What is a CMA (Comparable Market Analysis)?

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Before putting a home on the market or listing with a local real estate agent, home sellers obtain a comparative market analysis, also referred to in the industry as a CMA. Sellers use a CMA to figure out the value of their home and what to price their home for sale.

What is a Comparative Market Analysis?

Although reports can vary, from a two-page list of comparable home sales to a 50-page comprehensive guide, the length and complexity of the report depend on the agent’s business practice.

However, standard comparative market analysis reports contain the following data:

  • Active Listings

Active listings are homes currently for sale. These listings matter only to the extent that they are your competition for buyers. They are not indicative of market value because sellers can ask whatever they want for their home. It doesn’t mean any of the prices are realistic. The offered sales prices do not reflect market value until they sell, and in buyers market, for example, most sell for a lot less.

  • Pending Listings

Pending sale homes are formerly active listings that are under contract. They have not yet closed, so they are not yet a comparable sale. Unless the listing agent is willing to share information about the pending sale – and many are not – you will not know the actual sold price until the transaction closes. However, pending sales do indicate the direction the market is moving. If your home is priced above the list price of these pending sales, you could face longer DOM (Day On Market).

  • Sold Listings

Homes that have closed within the past six months are your comparable sales. These are the sales an appraiser will use when appraising your home for the buyer, along with the pending sales (which will likely have closed by the time your home is sold). Look long and hard at the comparable sales because those are your market value.

  • Off-Market / Withdrawn / Canceled

These are properties that were taken off the market for a variety of reasons. Usually, the reason homes are removed from the market is because the prices were too high. The median prices of this group will almost always be higher than the median prices of comparable sales. However,listings cancel, also for the following reasons:

1. Seller’s remorse. The sellers decided they cannot part with their home and no longer want to sell.

2. Priced too high. Nobody made an offer or the only offers received were low-ball offers, which were rejected.

3. The DOM were too long. Agents sometimes withdraw listings so they can put them back as a new listing and fool buyers.

4. Repair requests. The homes were once under contract and after the home inspection, the buyer requested repairs which the seller refused.

5. Seller fired the agent. It’s not uncommon for unhappy sellers to fire an agent and hire a newagent.

  • Expired Listings

This group will reflect the highest median sales price because they did not sell and were probably unreasonably priced. Some of the expired listings could also show up as an active listing, listed by a new agent at a new price. Listings also expire because they were not aggressively marketed or because the home was in need of repairs.

Examining Comparable Sales

Comparable sales are those that most closely resemble your home. It is difficult to compare a tri-level home to a single-story home. Select the homes from this list that are mostly identical to your home in size, shape and condition, such as:

  • Similar Square Footage

Appraisers compare homes based on square footage. Larger square-foot homes are worth less per square foot than smaller square-foot homes. The variance among a group of median-priced homes ideally should not exceed more than 200 to 400 square feet, plus or minus.

  • Similar Age of Construction

Ideally, the age of the home – the year it was built – should be within a few years of other comparable sold homes. Mixed-age subdivisions are common. For example, in one area of Sacramento, a subdivision consists of homes built in the 1950s, and then they jump a couple decades to the 1970s. Although the homes are located next door to each other, the homes loaded with character from the 1950s sell for more than their newer Brady Bunch counterparts. If your home was built in 1980, say, and brand new homes up the street are selling for more, you cannot command the same price as a new home.

  • Similar Amenities, Upgrades, and Condition

Appraisers will deduct value from your home if other homes have upgrades and yours does not. A home with a swimming pool will have a different value than a home without a pool. A completely remodeled home is worth more than a fixer. Homes with one bath are worth less than homes with two or more baths. Deferred maintenance will count against you.

  • Location

Everybody knows that real estate is valued on “location, location, location,” but have you considered what that means? A home with a view of the city, for example, is worth more than a home facing a cement wall. Homes located on busy thoroughfares are worth considerably less than homes on quiet streets. Compare your home to those in similar locations. If your home sits across the street from a power plant, look for other homes with power plant exposure or those located along railroad tracks, among other undesirable locations.

For a FREE CMA of your property visit: www.ModernoRealtyHomeValue.com

Source: The Balance

 

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Questions to ask when looking at homes to buy a home

 

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If you bought a house with no maintenance issues big or small, let us know. That would be one for the record books. In reality, most homeowners find a problem, quirk, shortcoming, whatever, within the first couple of months.

