Two real estate questions...

[Dtrigg]

Well, the wife and I have almost completed the remodel and are ready to put the house on the market at the end of this month. That brings me to:

1. What's the best way to go about finding the best real estate agent?

2. How can you do a "comp" if there are no "comps"? Inventory levels of available homes here are at a 30 year low here.

Thanks in advance for your help.

Doug

 

[D'Ecosse]

Hi Doug

1. By positive reference from a friend or associate I would think

2. There are always "comps" - in the loosest sense of the word; they will find other sales in the area that are close to sq ft. then make adjustments up or down for differences in condition, features, view, landscaping etc etc. A comp is typically "anything-but" if you have a custom home - the literal interpretation usually applies to tract homes where there are virtually identical floorplans etc, just minor cosmetic or landscaping assets or detractors

 

[Dtrigg]

Thank you my Scottish friend. How does a "comp" differ from an appraisal? Doesn't a "comp" pretty much set my sales price? Will a "comp" have any effect on how much a financial institution will lend the buyer for the property? Sould I get a appraiser, rather than the opinion of the real estate agent?

It is a custom home, and we've just more than $150K in the remodel, with no structural changes! It is an extremely unique home.

Also, thanks again to you and Lud for the Christmas activites. Bet those kids are still smiling, even while riding their bikes in the snow!

 

[coolnsx]

Doug, Try to find an agent that has recently CLOSED homes in your area that meet or exceed the price you expect to ask. Interview more then one but the real good ones hone there "farming" to a certain area. The comp's will be an issue when your buyer needs to qualify for the loan, they are always a mathmatical cluster-Fxxx when dealing with custom homes in good areas in a hot market. Good luck.

 

[Russ]

1. What's the best way to go about finding the best real estate agent?

Have you considered selling your house yourself? I don't know what you'll be selling your house for, but wouldn't you rather put the commission dollars you'd pay a broker into your own pocket? Try an open house before you list with a broker, put up signs in local supermarkets, etc. You may be very happy you did.

 

[Russ]

Thank you my Scottish friend. How does a "comp" differ from an appraisal?

A comp is an informal comparison done by the broker, typically for free, by pulling listings from their MLS database that have recently sold which match on various general criteria. An appraisal is a more detailed analysis done by a professional appraiser who, for a fee (around $250) inspects the property inside and out and employs a mathematical model to compare the subject property to other similar homes, to adjust for the differences between them, to arrive at a more (supposedly) accurate estimate of value. It's worth noting banks require a buyer to obtain an appraisal before they will approve a mortgage loan; comps won't do.

HTH

 

[PHOEN$X]

Hi Doug, maybe this will be of some help:

http://www.realestateabc.com/homeguide/cmavxapp.htm

"Comps", or comparative sales reports (aka CMA), are based on recent sales and primarily, price per square footage. Obviously the more sales there are, the more valid a comp analysis is. In your case, there are a low number of sales, and you invested a significant amount in upgrading your property without actually increasing the available living space size. Therefore, comps probably aren't likely to be very accurate for determining the value of your home, but it's a place to start.

An appraisal, on the other hand, includes some components of the comp, plus it factors in the replacement cost. It is considered to be more reliable and is used by financing companies when reviewing mortgage applications.

As for finding a realtor, I agree with Ken -- word of mouth is probably the best approach. Good luck.

 

[WOODY]

The appraisal includes comps and area analysis such as school district, growth trends etc.... to set a value for the property. the buyers lending institution will generally write loans based on the appraisal done by a company on their"approved " list. it has been my experience that the appraiser will often target a price at or slightly above what you will be asking for the house to "facilitate" the buyers financing.(within reason) . there is enough subjective data in the analysis to allow room to accomodate your asking price.

 

[huckster]

as a lender, we want to see at least one comp from your neighborhood, even if it isnt completely comparable to your home. That is where the gross adjustments come in. For more comparable homes the appraiser may need to go outside your neighborhood, but the closer the better.

Whatever the appraiser does, it is important that they explain WHY they went outside the neighborhood, picked a neighborhood comp that is less than comparable, etc. Too many appraisers fail to do this and then there are problems in the loan process.

You shouldnt need to worry about this unless your house is very unique without any similar sales in the last 12 months.

 

[donwon]

Consideration for upgrades and/or options reflect the variance between the subject and the comparables for various items that impact the sales price and value. These items individually may not be significant; however, when considered in aggregate, do impact the overall value when they change the overall appeal of the home. Consideration is based on market reaction to these items and not cost.

As for the lack of comps, homes similar in size, room count, and other functional factors within the same market area are the first things to be considered. Then adjustments will be made for market reaction to the upgrades or lack thereof.

The appraisal should address these issues with explanations to develop an opinion of value and report it in a manner compliant to USPAP and current lending guidelines. As Huckster stated, it is necessary to give a detailed explanation of any special considerations (comps outside market area) made to develop and report the value.

No appraiser can say that your home is worth nothing because no comparables were available. The supply and demand cylce of the market area will also play a significant part. If no sales are available because no one is selling (demand exceeds supply) or if no one is buying (supply exceeds demand); this will effect the outcome of the appraisal and and market reaction to the home and upgrades. Best of luck.