How can someone find out how much a house is worth?
People traditionally turn to either an appraisal or a
comparative market analysis when determining a
property's value.
An appraisal is an expert's "estimate of
a property's monetary value on the open market; an estimate of a
property's type and condition, its utility for a given purpose or
its highest and best use." These principles are considered
standard throughout the country.
The results can be presented to the client in
various ways ranging from a brief summary on a preprinted form,
to a more thorough narrative appraisal report showing all factual
materials, techniques and appraisal methods used in setting forth
the appraisers conclusion of value, or as a letter of opinion
simply giving only the appraiser's conclusion of value, with no
supporting data.
Appraisers, who must be licensed in Massachusetts, consider
numerous factors such as square footage, construction quality,
design, floor plan, amenities and energy efficiency. Other issues
taken into account are neighborhood quality and a property's
proximity to transportation, shopping and schools. Appraisers
also look at lot size, topography, view and landscaping.
Appraisers must view the property in question.
A comparative market analysis is an informal
estimate of market value performed by a real estate agent or
broker after viewing the subject property. Many agents
offer a free analysis or property profile as part of the process
of helping a potential client sell their home.
People also can attempt to do their own cost comparison using
public records maintained by their county recorders' and
assessors' offices. Go to Banker
& Tradesman to search for recent sales. You should be
aware that without having seen recent comparable sold homes you
will be guesstimating your property's value.
Interested in more specifics on property values? . For
an online
market analysis,
click here.
How Can I improve my loan approval
chances? Reprinted from Inman News, Tom Kelly
When it comes to mortgage
lending, strength is not necessarily in numbers.
Bringing more bodies to the deal will not
instantly enhance your chances of obtaining a
home loan. Although many states offer first-time
homebuyer assistance and lenders are willing to
stretch on low-down payment loans for customers
with strong employment credentials, credit repair
and a little additional savings can work wonders.
The key place hopeful homebuyers with awful
credit often error is recruiting an upstanding
person with flawless credit to cosign your loan.
If
you are the primary borrower and owner-occupant,
take some time to perform genuine damage control
on your credit before you lure any partners or
attempt to securing financing. Maybe the biggest
problem is a credit report that's out of date or
incorrect. It's not a bad idea to check your
credit every few years. If you are planning to
buy a home in the next six months, do it now.
There's a difference between a credit agency and
a credit bureau. Bureaus are huge companies that
collect data from banks, court records,
department stores, etc. Agencies typically
research what is in the bureaus and report the
findings to the client.
If an incorrect item appears on a credit
report, it's up to the consumer to see that it is
corrected. For example, if a courthouse clerk
inadvertently punched a summary judgment onto
your record, it's your responsibility to see that
it is corrected. Merely telling the agency is not
enough; you should submit the explanation, or
proof, in writing to the bureau. If you finally
have your credit looking better and still need an
additional push, consider asking the seller to
consider "seller financing" or
"carrying the paper'" on the house.
While most sellers prefer cash, some do not
necessarily want to be cashed out. Sellers check
credit, but not to the extent that banks do.
Typically, a seller will ask to see your tax
statements. It's often up to the buyer to start
the discussions that result in seller financing.
Sellers who need monthly income, perhaps a
retiree, sometimes will consider helping to
finance the house loan.
Young families who are moving up need a lot of
cash and are not good candidates for seller
financing, but it never hurts to ask. In
addition, buyers and sellers also can save some
closing fees. The buyer usually gets an interest
rate from the seller that is slightly below the
market rate. Be as impressive as you can to a
seller. It just might get you in the door. Here
are some other possibilities: Offer a
lease-option -You pay a small payment up front,
usually non-refundable, to the seller for the
option to buy the home on a specific date for a
specific price. This method can be viewed as
renting with a huge first and last month's rent
and a non-refundable damage deposit. It's a
benefit to the buyer because it gives him time
(typically a year or two) to improve his job
history or clear up credit questions. The method
benefits the seller because the option money is
not taxed to the seller until either the option
is exercised or it expires. In the interim, the
seller can depreciate the house.
