What Is Market Value ?

The explanation of "market value" in this article applies to single family houses only. Different methods apply to apartments and other commercial real estate. The meaning of "market value" confuses many people. As consumers, most people shop at retail stores and pay the price printed on the price tag. A sweater is worth $24.95 because the price tag says so. A hammer is worth $10.95 because the price tag says so. We really don't question it, because we are programmed to pay the amount of money listed on the price tag. When stores have sales on certain items, it is because the store did not sell all of these items for the listed price within a certain period of time. The sweater was not worth $24.95 to enough people. Therefore, the store must now lower the price to persuade people to buy the remaining sweaters. At the beginning of the Fall clothing season, the market value of the sweater was $24.95. In March, when we have more interest in Spring clothes, the market value may drop to $9.95. Market value is simply the price at which something will sell within a reasonable period of time. In a normal or average real estate market, "reasonable" means one to three months. Here is our definition: Market value is the price at which a particular house, in its current condition, will sell within 30 to 90 days. This definition contains three elements: 1. Particular house 2. Current condition 3. 30 to 90 days The only real measure of market value is what a particular house sells for. Period. However, unless you have a crystal ball, you might think you cannot predict how much someone will pay for the house in the future. Not true. You can learn to come very close to predicting the true market value of any house even without a crystal ball. Real estate appraisers do it every day. Even so, the appraisal of real estate is more art than science. An appraisal is only an opinion, an educated guess. Let's start learning to predict market value by analyzing each of the three elements of our definition. The particular house When you determine market value, you must always remember that you are estimating the market value of one particular house. The location, or neighborhood, of this particular house is the starting point for your investigation. The exact same house in the next city, or even on the other side of the same city, is not relevant to this determination. For example, a house located in La Jolla, California could be worth half a million dollars. But if the exact same house were located in San Diego (the city next door) it might be worth only $225,000. That's still a hefty price. But it's less than half the price of the La Jolla house. Although this may seem like an extreme example, house prices throughout the country fluctuate significantly from city to city and from neighborhood to neighborhood. Therefore, whenever you determine the market value of one particular house, you must compare it only with similar houses in the same or nearby neighborhoods. Current condition Next, you must assess the current condition of the particular house. The current condition determines the number of buyers who are interested in purchasing the property, which affects the amount of time the house remains for sale on the market before it is sold. Most home buyers want to buy the prettiest house on the block. Is the house gorgeous and ready to move into? Or is it a dump that needs a major renovation? Simply subtracting the amount of estimated fix-up costs from the selling price of other similar houses in the same neighborhood is not an accurate way to determine current market value for a particular house. If a house in good condition could sell for $80,000 and the house you are interested in needs $4,000 worth of repairs, that does not mean the current market value of your house is $76,000. Here's why: Far fewer buyers want to buy a house that doesn't look pretty. When a house attracts fewer buyers, it takes longer for the house to sell. To attract more buyers and sell the house sooner, the price must be reduced by much more than the mere cost of repairs. Although the current condition of the house is an essential element of market value, it is almost impossible to determine exactly how much the physical condition of the house affects its value. This simply is not an exact science. As a general rule, you should be fairly safe if you subtract two to three times the amount of the fix-up costs. 30 to 90 days In a normal real estate market, if a house doesn't sell within one to three months (30 to 90 days), the reason is simple: The price is too high. Even perfect houses don't sell within this time frame if the price is too high. On the other hand, if a house sells within one to two weeks, the asking price was probably too low. A house that sells within one to three months is priced at the true market value of the house. Imagine this scenario. It will take a year to sell a particular house for $100,000, six months to sell it for $90,000 and one week to sell it for $70,000. The price that will sell this house within one to three months lies somewhere between $90,000 and $70,000. The price that will sell this house in one to three months is probably right around $80,000, its true market value. Market Value is simply the price at which something will sell within a reasonable period of time. I'll explain exactly how to use "comparable sales" to calculate the current market value of a particular house next time.

 Top 10 Buyer Turn Offs.

Selling a Home? Avoid these Home Buyer Turnoffs

Are you selling a home? Did you know that even though home buyers are all looking for something different, the majority of them will turn around and walk back out of your door if they notice one or more of these Top 10 problems.

1. Odors

House odors are number one on the home selling uh-oh list. And narrowing it down, odors from cigarette smoke and pets take top billing, with mildew not far behind.

If you smoke indoors--the house smells like cigarettes. If you have pets, the house might smell bad--even if you don't notice it. Ask someone who doesn't live there to take a sniff, and don't get angry when they tell you the truth.

Eradicate the odors so that you can present potential buyers with a clean, fresh atmosphere--not a house that's full of perfumes to cover up the odors.

2.  Dogs that Meet You at the Door or in the Driveway

Dogs frighten some people and irritate others. You'll have a much better response from showings if you control your pets--dogs, cats, whatever.

You say you plan to put them in a bedroom or garage and then ask people not to open the door to that area? This is a bad idea. Would you buy a house you can't inspect?