To actively ferret out your home’s trouble spots and head off headaches, know the right questions to ask before you buy. That doesn’t mean potential problems go away, but you’ll have eyes wide open and can adjust your budget accordingly.

And if you’ve already settled in, getting answers to these key questions will help you get to work putting the shine on your castle. Ask the previous owner, your agent, and your new neighbors for helpful answers.

1. Has There Ever Been a Busted Pipe?

A broken pipe isn’t rare; in fact, water damage caused by a frozen or burst pipe is a leading cause of homeowners insurance claims, at around 22% of all home insurance losses, according to the Insurance Information Institute.

What bursts? Typically exposed water pipes in unheated basements and crawl spaces, along with exterior faucets.

Another prime suspect of water damage: old washing machine hoses.

A good inspector usually can tell if water damage has occurred, and any damage should be disclosed by the previous owner at the time of sale. Nevertheless, you should:

  • Make sure exposed pipes in unheated areas are protected with pipe insulation.
  • Install frost-proof spigots on all exterior faucets. The spigots let you put a shutoff valve inside your home so freezing isn’t likely.
  • Check that washing machine hoses are in good condition and replace, if necessary, with braided steel hoses with brass fittings ($11 to $18 for a 5-foot hose). They’re much stronger and longer lasting than rubber hoses.

The big fallout from water damage is moisture problems you won’t see — behind drywall and trim — which can lead to mold. If you know there’s been a major leak, a mold remediation pro ($200 to $600) will tell you if mold is present and the steps required to remove it.

2. How Old is the Roof?

Knowing the approximate age will give you a good idea of how soon you’ll face — and need to budget for — repairs or replacement. A new roof is no small matter: The “2015 Remodeling Impact Report” from the NATIONAL ASSOCIATION OF REALTORS® pegs the median national cost of an asphalt roofing replacement at $7,600.

The most common type of roofing — regular asphalt shingles — needs to be replaced after 15 to 20 years. Here are estimated average life spans for other types of roofing materials:

  • Top-of-the-line (architectural) asphalt shingles: 24 to 30 years
  • Metal (galvalume): 30 to 45 years
  • Concrete tile: 35 to 50 years
  • Wood shakes: 20 to 40 years

If you don’t know the age of your asphalt roofing, use these general guidelines to determine if new shingles are in order:

1. Sand-like roofing granules accumulate in the bottoms of gutters and flow out through downspouts, but otherwise the roofing looks in good shape. Inspect for deterioration in spring and fall.

2. Bare spots begin to appear where patches of protective granules have worn away, and the edges of shingles start to curl — a strong signal that you need new roofing.

3. Shingles become brittle and begin to crack and break. You might be able to replace a few. But if roofing nail heads become exposed (that is, they’re no longer hidden by the overlapping shingles), an expensive roof leak is likely.

Tip: Know how many layers of roofing your house has. Most building codes allow two layers (because of weight concerns): the original roofing, and one re-roofing layer over that.

3. Any Infestations of Termites, Carpenter Ants, or Other Pests?

This should be disclosed by the previous owner at time of sale. But even if the owner dealt with a past infestation — and can offer proof, such as a receipt for pest control — that doesn’t mean the little buggers have been totally eliminated.

Whatever conditions made your house ripe for infestation in the first place — a slow leak under the house, soft rotting wood that attracts insects — may still be present. Plus, many infestations aren’t confined to one house. It may be a neighborhood-wide problem.

Be proactive, because the average cost of a termite extermination treatment around the perimeter of a 2,500-square-foot house is $1,700 to $3,200. Repairs to wooden framing, sheathing, and siding can run from hundreds to thousands of dollars.

You should:

  • Ask neighbors about any problems they’ve had with pests.
  • Seal cracks and holes around your house.
  • Keep attics, basements, and crawl spaces dry and well-ventilated.
  • Make sure gutters and downspouts are in good repair, and that the soil around your foundation slopes away from your house at least 6 inches over a 10-foot distance.
  • Repair or replace any rotted wood.
  • Keep firewood and lumber piles at least 20 feet from your home.

4. Any Pets Buried in the Backyard?

For a grieving homeowner, it can make sense to bury Bosco in his favorite spot under the old oak tree.

On one hand, we sympathize; on the other, it’s kinda creepy. If you didn’t know, you might go out to with a shovel to plant a bunch of hostas. Surprise! You’ve unearthed Bosco.

If you ask this question and the answer is yes, you can:

  • Ask where the animal is buried and simply avoid gardening in that spot.
  • Ask the previous owner to remove the remains.
  • Remove the remains yourself.

