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Sell Your Home Without a Broker takes you through each step in the home-selling process. It cuts through the confusion and addresses the important issues of selling your own home. Armed with the essential information provided, you can sell your home quickly, make a greater profit and do it all at your own pace.
Written by a seasoned real estate attorney, Sell Your Home Without a Broker teaches you how to: use the Internet to your advantage, write a powerful advertisement, save money at closing, dodge pitfalls in the home-selling process, host an effective open house, and make moving day a breeze.
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About the Author
A true believer in the popular expression, "(a}n ounce of prevention is worth a pound of cure," and knowing that individuals who seek legal help often do so after there has been irreparable damage, Attorney DiBlasi has written several self-help books to provide needed legal information to individuals at the very earliest stages.
He has been a guest speaker for various civic organizations, and has been featured on television and radio programs as well as in newspaper articles. In addition to his law practice and writing, he invests time and energy in real estate, enjoys traveling, fitness, politics, and reading non-fiction. He is an avid Boston University hockey fan and serves on the Board of Directors of the local Chamber of Commerce, having recently served as president.
He and his wife, Laura, reside in Massachusetts with their young son, Dario, and are expecting their second child.
Read an Excerpt
Determine Your Home's Market Value
Excerpted from Sell Your Home Without a Broker by Joseph P. DiBlasi ©2005
One common problem affecting FSBO sellers is their inability to objectively view their home and price it fairly. Many believe that their home is unique or extra-special, and consequently attempt to sell it at an unreasonable price. People in the home-buying market are not impulsive buyers. They take their time-an average of seven to eight weeks according to www.realtor.org-to compare an average of ten homes before buying one. Therefore, they are somewhat sophisticated and will be able to sense when a home is overpriced.
A home that is overpriced will sit. A home that sits for a while will become stale and lose the appeal of being new to the market. Unlike new-to-the-market or just-listed homes, stale homes do not entice interested buyers to quickly make an offer before the home is snatched by someone else. Instead, the perception with buyers is that they have plenty of time to compare other homes before seriously considering yours.
Similarly, I have encountered some people who have completely undervalued their home and sold it for much less than what they could have gotten using a broker. Typically, this occurs with elderly people who have not bought or sold a home in many years and who are not in tune with the market. I recently had an older gentleman in my office whose wife had recently died. He was contemplating selling his home and told me that he thought he could get $200,000 for it. Being familiar with his town and his street, I was happy to advise him that he could sell it for nearly double that price.
Unless you are a keen observer of the local real estate market, you will not know the fair market value of your home. Indeed, many professional real estate agents who use comparison methods to estimate the fair market value of a home are often off considerably and are surprised by the actual selling price. Real estate is not a commodity.
It is, almost by definition, unique. Consequently, the comparison process only provides a very superficial basis for price estimation.
There are many characteristics of a home to compare, such as:
• size of the house;
• size of the lot;
• size of the rooms;
• location within the town;
• location of the house on the street;
• location of the house on the lot;
• exterior view;
• vicinity of services and conveniences;
• reputation of the town or city and the school system;
• number of bedrooms;
• number of bathrooms;
• number of levels;
• quality of construction;
• reputation of the builder;
• condition of home;
• beauty of the landscaping;
• architectural layout;
• size of driveway;
• exterior of home;
• interior design;
• special interior features (such as central air-conditioning and alarm system);
• special outside amenities (such as pool, sprinkler system, deck, and shed); and,
• topography of the lot (usable flat lot or steeply sloped).
Fair Market Value
Fair market value is defined as the price a willing buyer pays to a willing seller. The fair market value of your home is a function of many variables. Most of the characteristics of your home as set forth in the preceding section are variables that are beyond your control.
For example, you cannot change the location of your home or the topography of the land. Therefore, if the location of your home becomes more desirable (for example, as a result of its vicinity to a development of newer and more expensive homes), with all else being unchanged, the value of your home will increase.
Some variables that affect your home's price are beyond your control, but have little or nothing to do with your home. The condition of the local economy, the level of interest rates, and the amount of similar homes on the market are all good examples of this type of variable. If you are lucky enough to place your home for sale when there is a booming local economy, low interest rates, and few homes for sale, the value of your home will be considerably higher than if these variables were different.