Remove pets during showings if possible. If you can't, contain them in crates for their own safety and to show respect for the feelings of potential buyers.

3. Dirty Bathrooms

Grimy bathrooms are an instant turnoff. Scrub them, paint them, buy a new shower curtain, rugs and towels--do what it takes to make them shine. If you're serious about selling the home, the extra work is a must.

4. Dimly Lit Rooms

Dark homes are a turnoff to most home buyers, so try to brighten them up:

• Replace dim light fixtures
• Install additional light fixtures
• Install (quality) sun tunnels or skylights
• Remove heavy drapes to let the light stream through windows
• Repaint some rooms with colors that reflect light
• Trim tree limbs that shadow the house

Dirty and fogged windows are another buyer turnoff. Clean them inside and out to bring in more light. If possible, replace any double-pane windows with broken seals. You can find them by looking for a foggy residue that cannot be removed.

5. A House Full of Busy Wallpaper

Busy wallpaper in every room turns off most buyers, and even people who love wallpaper rarely like what you've chosen. It's a personal decorative touch that they want to select themselves.

It's the masses you must appeal to when you're selling a home, so take a hard look at your wallpaper and decide if it should be removed and replaced with paint. Don't paint over it, because it will be obvious that you did--and buyers know that makes removing it even more difficult.

6. Dampness

Dampness or damp smells in the basement throw up a red flag to buyers that the foundation leaks!

Most problems we see are not caused by faulty foundations. They occur because rainwater is being diverted towards the foundation instead of away from it.

• Clogged underground drains
• No rain gutters along roofline
• Downspouts aimed the wrong way

Go outside the next time it rains and determine where runoff water is going.

7. Bugs

Roaches, spiders, any insect that shouldn't be in the house. Get rid of them.

8. Poor Curb Appeal

You must grab a buyer's interest from the curb if you want to sell the home for top dollar. Home buyers often refuse to go into a house with an unkempt yard, sagging doors or peeling paint. You say you can't afford to paint? Okay, but get that yard in tip-top shape and grab a screwdriver to fix those doors.

9. Gutters with Plants Growing in Them

I'm serious. Some people never clean their gutters, and it always makes buyers wonder what else hasn't been maintained.

Remember the drainage issue in #6? Cleaning packed gutters might help.

10. Sellers Who Hang Around for Showings

Yes, you... leave the house during showings. Home buyers feel awkward about opening closet doors and lingering for a really good look at the house if the seller is home.

If you're selling by owner, give them some space, don't hover.

How to Improve Curb Appeal

Home Selling Advice to Help You Attract Potential Buyers

A large percentage of home buyers decide whether or not to look inside a house or take it seriously based on its curb appeal—the view they see when they drive by or arrive for a showing. You can help make sure they want to come inside your house by spending some time working on the its exterior appearance.

It's difficult to look at our own house in the same way that potential home buyers do, because when we become accustomed to the way something looks and functions, we can't see its faults. Decide right now to stop thinking of the property as a home. It's a house—a commodity you want to sell for the highest dollar possible.

Curb Appeal Exercise

The next time you come home, stop across the street or far enough down the driveway to get a good view of the house and its surroundings.

1. What is your first impression of the house and yard area?
2. What are the best exterior features of the house or lot? How can you enhance them?
3. What are the worst exterior features of the house or lot? How can you minimize or improve them?

Park where a potential buyer would and walk towards the house, looking around you as if it were your first visit.

Is the approach clean and tidy? What could you do to make it more attractive?

Take photos of the home's exterior. If you have a digital camera, view the color versions first, then remove the color and look at it in black and white, because it's easier to see problems when color isn't around to affect our senses.

Make a list of the problem areas you discovered. Tackle clean up and repair chores first, then put some time into projects that make the grounds more attractive.

• Kill mold and mildew on the house, sidewalks, roof, or driveway.
• Stow away unnecessary garden implements and tools.
• Clean windows and gutters.
• Pressure wash dirty siding and dingy decks.
• Edge sidewalks and remove vegetation growing between concrete or bricks.
• Mow the lawn. Get rid of weeds.
• Rake and dispose of leaves, even if your lot is wooded.
• Trim tree limbs that are near or touching the home's roof.

Don't Forget the Rear View

Buyers doing a drive by will try their best to see your back yard. If it's visible from another street or from someone's driveway, include it in your curb appeal efforts.

Evening Curb Appeal

Do your curb appeal exercise again at dusk, because it isn't unusual for potential buyers to drive by houses in the evening.

One quick way to improve evening curb appeal is with lighting:

• String low voltage lighting along your driveway, sidewalks, and near important landscaping elements.
• Add a decorative street lamp or an attractive light fixture to a front porch.
• Make sure lighting that's visible through front doors and windows enhances the home's appearance.

Landscaping Decisions

There are times that adding elements to your landscaping can improve curb appeal, but there are other times when removing something is even more effective.