If the previous owner refuses your request, you’re not exactly on firm legal ground. Disclosure laws are hazy on this point. Check your state’s disclosure laws.

Most states allow pets to be buried in a yard as long as they’re a prescribed distance from waterways, water sources, and nearby residences (usually 100 to 200 feet); the animal is buried 6 inches to 2 feet in depth; and there’s some sort of precaution (a kitty coffin or a covering of stones would do the trick) so the carcass can’t be dug up by animals. Major cities may not allow any type of pet burial. Aask your county’s board of health and animal control agency for local regulations.

If you find out there’s a buried pet and want it removed, write a letter to the previous owner requesting removal — and keep a copy. If you decide to go to court, you’ll want a document that proves you made the request.

Better yet, hire an attorney to draft a letter. A letter from a lawyer commands attention.

The bottom line: If you drag this all the way to court, it’s probably not worth the aggravation and bad blood. A better solution: Hire someone to dig out the remains and take them away, or do it yourself. Then plant those hostas.

5. Any Paranormal or Nefarious Activity?

Maybe for the sake of party conversation, you’re hoping the answer is yes. Regardless, ask.

Haunted houses fall into the category of what real estate pros call “stigmatized houses” — homes that have been the site of happenings like:

  • Ghost sightings and other paranormal activity
  • A murder or suicide
  • A death due to an accident or unusual disease
  • A meth lab

Again, real estate disclosures aren’t consistent. About half of all states have disclosure requirements for stigmatized houses, although most don’t include ghosts.

If the seller reveals the house to be stigmatized, you’ll have negotiating power. A stigmatized house generally sells for 10% to 25% below market value.

A meth lab carries the risk of residual toxic chemicals. If you suspect that kind of sordid history but it’s not being disclosed, you can check old news accounts or ask the local police for records of arrest.

You’ll want to ask the seller and your real estate agent directly if you’re concerned about ghosts and ghouls, and check your local real estate laws to get the local lowdown on disclosing paranormal activity.

6. What are Monthly Utility Costs?

You can’t get away from paying utilities, so know what your monthly budget is up against. Be sure to get an average cost — not the lowest monthly bill — and ask when peak months are.

While you’re at it, ask what kind of energy sources your house appliances use — gas, electric, propane, or a combination. That’ll help you understand where you might upgrade to energy-efficient appliances to save energy costs.

Remember that energy savings starts with the simplest of tasks, like sealing air leaks.

7. Has the Sewer Ever Backed Up?

As properties age and trees and other plants get bigger, roots find their way into sewer lines between a house and the street, causing clogs. It’s a mess for sure, and most homeowner insurance policies don’t cover damage from backed-up sewers.

Plan to have the sewer line cleared (about $150) every other year.

For $40 to $50 per year, you can add an endorsement to your insurance policy to cover damage from a backed-up sewer.

8. Is There Documentation on Warranties?

If the previous owners were conscientious enough to stash warranties and appliance manuals, be sure to get them.

If you get the paperwork, look for purchase dates on major appliances, so you’ll know how old they are and when they might decide to poop out. If you’re ready to upgrade, you can I.D. which appliances are least energy efficient and target those first.

Tip: Keep all warranty cards and product manuals yourself. If you decide to sell, those records show you care about your house and become a marketing asset.

9. How Much Insulation is in the Attic?

After sealing air leaks and weatherstripping around doors and windows, adding insulation is one of the best ways to gain efficiency and keep your house cozy.

Knowing how much insulation you have lets you decide if an investment in more insulation is worth the cost. In colder regions, for example, a $1,500 attic insulation upgrade from R-11 to R-49 saves about $600 per year in energy costs, and you’ll see a payback in about three years.

The U.S. Department of Energy recommends adding more insulation if the thickness of your attic insulation is less than 11 inches (R-30).

Is the previous owner unsure? Peek in the attic. If the attic floor is insulated and you can see the tops of the ceiling joists, you should budget an insulation upgrade. If insulation was installed between the roof rafters — and you can see the edges of the rafters — you can beef up the insulation by covering over the rafters with rigid insulating foam board.

10. How Big is the Water Heater?

To avoid a family rebellion, make sure your water heater is big enough to cover the needs of your household. Here’s a helpful guide from Johnson, Tenn.-based manufacturer American Water Heaters:

Most water heaters have a life expectancy of about 13 years. A new high-efficiency water heater costs $900 to $2,000, depending on the size and model you choose.

