued loss of value.
    1. Three causes of depreciation:
    1. Curable depreciation occurs when it is cost effective to repair a problem that is causing loss of value.
    2. Incurable depreciation occurs when it isn’t cost effective to make the needed repairs.
    3. Deferred maintenance develops when repairs have been delayed.

Income Approach

Income or Capitalization Approach

This approach is totally different from the other two. The appraiser is no longer concerned with what the property is worth, but with how much money it can make.

Cap Rate

We hear many different ways to evaluate rental property. The one method that is the most effective is called the Capitalization Rate, affectionately called the Cap Rate.

I have heard many variations of the cap rate, things like 100 times the rent. That is called the rent multiplier, takes the rent and times it by say 120. The problem with that approach is it doesn’t account for expense variations. It is a good rule of thumb measure to see if it is worth drilling down.

Are you ready for the unequivocal simple version of the Cap Rate, drum roll please?

Income, Minus Expenses, Divided By The Sales Price, Equals Rate of Return. It really is that simple. Always use annual numbers.

Gross Income $18,000
Minus Expenses $3,600
= Net Income $14,400
Divided By Sales Price $200,000
= Rate Of Return 7.2%

Property evaluations are based on cash purchases. When you leverage a property that is a different equation and has more factors than evaluating just the property, remember we are evaluating the property. If you are going to leverage a property, the property must perform at a higher interest rate than what you can borrow at.

Click for full functioning Excel Spread Sheet that will help you evaluate an income

Now the trick is getting real income and expenses on a piece of property you don’t own. Remember the seller’s motivation is the highest price. So based on the above formula, they like to overstate income and understate expenses.

When purchasing an income property the surest way to get the most accurate information is, for income use a tenant landlord estoppel letter. This letter is signed by both parties stating the basic terms of the lease, start date, end date, monthly payment, how much security deposit and where is it, that the tenant is current. Compare the letters to the leases and now you have your income.

As for expenses, if you really want to know how much a property owner has spent ask for a copy of the Schedule E of their tax returns. You know they didn’t leave anything out there.

Here are some things to consider when looking at the expenses.

How Many Utility meters are there?

How old is the-

Roof

Furnaces

Water Heaters

Zoning Basics

Cottonwood Heights Zoning Basics

When looking at a Zoning Map you will notice all kinds of abbreviations.
RR-1-21, R-1-8, R-2-8, F-1-21 and wonder what the heck is that.

The R = Residential, RR = Rural Residential, F= Foothill
The numbers tell you what can be done on a property.
The first number tells you how many units you can have. The second number tells you the minimum square feet of the lot.

So for example R-1-8 means you can have one house for every 8,000 Square Feet of Lot. However there are other requirements that must be met, for example there is a minimum lot width. For R-1-8 the lot width is 70 Feet.

Also there are set back requirements. Houses must be so many feet from the front, sides and the back. 

Corner Lots have two front setbacks and tend to have a large front and side yard and a smaller backyard.
R-2-8 You can have two units for every 8,000 square feet of lot subject to the other rules.

To view Cottonwood Heights Zoning Ordinances they can be found in our Municipal Code under Title 19

About

Cottonwood Heights Home Values

Q. What makes Cottonwood Heights Home Values different form the other online home value sites like Zillow?
A. The main reason is we are not a national site trying to be all things to all communities. We are local and specialize in Cottonwood Heights Real Estate.

Q. How does Cottonwood Heights Home Values determine the value of a home?
A. Unlike the large national sites that use formulas based on mortgage amounts, we at Cottonwood Heights Home Values use real comparable sales, the same that an appraiser would use.

To Receive Your FREE Comparable Sales simply complete the form and submit the information it is that simple.

Don’t Foget to visit Living In Cottonwood Heights for information about what is going on in Cottonwood Heights

 

 

About

Cottonwood Heights Home Values


Q. What makes Cottonwood Heights Home Values different form the other online home value sites like Zillow?
A. The main reason is we are not a national site trying to be all things to all communities.
We are local and specialize in Cottonwood Heights Real Estate.

Q. How does Cottonwood Heights Home Values determine the value of a home?

A. Unlike the large national sites that use formulas based on mortgage amounts, we at Cottonwood Heights Home Values use real comparable sales, the same that an appraiser would use.

To Receive Your FREE Comparable Sales simply complete the form and submit the information it is that simple.

Don’t Foget to visit Living In Cottonwood Heights for information about what is going on in Cottonwood Heights.