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Category: Useful articles

  • What is a reverse mortgage?

    A reverse mortgage is a loan based on the current paid-up value or equity in your home. Instead of making a monthly mortgage payment, your lender can use your equity to pay you a set monthly amount, provide a credit line for you to draw upon as needs arise, or pay out a lump sum to you. While gaining access to this money sounds great, it’s essential to understand how a reverse mortgage works to avoid any pitfalls.

     

    How does a reverse mortgage work?

    When you have a regular mortgage, you pay the lender every month so you can eventually own your home outright. With a reverse mortgage, you get a loan in which the lender pays you. Reverse mortgages use part of the equity in your home and convert it into payments to you. You do not need to pay back this loan until you move, sell the home, or pass away. When you (or your heirs) sell the home, the reverse mortgage loan balance is deducted from the proceeds of the sale. Any balance remaining from sale proceeds reverts to you or your heirs.

     

    What can you pay for with a reverse mortgage? 

    Here is a shortlist of expenses you can pay for with funds from a reverse mortgage:

    • Medical debt
    • Living expenses
    • Debt consolidation
    • Home improvements
    • College tuition
    • Another home purchase
    • Or, you can use it as supplemental income

     

    There are no stated constraints for how you use the money. But that doesn’t mean you should run right out and get one. Be sure to read the pros and cons to understand if this financial tool makes sense for your situation.

     

    How do I qualify for a reverse mortgage?

    Prepare to shop around for the right type of reverse mortgage to suit your situation. If you meet all of these qualifications, a reverse mortgage might meet your needs:

    • The primary loan holder must be age 62 or older – your spouse may be younger.
    • You must own your home outright or have just one mortgage which you are the borrower.
    • You’ll be required to pay off the existing mortgage using the proceeds from your reverse mortgage.
    • The home must be your primary residence.
    • You must be current on all property taxes, homeowners’ insurance, and other mandatory legal obligations (like HOA dues).
    • You must attend a consumer information class led by a HUD-approved counselor.
    • Your home must be maintained and in good condition.
    • The home must be a single-family home, condo, townhouse, manufactured home built after June 1976, or a multi-unit property with up to four units.

     

    There are 3 reverse mortgage types

    1. Single-purpose reverse mortgages: These are offered by some state and local government agencies and nonprofits. For a single-purpose reverse mortgage, the lender specifies how loan proceeds must be spent. For example, you may only be able to use the funds for property taxes or home repairs. This is the least expensive type of reverse mortgage, and low and moderate-income homeowners can often qualify.
    2. Home Equity Conversion Mortgages (HECMs): HECMs are reverse mortgages backed by the Department of Housing and Urban Development (HUD). You can use proceeds from a HECM for any purpose. This type of loan will be more expensive than a single-purpose reverse mortgage or traditional home loan, including high closing costs. If you plan to stay in your home for a long time, the upfront costs are less of an issue.
    3. Proprietary reverse mortgages: These loans are offered by private lenders. You may be able to get a larger loan from a private lender if you own a high-value home over $500,000. These loans are more expensive than single-use loans and similar to HECMs.

     

    How much money can you get from a reverse mortgage?

    The amount of money you can access from a reverse mortgage will vary with the amount of equity you have in your home, your age, the home’s current market value, current interest rates, and the specific type of reverse mortgage. If you have another loan, lien, or outstanding balance on your home equity line of credit, you will be required to pay the outstanding balances first with any funds you received from a reverse mortgage. The obligation includes any property tax liens, or contractor, or other private liens.

     

    How much does a reverse mortgage cost?

    The costs and terms for a single-purpose reverse mortgage and a proprietary reverse mortgage can vary. You’ll want to shop around with different agencies and mortgage lenders to find the most favorable terms. Costs for HECM loans are well-documented since the government backs such loans. However, you will not need to pay loan costs out of pocket because the costs can be covered by loan proceeds, which will reduce the net loan amount available for expenses.