The fair market value of your home is also a function of variables that are not beyond your control. The condition of the home and landscaping, and the quality of your advertising and marketing campaign, are principle variables that you have almost total control over. The prudent seller should look at all of these variables when considering the price to ask for the home. I have seen homesellers, including those using brokers, underestimate the favorable seller's conditions or fail to make simple, cost-effective improvements. Consequently, they lost a significant amount of money when they sold their homes.
The most accepted manner for determining the fair market value for your home is the comparison method. In theory, the value for your home can be approximated by comparing your home and its features with other homes nearby that have sold recently. This method can be pursued in one of two ways-formally or less formally. To determine the fair market value formally, a licensed real estate appraiser is needed. A licensed real estate appraiser, as a result of training and certification, is the foremost authority on evaluating the value of real estate. You can expect to pay $250$500 for a full appraisal. An effective way to locate a qualified and licensed real estate appraiser is to call the lending department of your local bank. Lending officers work closely with licensed appraisers and will be able to provide you with a couple of names.
The appraiser will come to your home to inspect and evaluate it. He or she will make note of all of the characteristics that make your home unique. Next, he or she will locate up to five similar homes in the area that have sold recently. Appraisers try to use homes that have sold within the last three or four months for comparison. Using older sales will compromise the integrity of the process, as the market conditions going back more than three or four months are likely different than they are at present. While an appraiser will make note of most, if not all, of the items in the list of how homes differ, the actual variables he or she uses for comparison will likely be:
• location of home;
• size of lot;
• exterior view;
• design and appeal;
• quality of construction;
• gross living area;
• whether there is a full basement and whether it is finished;
• the condition, quality, and amenities of the utility systems;
• whether there is a garage;
• whether there is a porch, deck, patio, or fireplace; and,
• outside features, such as pool, shed, and fence.
The appraiser will use a grid table to display the results. There will be one column for your home and one for each of the other homes used for comparison. The rows of the table are for the variables considered for comparison.
Comparative Market Analysis
The less formal approach to determining your home's worth is to perform a comparative market analysis (CMA). This approach does not entail the thoroughness of the features and variables comparison, or of the specific positive and negative dollar value adjustments seen in the appraisal. Rather, it is performed by reviewing the selling price of visually comparable nearby homes, and comparing the homes on a more basic and superficial level. As a consequence, the resulting value determined by a CMA is not a precise dollar figure, but is instead typically a range of value, such as $385,000 to $400,000. The CMA can be done, however, at little or no cost.
First, you will need to locate the addresses of homes in your neighborhood that have sold within the past six months. Once you know the addresses of the homes that recently sold, you should contact the assessor's office of the town or city hall, and ask them for the name of the owner. (Chances are, since it often takes months before their records are updated, they will provide you with the prior owner's name. However, whatever name they give you will aid you in your research.) Next, you need to go to the applicable registry of deeds and review the Deed executed for each comparable home sold. The deed will most likely recite the price paid by the buyer. If not on the deed, the purchase price is often located on some other document available to the public, such as a Transfer
Declaration Page, which is used in some areas.
Most registries have online access, and in these cases, you should be able to view copies of the deeds without leaving your home. Typically, the online procedure for retrieving and viewing deeds is quite user-friendly. Often, the user is able to find the deed knowing only the address of the property or the seller or buyer's name.
Internet Comparative Market Analysis
With the growing sophistication and utility of the Internet, there are several sites that can provide you with accurate sales price information. Some sites will provide you with recent sales prices of all homes with the requested range of street numbers, in case you are not sure of which homes have sold recently. Examples of worthy websites are:
www.FSBOadvertisingservice.com/saleprices.asp and www.domania.com
Other websites will provide you a CMA of your home online after you input the requested information about your home. Some impressive national sites include:
• www.homegain.com; and,
Most of these sites are tied to real estate broker agencies, and will forward your name and contact information to a local broker, who will urge you to allow them to list your home. If you do not mind the solicitation, then the free information obtained through these websites will be worth it. If you do not want to be contacted by a broker and do not mind paying for a CMA, then check out www.ushomevalue.com. This online service will provide you with a comprehensive CMA for your home, as well as recent sales data for nearby comparable homes. You can expect to pay approximately $40 for the report.