For example, we had a listing for a large brick house with large white columns. Tall evergreens, planted in front of each column, had grown taller than the roof. They obscured the columns and windows and made it difficult to see the front of the house.

We suggested that the owner remove them. She trimmed them back, but it didn't do the trick—they were unattractive and still kept potential buyers from seeing the true character of the house.

I sold the house to a couple who could see past the trees. One of their first tasks after closing was to yank them out of the ground, instantly boosting the home's curb appeal.

Most buyers cannot visualize changes, and often won't take a second look at a house if the first look doesn't appeal to them. Home buyers who can visualize changes, and are prepared to make them, expect you to reduce the price of the house to compensate for the work they plan to do.

A Few Curb Appeal Tips

• If you can budget it, a fresh paint job does wonders for a dingy house. Drive around your town to find color schemes that are appealing.
• Install a more attractive front door, maybe something with leaded glass inserts.
• If you can't justify the cost of a new door, consider replacing plain doorknob hardware with something more attractive.
• If new hardware is beyond your budget, repaint or stain the door and polish the hardware?

If you brainstorm, you'll find that there's a solution to most problems—one that lets you stay within your budget. The trick is to find the areas where improvements are needed, then work on them as best you can.

10 Low-Cost Ideas to Increase Salability

Tiny details count as much as the big things when you’re trying to sell a home.

You can’t always predict what will capture buyers’ fancy (or what will turn them off). But most buyers respond to certain things, such as a clean, clutter-free home in good repair. Homes that owners keep in tip-top shape for showings garner higher offers than homes that aren't ready for show time. You might have already suggested that clients paint their homes or do some major repairs. But other small-scale details can prove just as important in creating a salable home. Here are ten small-scale suggestions that you can give to help sellers prepare their homes for showings.

1. Have a garage sale before the home is listed. Get rid of clutter to allow the buyer to really see your home. Pack away everything you can and clean out items you won't need in your next home. Homebuyers will expect you to be preparing to move, so a few packing boxes here and there can be used to your advantage. They could be a good visual stimulant to someone who is "on the fence;" they show that you are moving and are serious about finding a buyer.

2. Welcome the buyer at the entry. Put out a new doormat, but avoid mats with cutesy sayings. Clean and polish the brass door knocker. Put potted flowers on the porch. Make sure the front entry floor is always sparkling clean and the porch and steps are always swept. First impressions count.

3. Stimulate buyers' imaginations. Set the dinner table with your best china. Use the coziness and romance of the fireplace to advantage. Put a pair of wine glasses and a vase of flowers on the coffee table in front of the fire. Your goal is to set a scene that will encourage buyers to imagine themselves living in your home.

4. Be ruthless about odors. If there is a smell, your house won't sell. Use cleansers of all kinds to make the home smell fresh, from carpet freshener to potpourri. Deodorize cat litter and scoop litter daily. Put cedar chips inside the closets. However, be careful when using room sprays as they can irritate allergies. You can also use the sense of smell to your advantage by having fresh-baked cookies on the kitchen table, creating a welcoming sensual environment for your potential buyers.

5. Create a spacious feeling. Make sure that all doors, cabinets and drawers open all the way without bumping into anything or sticking. Clean out the entry closet and put only a few hangers in it, so that the buyer can visualize winter coats. Move oversized furniture to a storage facility. Make sure entrances to all rooms have an open flow.

6. Make the most of views. Disguise unsightly views. Put a screen or a basket of flowers in front of a fireplace if it isn’t in use. Let breezes move your sheer curtains at the window. Make sure the interior is visible from the street. All windows must be crystal clean and clear.

7. Create counter space. Store away extra appliances. Put away dish racks, soap dishes and other clutter. Decrease kitchen clutter further by removing magnets from the refrigerator.

8. Avoid eccentric decor. De-personalize your teenager's room, the game room or other areas by removing wild posters or any decorative item that could be construed as offensive. Remove decorations which might not appeal to the masses, from hanging beads in doorways to jars where your children store their spider collections.

9. Let there be light. Increase the wattage in light bulbs in the laundry room, kitchen and bathrooms. For showings, turn on lights in every room.

10. Show how your family made the house a home. Put photos of your family enjoying your home in at least three different places.

COMMON Q&A ABOUT SELLING YOUR HOME

Do sellers have to disclose the terms of other offers?

ANSWER:

Sellers are not legally obligated to disclose the terms of other offers to prospective buyers.

How do I prepare the house for sale?

ANSWER:

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 and next to any information about the house you have prepared for buyers.

How long do bankruptcies and foreclosures stay on a credit report?

ANSWER:

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.

Should I add on or buy a bigger home?

ANSWER:

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 are some tips on negotiation?

ANSWER:

The more you know about a seller's motivation, the stronger a negotiating position you are in. For example, 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.

What do all of those real estate acronyms in the ads mean?

ANSWER:

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
* 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
* pwdr rm -- powder room, or half-bath
* upr- upper floor
* vw, vu, vws, vus -- view(s)
* Wow! -- better check this one out.