Parents as partners - The method is popular
with parents who want to help their children find
an alternative to college dormitory living. By
taking an ownership share, the parents get some
tax benefits by renting their share of the house
to their children. Because both are co-owners,
both parties share in resale profits and the
children establish credit. Keep the seller on the
title - You move in, pay as much down as you can,
but keep the seller as co-owner to help qualify
for a mortgage. Set up an agreement that gives
you title on a specific date after you've paid
off the seller or refinanced the deal with better
credit.
Search for an assumable loan – Some
Federal Housing Authority and Veterans
Administration loans are easily assumable.
However, if the seller is to be released of
liability on the loan, then a complete loan
application with credit check is required. Many
homes now have existing adjustable-rate mortgages
that are assumable. Typically, lenders are not as
tough on assumption qualifications as they are
when originating a new loan.
When is the best time
to sell your house?
In addition to supply and demand, and other economic factors,
the time of year you choose to sell can make a difference both in
the amount of time it takes you to sell your home and in the
ultimate selling price. Weather conditions are less of a consideration in some
states than in other parts of the country. Although winter is seen as a slower
time, there are more serious buyers in the marketplace. That can be the silver
lining in a winter market.
But generally the real estate market picks up as early as
February, with the strongest selling season usually lasting
through May and June. With the onset of summer, the market slows.
July is often the slowest month for real estate sales due to a
strong spring market putting possible upward pressure on interest
rates. Also, many prospective home buyers take vacations during
mid-summer.
What steps
should a person take to when preparing a house to sell?
Making your home look as nice as possible may seem obvious.
Apparently, it's not, because many sellers don't do much beyond
vacuuming the living room rug and maybe cleaning the ring off the
bathtub, says George Devine, in "For Sale by Owner,"
Nolo Press, Berkeley, CA, 1993.
Short of spending a lot of money, there are several steps
people can take to make their home show better:
Sweep the sidewalk, mow the lawn, prune the bushes, weed
the garden and clean debris from the yard.
Clean the windows (both inside and out) 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.
Make sure the
house smells good: from an apple pie, cookies baking or spaghetti sauce
simmering on the stove.
The federal budget passed by Congress and signed by President
Clinton dramatically alters the tax treatment on the gain
realized on the sale of a primary residence.
Under the old rules, the only way for a home sellers to avoid
paying taxes on any profit they realized was to purchase another
home of equal or greater value to the one they were selling. And
actually, they weren't avoiding paying the tax on gain, they were
only deferring it by rolling the gain over into the new house. If
they didn't buy a new house or didn't buy within 2 years of
selling the old house, they had to pay a tax on the gain. Sellers
55 years and older could permanently exclude up to $125,000 of
the gain but they could only do this once in their lifetime.
The new change does away with all of that. Hooray! Now all
homeowners filing a joint return regardless of age can exclude up
to $500,000 of their home sale gain and single filers can exclude
up to $250,000. You don't have to buy a larger house or buy
something within 2 years. To qualify for the maximum benefit, the
property must be your primary residence and you must have
occupied it for at least 2 out of the 5 years immediately
preceding the sale. So that means you will be able to take
advantage of the exclusion as often as every 2 years.
And there's more. If you still face a tax liability after the
$500,000 exclusion ($250,000 for singles) you get another tax
break because the maximum rate at which capital gains are taxed
has dropped from 28% to 20% and staring in 2001 the rate will
drop to 18% for assets held at least 5 years.
These rules went into effect retroactively to May 7, 1997. If
you sold you home after that time you can take advantage of the
new law!
Private
Mortgage Insurance (PMI) if putting down less than 20%
down payment
other fees depending on your circumstances
Title insurance premiums...lenders require policy, buyers
should obtain owners policy
What's Personal About Real Estate?
The distinction between personal property and real
property can get pretty personal in a real estate
transaction. An offer to purchase is normally written to
include all real property; that is, all aspects of the
property that are built in or an integral part of the
structure. For example, this would include light
fixtures, attached mirrors, trees and shrubs in the
ground. It would not normally include potted house
plants, free-standing refrigerators, washers/dryers,
microwaves, bookcases, swag lamps, drapes, etc.
If there is any uncertainty whether an item is included
in the sale or not, it is best to be sure that the
particular item is mentioned in the offer as being
included or excluded. Better to be safe than sorry.
As you read ads for "dramatic
new custom homes" , "a perfect marriage of land and
house" and "for the choosy family", you'll also
find ads for homes that don't quite measure up to such glowing
accolades. These are homes that might sell for less because they
need cleaning, decorating, repairs or are for sale by anxious
sellers. These are not considered "handyman specials".
