What is the difference between list price, sales price and appraised value?

The list price is a seller’s advertised price, a figure that usually is only a rough estimate of what the seller wants to receive. Sellers can price high, low or close to what they hope to receive. To judge whether the list price is a fair one, be sure to consult comparable sales prices in the area. The sales price is the amount of money you as a buyer would pay for a property. The appraised value is a certified appraiser’s estimate of the worth of a property and is based on comparable sales, the condition of the property and numerous other factors.

What’s a Home Inspection?

A home inspection is when a paid professional inspector inspects the home, searching for defects or other problems that might plague the owner later on. They usually represent the buyer and/or are paid by the buyer. The inspection usually takes place after a purchase contract between the buyer and seller has been signed.

Do I need a home inspection?

Yes. Buying a home “as is” is a risky proposition. Major repairs on homes can amount to thousands of dollars. Plumbing, electrical and roof repairs represent significant and complex systems that are expensive to fix.

What are closing costs?

Closing costs are the fees for services, taxes or special interest charges that surround the purchase of a home. They may include costs such as lawyer’s fees, real estate commissions, fuel adjustments, deed transfer taxes, etc.

What conditions should be put in an offer?

Most offers include three standard conditions: a financing contingency, which makes the sale dependent on the buyers’ ability to obtain a loan commitment from a lender, an inspection clause, which allows buyers to have professionals inspect the property to their satisfaction and an insurance clause, which allows the buyer to have the property inspected by their own insurance company. A buyer could forfeit his or her deposit under certain circumstances, such as backing out of the deal for a reason not stipulated in the contract. The purchase contract must include the seller’s responsibilities, such things as passing clear title, maintaining the property in its present condition until closing and making any agreed-upon repairs to the property.

When is the best time to buy?

Because many buyers prefer to move in the spring or summer, the market starts to heat up as early as February. Families with children are anxious to buy so they can move during summer vacation, before the new school year begins. The market slows down in late summer before picking up again briefly in the fall. November and December have traditionally been slow months, although some astute buyers look for bargains during this period.

What kind of home insurance should I get?

A standard homeowner’s policy should protect against fire, lighting, wind, storms, hail, explosions, riots, aircraft wrecks, vehicle crashes, smoke, vandalism, theft, breaking glass, falling objects, weight of snow or sleet, collapsing buildings, freezing of plumbing fixtures, electrical damage and water damage from plumbing, heating or air conditioning systems. Such policies are “all-risk” policies, which cover everything except earthquakes, floods, war and nuclear accidents. A basic policy can be expanded to include additional coverage, such as floods and earthquakes and even workers compensation for servants or contractors. Home-based business coverage, an increasingly popular rider, does not cover liability associated with business. Insurance experts recommend that homeowners obtain insurance equal to the full replacement of the home. On a 2,000 square foot home, for example, if the replacement cost is $80 per square feet, the house should be insured for at least $160,000. For personal items, homeowners can increase their coverage beyond the depreciated value of items such as televisions or furniture by purchasing a “replacement-cost endorsement” on personal property. Some experts recommend an inflation rider, which increases coverage as the home increases in value.

What’s a house worth?

A home 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 value of the property at a given point of time. To make their determination, appraisers consider square footage, construction quality, design, floor plan, neighbourhood, availability of transportation, shopping and schools amenities, energy efficiency. Appraisers also take lot size, topography, view and landscaping into account. A comparative market analysis is an informal estimate of market value, based on comparative sales in the neighbourhood, preformed by a real estate agent or broker.

Who gets the furnishings when a home is sold?

Fixtures, any kind of personal property that is permanently attached to a house (such as drapery rods, built-in bookcases, tacked down carpeting or a furnace) automatically stay with the house unless specified otherwise in the sales contract. But you can consider anything that is not nailed down negotiable. This most often involves appliances that are not built-in (washer, dryer, refrigerator, for example), although some sellers will be interested in negotiating for other items, such as a piano.

How do I prepare a house for sale?

Sweep the sidewalk, mow the lawn, prune the bushes, weed the garden and clean debris from the yard. Clean the windows and make sure the paint is not chipped or flaking. Be sure that the doorbell works. Clean and make attractive all rooms, furnishings, floors, walls and ceilings. It’s especially important that the bathroom and kitchen are spotless. Organize closets, make sure the basic appliances and fixtures work. Get rid of leaky faucets and frayed cords. Ensure that the house smells good: from an apple pie or cookies baking, for example. Hide the kitty litter. Put vases of fresh flowers throughout the house. Pleasant background music is a nice touch.

How is the price set?

It’s very important to price your home appropriately relative to current market conditions. Because the real estate market is continually changing, and market fluctuations have an effect on property values, it’s imperative to select your list price based on the most recent comparable sales in your neighbourhood. A comparative market analysis provides the background data on which to base your list-price decision.

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. A comparative market analysis is an informal estimate of market value performed by a real estate agent based on similar sales and property attributes.

Are fixers a good idea in bad areas?

Distressed properties or fixer-uppers are everywhere, even in wealthier neighbourhoods. Such properties are poorly maintained and have a lower market value than other houses in the neighbourhood. Many experts recommend that buyers find the least desirable house in the best neighbourhood and then decide if the expenses needed to bring the value of that property up to its full potential market value within one’s budget. Most experts say inexperienced buyers should avoid run-down houses that need major structural repairs and instead look for properties that only require cosmetic fixes.

What can I afford?

Knowing what you can afford is the first rule of home buying, and that depends on how much income and how much debt you have. It pays to check with several lenders before you start searching for home. Most will be happy to roughly calculate what you can afford and prequalify for you a loan. The price you can afford to pay for a home will depend on six factors:

  • Gross income
  • Amount of cash you have available for the down payment, closing costs and cash reserves required by the lender
  • Outstanding debts
  • Credit history
  • Type of mortgage you select
  • Current interest rates