     

    HECM costs include: 

    • Mortgage Insurance Premium (MIP): This mortgage insurance guarantees that you will receive expected loan advances. You can finance the MIP as part of your loan. Initially, you will be charged 2% of the loan amount for MIP at closing. This is followed by an annual MIP equal to 0.5% of the mortgage balance over the loan’s life.
    • Third-party Charges: Third-party costs include an appraisal, title search and insurance, surveys, inspections, recording fees, mortgage taxes, credit checks, and other fees. These costs are paid at closing.
    • Origination Fee: Like any mortgage, the lender gets paid to process your loan. A lender can charge the greater of 2% of the first $200,000 of your home’s value + 1% of the amount over $200,000 or $2,500. All origination fees are capped at $6,000.
    • Servicing Fee: Service fees over the term of the loan cover services that include sending the account statements to you, paying property taxes and insurance on your behalf, and disbursing loan proceeds. If the loan has an annual adjusted interest rate or a fixed interest rate, the service fee caps $30 per month. If your interest rate adjusts monthly, the monthly service fee caps at $35.

     

    At loan closing, the lender deducts the first servicing fee from your available funds and then adds each monthly servicing fee to your loan balance. Alternatively, lenders may include the servicing fee in the mortgage interest rate by charging a higher rate.

     

    Reverse mortgage pros and cons

    Pros: 

    • A reverse mortgage can give you financial options and additional income during retirement.
    • If the primary loan holder passes away, the spouse can stay in the house and continue to receive payments from the loan.
    • You don’t have to make monthly mortgage payments.
    • Depending on the type of reverse mortgage, your funds can be used for any expense.
    • It can be used as a way to stop or prevent foreclosure and loss of the home.

    Cons:

    • You will owe more over time due to interest on the loan.
    • You could lose your home if you don’t maintain payments for property taxes and insurance.
    • You reduce the equity in your home because you are, in effect, lending it to yourself.
    • The upfront cost of a reverse mortgage can be thousands of dollars.
    • Your heirs may not be able to keep the home if they can’t afford to pay off the loan.

    Is a reverse mortgage a good idea? 

    While a reverse mortgage involves certain complications, it can be an excellent way to supplement your income during retirement, pay for medical expenses, or home improvements that allow you to age in place. As with any loan, it makes good sense to shop around for the best terms and fees. Guidance from a HECM counselor can help you make the best choice.

  • Mortgage Misunderstandings That Can Cost You

    The spending season is upon us. But that doesn’t mean you should be spending in excess everywhere you go. Just like you may be waiting for the best deals on those perfect holiday gifts, you also should be aiming for the best deal if you’re shopping for a home mortgage.

    Unfortunately, just like the flurry of holiday sales can have you confused about what price is best, a few mortgage misunderstandings could confuse you also. Today, we’re debunking five common mortgage misunderstandings that could be costing you more money.

    1. “I don’t need loan pre-approval to find the right home.”
    Beginning to look for a home before you know what you can afford actually can cost you a lot more than just money. It could cost you the home of your dreams. In today’s competitive market, buyers who take the time to gain loan pre-approval before they begin searching for a home are seen as more credible than those buyers who just start looking. So, if you fail to gain mortgage pre-approval and happen to enter into a bidding war with a buyer who has already secured that lender “OK,” you may lose out on a home that seems to be just perfect for you.

    2. “As long as I’m approved, my credit score doesn’t matter.”
    When you go to buy a home, of course, mortgage approval is your main concern. So, if you know you have a credit score that is good enough to get your mortgage approved, you may not be worried about trying to boost it just a bit higher. But, in fact, you should! A higher credit score often means a lower interest rate, which means lower payments throughout the course of your mortgage. Ultimately, that means you pay less for your home. Your credit score matters – a lot!

    3. “Once I’m approved, I can stop looking for a mortgage.”
    Though gaining initial loan pre-approval is an immensely satisfying feeling, it does not mean that you can stop shopping around. If you do, you could miss out on the best rate. Instead, you can take that initial pre-approval and continue shopping for a better rate with peace of mind, knowing that your mortgage can only get better!

    4. “My home only costs as much as my mortgage payment.”
    Once you gain loan pre-approval, you may begin to try to determine what your monthly mortgage payments will be. But don’t be fooled into thinking that estimated payment will be the only monthly expense associated with your home. You need to include property taxes, insurance, and possible homeowner association fees as well. When you add in those necessary extras, you need to make sure you’re not pricing yourself out of your available budget.

    5. “I don’t need to put 20% down on my home.”
    Frankly, you’re right. You don’t. But this mortgage misunderstanding certainly can cost you. If you choose a conventional loan that is lenient when it comes to your down payment, you’ll probably be paying a little extra in other places. It is likely you’ll need to pay for private mortgage insurance, or PMI. You’ll also likely face a higher interest rate than a buyer who is willing or able to put more money down. If you can afford to put the entire 20% down on your new home, save somewhere else by making that payment!