They are decent homes that are not brought up to the 90"s in
decors or systems. They're homes that need a little TLC or sweat
equity. In other words, you need to rent the wallpaper steamer
and strip the walls, paint, wax and varnish and clean, clean,
clean. These homes are worth a look if you want to get more bang
for your buck!
Carefully read the Real Estate
Ads. Check out key phrases like, "needs work",
"bring all offers", "old world charm". Some
ads will simply try to present the property in the most positive
way yet hint at work that needs to be done.
Real Estate Ads are designed to
make the phone ring and to present the homes in the best possible
light. With some practice, you will be able to spot the homes
that are good values. Here are some translations of inventive
Real Estate Ads.
When the Ad says:
The Ad means this:
Comfortable as an old shoe
Older home, probably large
and needs some decorating
Near shopping and public
transportation
Could be on or near a busy
street
Make this your dream home
Could need decorating or
improvements like new baths
A diamond in the rough
When the property is run down
and so is the price! A bargain hunters delight.
Differently modern
Unique home, probably added on to or
custom built. Not for everyone.
The following is a summary from the Massachusetts Association
of Realtors recent update.
"A question that has troubled Realtors for many years is
the disclosure responsibilities of real estate licensees when it
comes to tragic events such as suicides or homicides which may
have occurred at a particular listing. Due to the passage of new
legislation effective 11/9/98 in Massachusetts, the answer to
these types of questions is now clear- absent a specific inquiry
about the incident by the prospective purchaser, there is no duty
for the broker to either investigate or affirmatively disclose
murders, suicides, allegations of ghosts or other potential
stigmas. However, the licensee must answer any question posed by
the prospective buyer to the best of their knowledge."
Ardmore, Bishop
Gardens,Charles, Howe Street Condos, Kendall Green II, Maplewood,
Meridian Place, Mills Falls, Oak Terrace, Prescott Gardens,
Winter Knoll Condos
FRANKLIN
Claremont, Hawthorne
Village, Highwood Condos, Ledgewood, Milliken Hills, Presidential
Arms, Stone Ridge East, Spruce Pond, Westminster Woods
HOLLISTON
Crestview, Regency Park
HOPKINTON
Apple Tree Hill, Walcott
Valley
HUDSON
Assabet Village, Broad
Windsor, Linden Street School, Riverview Park, Valley Park,
Whispering Pines, Central Park
MARLBORO
Centre Place, Cider Hill,
Glen Knoll, Pleasant Court, Ridgewood, Sheffield Court,
Shillington Court, The Woodlands, Waterwind Knolls, Williamsburg
Heights, Wynwood Estates, Pleasant View, Curtis Square, Maple
Grove, Heritage Hill, Elm Ridge, Crystal Brook
MEDWAY
Colonial Park Estates
MILFORD
Milford Country Club,
Laurelwood at Milford, Birch Hill
A Board of registration
will be created for home inspectors to establish standards for
the industry and administer a licensing system.
Home Inspectors will be
required to carry at least $250,000 in Errors and Omissions
Insurance to protect their clients.
Real Estate Agents when
acting as sellers agents will be prohibited from making direct
referrals. They may upon request provide a complete list of
licensed home inspectors prepared by the Consumer Affairs Board.
A real estate agent when acting as a Buyer Agent with a written
contractual agreement between agent and buyer may make direct
referrals.
The Office of Consumer
Affairs is mandated to develop a public education program
regarding the industry including publishing a brochure that would
educate the home buyers about the home inspection industry. Such
brochure shall be required to be given to the buyer by the seller
or real estate agent at the time of signing the first written
contract to purchase.
A naturally occurring mineral fiber sometimes found in older homes. It is
hazardous to health when a possibility exists of exposure to inhalable fibers.
Homeowners should be alert for friable asbestos and always seek professional
advice in dealing with it.
AWNING WINDOWS
A window with hinges at the top allowing it to open out and up.
B
BASEBOARD:
Usually wood or vinyl installed around the perimeter of a room to cover
the space where the wall and floor meet.
BASEBOARD HEAT:
A heating system with the heating unit located along the perimeter of the
wall where the baseboard would be. It can be either an electric or hot water
system.
