Category: First Time Home Buyers

What Are Comparable Sales in Real Estate?

On By Brigita DeNapoliIn First Time Home Buyers
Comparable Sales
Townhomes in Holywood, FL

Comparable sales is a term used in real estate when analyzing homes located in the same area, Those homes are very similar in size, condition and features as the comparable home. The term “comps” is also used.

Home – buyers should look at comparable sales when deciding what price to offer for a home they want to buy. Homeowners should use comps inorder to decide on a best price for home to sell.

There are 3 main things that are important in deciding on comparabes:

1. Location.

2. Timeframe.

3. Features.

 

Lets look at these in more details.

1. Location 

Location is the most important when analyzing homes and trying to decide on a home value. There is even saying “3 most important things about the house are : location, location, location“. I have wrote about the importance of location in my blog before. The real estate market is based on property location. The most effective way to analyze the property is to keep as close to the subject property as possible. It is the best to keep the comaprables and the subject properties within the same neighborhood .

If there are not enough comps near the subject home , it’s ok to look futher and expand out. But do not foeret to watch other boundaries, like a school district, and stay within it.

2. Time frame

When looking at the comps that were recently sold, the best comparable sales are in the past three (3) months. Do not go back for more than six months, because it is older data is not reflective of the current market.

The best comparables are homes that are currently “pending.”. A pending home means that a buyer and seller made a deal. Just the final sale price is not known,because the home is not sold yet.

3. Home Features:

After finding the comparable homes in a particular location and getting comps from a recent timeframe, the most important is to look for homes with similar features as a subject home. It is important to look at the prices that homes were sold.

If comparing price per square feet, it will not consider other factors,like lake or golf views, a new designer kitchen, updated new bathrooms.

When comparing home features, it is very important to look for similarities. Let say, the subject home has all four bedrooms on the top floor, look for something similar. Its is very important number of bedrooms, number of bathrooms and totl square footage of the whole house. Also, the size of the lot is very important too. Check if the basement finnished or unfinished. It is possible to make adjustments in price for diffrences , when comparing homes.

 

What Is a Title in Real Estate?

On By Brigita DeNapoliIn First Time Home Buyers
Sheridan Lumbar - business building at 2044 Sheridan St., Hollywood, FL
“Sheridan Lumbar” business building located at 2044 Sheridan St., Hollywood, FL

The title in real estate are the legal rights of property ownership and they are protected and recognized by law. The ownership might be legal interest or equitable interest.

Those legal rights to real estate are many different ones – to own, to use, to posses, to  control, to enjoy, dispose of real estate or interest in real estate.

The main real estate rights are possession and use.

That bundle of rights can be separated even more and held by different parties, for example, some of the real estate rights are:

  • Water rights
  • Mineral rights,
  • Hunting rights,
  • Air rights .

In real estate, land and real property registration and recording gives public notice of ownership information.

Title evidence is proven through title report. This title report  is written up by title insurance company, which show the history of title as determined by the recorded public record.

What Is a Security Deposit

On By Brigita DeNapoliIn First Time Home Buyers
Apartment building in Parkside neighborhood in Hollywood, FL
Apartment building in Parkside neighborhood in Hollywood, FL

A security deposit in real estate is an agreed amount of money held in trust.

One party gives money to the other party in order to secure a real estate transaction.

A security deposit can be given buy a buyer to a property seller as an initial part-payment in a purchasing process. It is done to prevent the seller from selling an item to someone else during an agreed period of time while the property buyer verifies the suitability of real estate, or arranges finance of it. This way the property seller knows that the buyer is serious in buying the real estate. In this scenario, a security deposit is also called earnest money payment.

Also, security deposit is paid when signing a rental agreement. The person renting a property gives security deposit to lanslord. This way the property is protected against default by the tenant. SEcurity deposit is also used to repair any damage done to the rental property by the person renting it.

What is a Foreclosure?

On By Brigita DeNapoliIn First Time Home Buyers

IMG_3782 - What is Foreclosure

When a person buys a house, he usually borrows money in afford the property. Some people can pay cash, but most people have to borrow money.

People have to pay a down payment for the house, and borrow the rest.

By signing a mortgage contract the person agrees,that if he was late making his monthly payments ( the interest and part of the borrowed principal), so the one who provided the loan money can sell the property in the auction and use the money to cover the loan balance.

Foreclosure is the legal process when a lender revokes (or forecloses) a borrower’s right to recover the mortgaged property. The borrower can still get the property back by paying off the entire loan plus foreclosing expenses, but only until the date set by the court. If the owner doesn’t do pay of the loan,so the lender can sell property. Lender applies the received money from the sale to the due amount and pays the left to the borrower. If the money from the sale is not enough to pay of entire debt, the borrower remains liable for the due amount.

What is a Comparative Market Analysis in Real Estate?

On By Brigita DeNapoliIn First Time Home Buyers

IMG_3747 - What is CMA.Real estate agents complete a comparative market analysis for their clients. This helps real estate buyers and sellers decide a price to offer when buying a house or a price to list when selling a house.

Comparative market analysis (or CMA) in real estate is an analysis of the prices at which similar properties in the same area were recently sold.  Real estate agents use CMA to complete a detailed analysis of a home’s worth in today’s market.

Real estate agent has to research information about comparable properties in the area. Real estate professional gets actual information from Multiple Listing Service, which is a real estate industry resource for property records.

The real estate professional looks for recently sold properties that are similar to the subject property and in the same geographical area. Real estate agent compare the properties, adjust for different features and makes estimated value for subject property.

Real estate agent research for different properties in Multiple Listing Service in order to come up with value for the subject property. This includes:

  • Properties sold and closed within the last 12 months.
  • Active listings – properties currently for sale.
  • Pending sales– listings that have sold but not yet closed.
  • Expired listings– properties that did not sell during the listing period.

The price from CMA is for the most part subjective. Don’t be surprised if results of a CMA is a price range rather than a set price.  It is because in some markets is is very hard to determine the subject property price as a result of differences in comparable property age, size, physical condition and architectural style.

Lets not forget, listing prices is only a price at what seller wants to get for the property. It does not necessarily show the actual value of the property. Active listing property is actual current competition for subject property, so it is good to know what competition of similar homes is priced at.

Lets look at the example: the house has 3 bedrooms, 2 baths and a two-car attached garage. It has 1900 square feet of living area. So when making a CMA real estate agent will try to find three or four comparable properties with those same features. However, that not always possible.

Lets not confuse a CMA with an appraisal. A CMA is not an actual appraisal. A real estate appraisal is a comprehensive evaluation done by an independent professional appraiser.