  • Tips For Online Home Searches

    Today’s home searches do not begin by simply driving by a “for sale” sign and stopping in to view a home. In many cases, buyers begin searching for their next properties from the comforts of their current homes.

    In fact, online home searches have become such a reality for today’s home buyers that listing photos have become an integral part of curb appeal. If you’re planning to start your new home search online, how can you be sure you’re finding a home that will match your needs?

    Here are five tips to help you get your online home search started:

    1. Know your needs and wants list.
    One major difference between searching for homes online and scouring local neighborhoods for available homes is the sheer number of homes available. If you don’t have a clear idea of the features you want to find in a home, you might spend a lot of time sorting through available inventory online to find even a couple homes that meet your desired criteria. Spend some time before you begin your search and determine the home features that are most important to you. Focus your online efforts on finding homes that meet all or most of those criteria.

    2. Use available tools to narrow your home search.
    Once you have a good grasp of the home features you’re looking for, allow online search capabilities to assist you! Use search filters to eliminate homes that are not in your price range, or those that do not have the features you’re looking for. Want a single-family ranch with at least three bedrooms, a finished basement, and a little yard space? Use search filters to find homes that might meet all or most of those wants.

    3. Be sure to do neighborhood research.
    You can learn a lot about a home through an online search. Once you find a home or homes that might be right for you, be sure to take time to learn about their neighborhoods too. Check out what kinds of restaurants, entertainment options, and amenities are nearby. Learn about the schools, commutes and crime rates too. Even if a home seems to have everything you’re looking for, it’s location might not be right for you and your family. Research any neighborhoods you might not be familiar with when you’re searching online.

    4. Don’t believe everything you see.
    A picture is worth 1,000 words, right? When it comes to an online home search, buyers might need to make sure those 1,000 words are accurate. Professional listing photos can paint an incredible picture of a home. And kudos to all sellers who represent their homes with awesome listing photos. But, buyers beware, seeing really is believing when it comes to a home. Let online photos draw you into a home, but take the next step and schedule a showing before becoming too captivated. Make sure the real thing lives up to the online representation during your home search.

    5. Hire a professional to guide your search.
    An online search is a great place to start looking for a new home. Once you find a home or a few homes that you’re interested in, allow a professional real estate agent to schedule showings for you. Once you share the homes you’re interested in with your agent, he or she might be able to point you to other homes that meet your desired criteria too. Of course, your agent will also represent your needs when it comes to negotiating a price, working with inspectors and other service professionals, and helping you get all the way to closing.

  • Buying a Home with Friends: Conversations to Have Beforehand

    Some of them have been around since you were a child. Some you may have found in college. Some may even be in your neighborhood or at work. No, we’re not talking about your sweater collection—though sweater season is in full swing. We’re talking about your friends. You know, the people who you rely on, confide in and maybe even vacation withY

    You probably have no reservations about sharing secrets with your friends, but have you ever considered sharing a mortgage with them? It is not uncommon for friends to join forces to take on a second mortgage for a vacation home or investment property. It seems like a no-brainer, right? You’ve already vowed to be friends forever. A 15-or-30-year mortgage should be no problem

    However, even the most maintenance-free friendships can face some tough times when it comes to sharing a home purchase. That is unless both parties are prepared for what co-ownership may bring. If you’re considering buying a second home with a friend, here are three major conversations you must have first.

    How will you split the costs?
    Unless you and a friend are planning to pay for a second home with cash, you’ll both be responsible for making monthly mortgage payments on the property. And, no, splitting a mortgage is not like splitting the bill for a night out. Having a conversation about fees like the down payment, closing costs and monthly mortgage payment is crucial before you even begin to consider looking at homes together.
    While you’re chatting, don’t forget to include other monthly homeownership fees like utilities, regular maintenance, homeowner association dues or other services. It is also important to bring up potential scenarios like plumbing issues, roof leaks or other home damage. How will you split all of the certain costs that come along with owning a home?

    What will happen if someone is unable to hold up their end of the deal or wants to get out of the mortgage?
    Any conversation about the potential costs of owning a second home must be accompanied by a conversation about what will happen in the event that one or both parties is unable to make their payments or wants to leave the agreement altogether. Though this conversation may not be as fun as reminiscing about your old college antics, it is a must-have talk before you can confidently enter a home purchase with a friend.
    With all the excitement of potentially owning a vacation home or investment property, who wants to get mired down by thinking about the negative aspects of sharing a mortgage? Hard times happen for everyone. Before they happen in your blissful home-buying experience, have a plan. Will one person take over the entire mortgage payment? Will you be forced to sell the property? Make sure you consider the “what ifs” before you and your friend are forced into an uncomfortable situation.