BREAKER BOX:
A metal box that contains circuit breakers or fuses that control the
electrical current in the home.
BUILDING CODE:
Minimum local or state regulations established to protect public health
and safety. They apply to building design, construction, rehabilitation,
repair, materials, occupancy and use.
BUCKLING:
The bending of a building material as a result of wear and tear or contact
with a substance such as water.
C
CASEMENT WINDOWS:
A sidehinged window that opens on hinges secured to the side of the
window frame.
CAULKING:
Material used to fill joints that may exist between floors and fixtures;
around windows and doors, shower stalls and bathtubs, etc.
CIRCUIT BREAKER:
The safety valves for electrical systems. It interrupts an electric
circuit when an unusual condition arises such as lightning and malfunctioning
appliances. Unlike a fuse, it can be reset.
CLASS B DOOR:
A fire resistant rating applied by the Underwriters Laboratories
Classification for a door having a 1 to 1 1/2hour rating.
CPVC:
Plastic water piping.
CRAWL SPACE:
Shallow space between the underside of the first floor of a house and the
ground.
CUTOFF VALVES:
Valves used to shut water off, generally located under sinks or behind
bathtub and shower access panels. They cutoff hot and/or cold water at the
source without cutting all water off throughout the house.
D
DAMPER:
An air valve that regulates the flow of air inside the flue of a furnace
or fireplace.
DISPOSER:
A device that grinds food sufficiently to enter drains for disposal
without clogging.
DORMER:
A converted attic with windows projecting through a sloping roof.
DOUBLEHUNG WINDOW:
A window with sashes that slide vertically and allow opening from the top
and bottom.
DRYWALL:
A gypsum board material used for walls or ceilings.
DUCTWORK:
A system of distribution channels used to transmit heated or cooled air
from a central system (HVAC) throughout a home.
E
EAVES:
The section of the roof that overhangs the walls of a house.
EXHAUST FAN:
Extracts air or excess heat from the interior of a home.
F
FLASHING:
Sheet metal used at wall and roof junctions and around chimneys to prevent
water entry.
FLUE:
An enclosed chamber in a fireplace that directs flames, smoke and other
gases to the outside air.
FOOTINGS:
Concrete set in the soil (foundation bed) that support the foundation of
the house.
FORCED-AIR FURNACE:
A unit that transfers heat from fuel and circulates heat throughout the
ducts of a house.
FOUNDATION:
The part of the structure upon which all other construction is built.
FUSE BOX:
A metal box that contains the fuses that regulate electric current in a
house.
G
GROUNDFAULT INTERRUPTER (GFI):
A safety device that interrupts surges of electricity in appliances and
other electrical components found in a home.
GUTTER/DOWNSPOUT:
Channel of various materials including plastic and copper supported at the
eaves to direct water away from the foundation of a home through downspouts.
H
HEARTH:
The fireproof surface of a fireplace, usually 18 inches wide.
HEAT EXCHANGER:
A device used to transfer heat in a furnace.
HEAT PUMP:
A reverse cycle refrigeration unit that both heats and cools.
HOT WATER HEATING SYSTEM:
This system heats water to boiling in a water heater, and a circulator
pumps it through a system of pipes.
HVAC:
Heating, ventilating and air conditioning system.
I
INSULATION:
Material used to resist the loss of heat energy. Materials such as fiber
glass, mineral wool, cellulose and foam are placed in the walls, ceilings,
basements and crawl spaces. Insulation may be blown or installed in batt
sections.
J
JOISTS:
Horizontal timbers, beams or bars supporting a floor.
L
LATHING:
Strips of wood or other material used as a base for the installation of
plaster.
LEAD:
A material used in pipes and paint of many older homes. We now know that
lead is hazardous to health. The local environmental protection agency should
be consulted for guidelines on handling, removal and applicable laws.
M
MASONRY:
Construction using materials such as tile, brick, cement, stone or similar
materials.
MEMBER:
Wood or steel elements that make up the framing and foundation of a
structure such as 2 X 4 strips of lumber cut to various lengths.
MORTAR:
A bonding material used in the construction of brick or stone structures.
MOULDING:
Strips of wood or the material used to cover joints between floors and
walls, and walls and ceilings.