Regardless of whether you use the formal or informal method of determining the value of your home, you should consider your own situation, as well as some intangible market conditions, to arrive at a final asking price. For example, if the appraisal dictates a selling price of $450,000, but you are a very patient seller not in a rush to sell, you are just coming into the prime spring buying market, and the interest rates are low, you may consider listing it at $460,000 or even $475,000. If, on the other hand, the CMA suggests a range of $440,000$460,000, the inventory of other homes for sale in your area is high, many are sitting for a while, and you need to sell quickly, then you may want to list the home at $440,000 or lower. In other words, evaluate your own personal situation with the current market conditions to tweak the actual asking price for your home.
Finally, there is a bit of psychology behind effective home pricing. Although $399,900 is only $100 less than $400,000, the difference is much greater subconsciously. The first number in the price of the home is very powerful. A buyer may believe that a house in the 400s is out of his or her financial ability, but may be willing to stretch for a home at $399,900. Moreover, this same buyer may search for a home to buy on a for-sale-by-owner website, limit his or her search by price, and ask to see advertisements for homes from $300,000 to $400,000. If your home is priced $1 more than the $400,000, or if the website provides results exclusive of the low and high limit ranges, the buyer will not see your ad.
Table of ContentsIntroduction
Chapter 1: What is a Mortgage?
- How are Mortgages Structured?
- Promissory Notes
Chapter 2: The Mortgage Industry
- Why Would a Primary Lender Sell a Loan?
- Who Buys These Loans?
- What the Secondary Market Means to You
Chapter 3: Underwriting
- Credit History
- Income-to-Debt Ratios
- The Property
- Sample Gift Letter
Chapter 4: Interest Rates -
- Understanding Interest Rates
- Points and Buydowns
- Locking in Your Loan Rate
- Assumable Mortgages and Prepayment Penalties
Chapter 5: Prequalifying for a Loan
- Using a Real Estate Agent
- Using the Web
- Using a Lender
Chapter 6: The Term
Chapter 7: Payment Plans
- Biweekly Payment Plans
- Graduated Payment Mortgage
- Interest-Only Loans
- Balloon Payment Mortgages
Chapter 8: Fixed Mortgages
- Why is the Interest Rate Always a Little Higher?
- Things to Know
Chapter 9: Adjustable Rate Mortgages
- Start Rate
- Understanding ARMs
- Flexible Payment Adjustable Rate Mortgage
Chapter 10: Hybrid Mortgages
Chapter 11: Jumbo Loans
- Avoiding the Jumbo Loan
Chapter 12: Prepayment
- Changes that Affect Prepayments Today
Chapter 13: Government Loans
- FHA Insured Mortgage Loans
- The FHA Advantage
- VA Loans
Chapter 14: Hard Money Mortgages -
- Bridge Loans
- Sub-Prime Loans
Chapter 15: Junior Loans
- The Piggyback Loan
- The SingleFile Mortgage
Chapter 16: Home Equity Loans
- Home Equity Line of Credit
Chapter 17: Refinancing
- Whether to Do It
- How to Do It
Chapter 18: Manufactured Housing
Chapter 19: Inflation
- Inflation and Mortgages
Chapter 20: Foreclosure
- How Foreclosure Works
- Avoiding Foreclosure
- Doing Nothing
- Foreclosure Scams
Chapter 21: The Purchase Money Mortgage
- The Seller
- Selling the Mortgage
Chapter 22: The Reverse Mortgage
- How It Works
- What You Can Borrow
- Home Equity Conversion Mortgage
- Types of Reverse Mortgages
- Distinguishing FHA with Non-FHA Loans
- The Home Keeper Mortgage
- Future Problems
- Reverse Mortgage Comparison Worksheet
- Reverse Mortgage Comparison Worksheet
Chapter 23: First-Time Buyers
Chapter 24: The Right Loan for You
- Fixed Interest Rate Loans
- Adjustable Rate Mortgages
- Lenders and Mortgage Brokers
- Mortgage Comparison Worksheet
- Mortgage Comparison Worksheet
Appendix A: Amoritization Tables
Appendix B: Home Ownership and Equity Protection Act
Appendix C: The Real Estate Settlement Procedures Act
About the Author