    How will you use your new property?
    Once you get the tougher financial conversations out of the way, you can begin to consider the possibilities of what it will be like to own a second home with your friend. If you’re planning to purchase the home as a vacation property, you’ll need to decide if you’re going to split time there, vacation together or rent it out on a seasonal basis.
    If you and a friend are looking to buy a second home as an investment property (or if you’re planning to rent out that vacation home), you’ll need to draft a rental agreement, plus decide how you’ll deal with tenants and their issues. You’ll also need to map out a plan for marketing and maintaining your property so that it continues to be a worthwhile investment.

    Are you prepared to have a few tough financial conversations with a friend? Are you also prepared to face a few certain disagreements along the way to happy homeownership? If you confidently answered “yes,” you—and your friendship—may be ready to stand the test of owning a second home together!

  • Military Members: Things to Consider When Buying a Home

    For anyone interested in buying a home, there are a lot of decisions to be made. From the type of flooring they may want to the type of loan they may qualify for, this major purchase comes with major choices. For the men and women who serve in our Armed Forces, there are even more things to consider when it comes to buying a home. Here are five things to think about if you are a military member who is considering buying a home:

    1. Location
    When you commit to buying a home, you’re making a long-term commitment. While it may not be your forever home, you’ll want to own the home long enough to recoup your investment—and then some! So, if you’re in the military and know that you are likely to move in the near future, it may not be the right time to buy. If you are confident you will be spending significant time in your current assignment, you could be in the right place to buy. When it comes to location, you’ll also want to consider your proximity to your base. Some may prefer to live close to base, while others may want to physically separate themselves from their daily work life.

    2. Family
    Because deployment is certain when it comes to military life, you must consider what your family will do while you are deployed. Will they stay and live in your home or are they likely to travel to stay with a family member while you are away? If you know they are likely to go home to be with family, you’ll have to consider who may take care of the house while you’re all away. If your family will be living at your home, you’ll want to make sure you buy in an area where they are close to any amenities they’ll need in your absence.

    3. Service
    We’ve already mentioned deployment and how your time away may affect members of your family who stay behind to live in your home. But, as a military member, you also need to consider where you are in your career. If you are at the beginning of your military career and starting to build a family, buying a home may be ideal for you. If you are nearing the end of your service and have an interest in traveling or exploring other career paths, you may want to hold off on buying for now.

    4. Money
    As a member of the military, you’ll likely qualify for a VA loan. This mortgage requires no down payment and does not carry private mortgage insurance. Since you won’t have to save as much money as some other buyers, you may be enticed to spend more on a home. But, do not forget about those monthly mortgage payments. Make sure you’ll be comfortable carrying the mortgage you apply for.

    5. Future
    No matter where you are in your military career, before you decide to buy a home, it is important to consider the future. Even if you know you may receive new orders or be deployed in the short-term, if you’ve fallen in love with a certain area, you may have plans to stay even when your military career ends. If this is the case for you, it may be the right time for you to go ahead and buy your forever home.

  • Signs It’s Time to Sell After Retirement

    Even the happiest of professionals can admit that they dream of retirement from time to time – and maybe even more frequently. And, why not? For many, retirement means more time to spend with those you love, doing the things you love.
    But when you’re used to an income that allows you to live a particular lifestyle, then that income changes, it can be difficult to maintain the lifestyle you’ve grown accustomed to. Some retirees look at the lifestyle change as an opportunity to sell their home and simplify. Some homeowners decide to stay in their homes long after retirement. How will you know what decision is right for you?
    Each person and their financial situation at retirement are different. But if you’re inching closer to retirement and you’re not sure what to do with your home, here are five signs that it might be time for you to sell:

    1. You need more money.
    Selling your home when you retire will allow you to downsize and simplify a bit, which can equate to fewer financial commitments. However, if your home is paid off, selling might also add to your retirement funds, which will allow you more freedom to travel or enjoy the things you’ve been looking forward to.

    2. You’re looking for less responsibility.
    Owning and maintaining a home requires quite a bit of cleaning, seasonal maintenance, and upkeep in general. When you sell a larger home to move into a smaller space or one with added amenities, like landscaping or housekeeping, you can say goodbye to some of the time-consuming tasks that come along with home ownership.