P
PARAPET WALL:
A low wall or railing along the edge of a roof, balcony, bridge or terrace
constructed for protection, to control water resulting from rain or artificial
flooding or to insulate against the sun's rays.
PARQUET FLOORS:
A floor that is laid in rectangular or square patterns often made of
prefinished wood or wood veneer squares.
POINTING UP:
The removal of deteriorated mortar between bricks and replacement with new
mortar.
POLYBUTYLENE:
Water piping used for interior piping and the main waterline to the
street. Problems with this pipe have curtailed its use.
PROFESSIONAL INSPECTION:
An inspection performed by a specially trained inspector to provide a
comprehensive report on the condition of a house. This report is usually
written and is often used in home sale negotiations.
R
RVALUE:
A measurement of the ability of insulation to slow the transfer of heat or
cold. The higher the Rvalue, the greater the insulation power.
RADIANT HEATING SYSTEM:
An electrical heating system that distributes heat through cables
installed usually in baseboard panels.
RADON:
A colorless, odorless gas that is emitted from soils, rocks and water as a
result of radioactive decay in certain areas of the country. Radon is known to
cause cancer. Homes should be tested for radon. The local environmental agency
should be consulted on its handling, removal and any applicable laws.
RAFTER:
The structural member or beam that supports the roof. It spans from the
exterior wall to the ridge board of the peak of the roof.
REGISTERS:
Help to regulate the flow of air.
RETAINING WALL:
A vertical structure used to restrict the movement of soil or water.
S
SASH:
Framework that holds the glass in a window or a door.
SETTLING:
The lowering of elevation of a house or pavement due to weight or
shrinkage.
SHINGLE:
Sheets of waterproof material used to cover the roofs of homes and other
surfaces.
SIDING:
Finish material such as wood, vinyl and aluminum used on outside walls.
SILL:
The lowest piece upon which a window or exterior door rests, usually
slanted downward slightly to provide for rain water runoff.
SLAB:
A concrete foundation or floor of a home. Houses built on slab usually do
not have basements.
SOFFIT:
The underside part of a roof that extends beyond the outside walls of a
structure.
SOLAR HEAT:
Heat created from the gathering of solar energy from the sun. It can be
passive or active. A positive system takes advantage of winter sunlight
through windows on the south side of a home. An active system heats through
the collection of solar energy through solar collectors.
SUMP PUMP:
An electric pump, usually installed in the basement to prevent water from
entering the basement area. It empties water from a "well or pit" where it is
collected and pumps it to the outside of a home.
T
THERMOSTAT:
Helps to control temperatures within the home. Thermostats automatically
turn heating or air conditioning on or off as necessary to maintain a desired
temperature.
THRESHOLD:
A strip of metal, wood, marble or other material placed at the base of a
door.
U
UREA FORMALDEHYDE FOAM INSULATION:
A type of foamedin-place insulation that releases formaldehyde gas. It
was banned by the Consumer Public Safety Commission in 1982 from use in
residences and schools. Holding that the risks had not been proven, a Federal
Court lifted the ban in 1983. The local consumer and/or environmental
protection agency should be consulted for additional information on this type
of insulation.
W
WEATHER -STRIPPING:
Made of various materials used to reduce the escape of heat or air
conditioning from a home. It is usually installed around windows and doors.
WINDOW WELL:
The open subsurface space that provides light through a basement window.
Z
ZONE:
A system that allows different temperatures in various parts of a
structure.
Bibliography for Glossary
Appraisal Institute, The Dictionary of Real Estate Appraisal, Chicago,
Illinois The Appraisal Institute, 1993.
Boyce, Byrl N., ed. and comp., Real Estate Appraisal Terminology, Revised
Edition, Society of Real Estate Appraisers, Ballinger Publishing Company,
Cambridge, Massachusetts, 1984.
Friedman, Jack P., Jack C. Harris, J. Bruce Linderman, Dictionary of Real
Estate Terms, 2nd Ed., Barron Educational Series, Inc., Hauppauge, New York,
1987.
Home Ownership Partners, Maintenance and Educational Manual, Home
Ownership Partners, Louisville, Kentucky.
R.S. Means, Inc. Means Illustrated Construction Dictionary, New Unabr.
Ed., R.S. Means, Inc., Kingston, Massachusetts, 1991.
Search
for Homes