11. When Was the Last Time the Septic Tank Was Pumped?

A typical septic system should be pumped every three to five years, according to the U.S. Environmental Protection Association. But the number of people in the house can affect that recommendation. We like this chart from septic installer Van Delden in San Antonio, showing about how often (years) you should pump based on capacity. A pumping costs $200 to $300.

12. Will My SUV Fit in the Garage?

It’s a fairly common doh! moment “Many garages are too low to accommodate the height of a big, newer vehicle.”

Cabinets and workbenches can shorten overall garage space, too, making length an issue.

With full-size SUVs and trucks nearing 20 feet in length and almost 7 feet tall when equipped with a roof rack, sizing up the garage space is a good idea before you buy.

Worst case: You buy without checking and come sailing happily home for the first time to discover — too late — your Chevy Suburban is too tall to fit in the garage.

Knowing everything you can about your home gives you a leg up on surprises, lets you budget smartly, and gives you royal satisfaction with your new castle.

Source: House Logic by John Riha

Getting top dollar for your home

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If you’re thinking of selling your property, here are the places in every home you should be paying attention to.

With the prime summer selling season coming, you may be wondering which areas of my property can give me the best return on my investment if i decide to renovate.

Here are the five key renovation strategies that are time-tested, require minimal effort and provide options for every budget. These improvements are designed to get you the best bang for your buck and top dollar for your property when you sell it.

1. Flooring

Every single person in a household will touch the floor every day in varying degrees, whether it’s the bedroom, living room or kitchen. It comes as no surprise that upgrading the flooring is a key feature that will go a long way to capture a buyer’s attention.

Here are some key tips:

  • Remove outdated carpets (or at the very least, if that is not possible, ensure the carpets are professionally steam cleaned, looking fresh with no stains, rips or tears).
  • Replace old carpets with either laminate flooring, hardwood flooring or ceramic tiles.
  • It’s been proven buyers view non-carpeted flooring more positively, as it’s easier to clean and helps with family members who have allergies.

2. Fixtures and hardware

These may seem small on the surface, but can make quite a difference. Fixtures and hardware include items such as door knobs, handles on doors and closets, entrances and exits, cabinet hardware, bathroom and lighting fixtures, etc.

They are easy to replace, fairly inexpensive, come in many color and design options, and provide great options for anyone on a budget. The best part is that the seller gets a great return on investment for not a lot of money. These are simple and cheap, but definitely a worthwhile improvement to any home.

On the other hand, if fixtures and hardware have not been replaced, it can really date a property and make it appear as if it has not been maintained.

Just remember, everyone has to either touch a door or walk through it!

3. Bathrooms

Without a doubt, any money you spend on upgrading a bathroom will be worth the effort, as it’s considered the second-most-important room in the house.

Key upgrades include:

  • New tile and grout (floors and shower)
  • New faucet and hardware
  • New coat of paint on walls or cabinets
  • Upgrading or replacing cabinets (this can including swiping out new
  • hardware and sanding down old cabinets and repainting them or replacing them completely)

4. Kitchen

This is the most valuable room in the house – if homeowners only have one place where they can opt to do renovations, the kitchen is a sure-fire bet to pay off.

You don’t need to spend a fortune in order to make it look spectacular.

Here are some simple add-ons or improvements:

  • Add in a new deluxe faucet
  • Change out cabinet door hardware with new handles or knobs
  • Upgrade or purchase new appliances (fridge, range and hood, dishwasher, etc.) with a clean look that complements each piece, giving the kitchen a cohesive design
  • Add new lighting
  • Create a backsplash to help jazz up appearance and functionality
  • Rebuild standard cabinetry at half the price (as opposed to custom cabinets or using expensive materials)

5. Add an income-suite

Depending on the city or municipality, if the neighborhood allows for income suites, sellers could potentially add 150 percent to 160 percent of equity into their home by putting in an extra suite.

This allows you the owner to also potentially receive additional income through a tenant that can help pay off the mortgage or as an additional investment. Depending on the specific market or city, demand for double unit homes can rise by more than 25 percent.

Research the market area of the home – if the city is growing, it means more people will move into that city. Also, check if the government and other institutions are planning on investing into that market; for example, are they planning to build hospitals, schools, universities, new transit system, etc.? This may signal that as the community grows, there will be a greater demand for housing, tenant opportunities and increased equity for homes who can support the upsurge.

If you have any questions please contact us, we look forward to talking with you.

Source: Pillar to Post Inspectors