Q: How much is the commission?
A: 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.
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Q: How long will it take for our house to sell?
A: 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.
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Q: Can other Realtors show people our home?
A: 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. 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.
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Q: How is a home’s value determined?
A: The fair market value is the price that property a would sell for on the open market under usual conditions. Thus, the FMV is significant to those who own a property, as well as those who must pay taxes on that property.
Unfortunately, there is no easy or universal way to determine market value for real estate. However, nearly every market valuation comes down to two factors: real estate appraisals and recent comparable sales.
The economics of the market value plays a part. For the real estate market, a buyer must value a property higher than the amount they are willing to trade for that property. At the same time, the seller must value the property at a price below the money offered. Of course, the supply and demand for a home in a given region will play into these economic pricing evaluations.
An appraisal is a professional opinion of value. During a home sale, the bank that offers the home loan will typically select an appraiser to render an opinion about the value of real estate as of a specific date.
Comparable sales, also known as the “market data” approach, is the most common way to arrive at market value. Here, the recent sales of properties of similar stature are reviewed to inform judgment.
IRS Publication 561 is the governing tax code publication for the fair market value of real estate. This publication does not set aside a section for determining real estate market value, yet it states “a detailed appraisal by a professional appraiser is necessary” for proper valuation.
The bottom line is that regardless of how you value a property, at the end of the day, the amount of money received for a home will be negotiated between a buyer and a seller. Each party may use valuation techniques to help argue their case, but a deal is typically reached with some compromise and some personal back-and-forth.
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Q: What is the difference between market value and appraised value?
A: Market value is essentially what the buyers are willing to pay for a home, aside from what the sellers list it for. Just like a traditional market, buyers and sellers have the option to negotiate a deal.
There are several factors that can determine market value:
- Comparable listings (comps) of similar homes in the area
- Property features and overall condition
- Reviewing current real estate trends
Essentially when you hear the term “market value”, it’s the price a seller can reasonably expect to secure for his or her home.
The appraised value of a home is determined by a third-party licensed appraiser. When a buyer is needing to secure a mortgage, the lender will order an appraisal before they approve a buyer’s loan to help minimize the risk. If the appraisal comes in lower than the offer, buyers and sellers can renegotiate the deal, or the buyer can essentially choose to walk away.
A few factors that determine appraised value are:
- Square footage
- Code compliance
- Interior/exterior condition Location
- Comparable listings of other homes in the area
Each appraiser will take a different approach to their home inspection, while also looking at the value of other homes as a part of their decision-making process. It’s important to note that the appraised value is not up for negotiation like market value is.
In summary, market value and appraised value are two different ways to determine the value of a home. Market values are decided by buyers and sellers, and appraised value is calculated by a licensed appraiser.
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Q: Who pays the real estate commission?
A: The services of a Buyer’s Agent is 99% of the time at no cost to the buyer. With listed property for sale the seller of the home has already agreed to pay the real estate commission.
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Q: What are closing cost?
A: Closing cost are lender fees, attorney fees, taxes, homeowners insurance premiums and state taxes associated with getting a new mortgage. There are very little closing cast associated with a cash sale.
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Q: How do you choose between fixed and adjustable rates?
A: There is risk involved in selecting an adjustable rate mortgage, or ARMs, because rates may go up. On the other hand, a fixed-rate loan offers good protection against rising interest rates but the borrower is stuck with the initial rate if interest rates drop.
Statistics show that home buyers who have chosen ARMs since 1981 have saved thousands of dollars. For a period, the percentage of home buyers applying for ARMs rose substantially, then buyers and homeowners began flocking to fixed-rate loans.
Whether to opt for a fixed or adjustable rate mortgage is a matter of personal choice. The first route offers stable payments; the second offers lower initial payments. Another consideration is the length of time a buyer plans to own the home. If you’re planning on moving within three or four years, an ARM makes sense even if rates do nothing but rise during that period of time.
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