    3. You feel like you don’t fit in.
    When you’re a new family and you live in a neighborhood with close neighbors who are at similar stages of life, the sense of community can be amazing. If you grow older and notice that your neighbors seem to be turning over every few years, new families might remain the community norm. If you’ve watched your children grow up and leave the nest, it may be your turn to flock to somewhere new next.

    4. Your retirement plans include a lot of travel time.
    If your retirement aspirations have you sailing around the world or visiting cities and countries you’ve never seen, it simply might not make sense to hang on to a big home. If you do, you’ll need to hire someone to handle the regular maintenance and upkeep responsibilities. If traveling is high on your retirement priority list, you may only need a small crash pad where you can stay between trips.

    5. If you have children, they have moved away.
    For grandparents, retirement can mean taking on a new role of spending more time with their grandchildren. If your children have moved away and seeing your grandkids means you’ll need to leave your home for an extended period, it may not make much sense to keep the home you’ve been living in. On a similar note, if your children have moved away and you intend for them to be your heirs, it may make financial sense to leave them a nest egg, rather than a piece of property that is far from them. They’ll eventually have to sell or hire someone to look after the home, which may not be financially worth it!

  • How to Protect Your Home From Severe Cold Weather

    Homeowners in cold-weather climates face icy conditions, blizzards, and other cold-weather storms. Beyond barring you from being able to leave your home, severe cold weather can threaten your home’s structure and your safety. It’s important to take preparatory measures and invest in the resources you’ll need to deal effectively with winter’s challenges before it gets into full swing.

    Understand the threats of severe cold weather

    Blizzards: Storms with heavy winds and large amounts of snow accumulation can cause roof or other structural damage and leave you isolated.

    Ice storms and ice dams: Ice storms coat structures, trees, power lines, cars, roads and virtually everything else with ice. As the ice melts, large chunks can fall and cause injury to anyone below. When ice melts during the day and then re-freezes at night, ice dams—which block water from flowing in the gutter—may form. This condition can force water back under the roof line and cause leaks.

    Sleet or freezing rain: Combinations of snow and freezing rain may cause slippery conditions and coat roads, sidewalks and driveways with ice when temperatures drop.

    Protect yourself from severe cold weather

    The Federal Emergency Management Agency (FEMA) recommends that homeowners have shovels on hand, as well as melting agents such as rock salt. Some of the new, more environmentally friendly deicers include calcium magnesium acetate and sand to improve traction. Be sure to stock up early in the season, as these agents tend to be in short supply during periods before a well-publicized storm.

     

    FEMA also advises you have enough fuel to maintain heat in your home, as well as a backup heating source: firewood if the home has a working fireplace or a generator to power heaters in case of power failure. However, use caution as these can represent fire hazards when not used correctly. Be sure to follow directions explicitly and keep a fire extinguisher. Some generators and fireplaces also require proper ventilation, according to the Institute for Business and Home Safety—so follow directions carefully and keep them away from curtains or other flammable items.

    Stock up on extra blankets, warm clothing and enough food/water to sustain your family in case of a few days of isolation. And a transistor radio with fresh batteries can help keep you updated on news and information in case of a power outage.

    Protect your home from severe cold weather

    Before winter, there are some precautions you can take to protect your home from the ravages of severe cold weather storms.

    Winterize your home: Check shutters, siding and other exterior materials to ensure they’re secure, says retired contractor, home improvement expert and writer John Wilder of Jacksonville, FL. High winds, ice and moisture from winter storms can easily strip off such outside elements if they’re loose.

    Be sure that gutters are clear of debris and walkways are even—and don’t represent tripping hazards that can be exacerbated with snow or ice. Caulk drafty windows and apply weather stripping to doors, both inexpensive strategies that can keep heat in your home. Air sealing can help you save about $350 in energy costs or one-third of your average annual heating and cooling costs. The average annual home energy bill is about $2,200, according to Energy Star—of which about $1,000 represents heating and cooling. An assortment of air sealing materials and tools—including silicone foam, caulk, aluminum flashing for flues and additional insulation—will run roughly $100 to $350.

    Winterize pipes: Be sure your pipes, especially those exposed or in unheated areas like crawl spaces, are wrapped in insulation to prevent freezing and bursting. Also, learn where your water shut-off valves are so you can turn off the water supply in case of a leak. Six feet of insulation can cost anywhere from $7 to $17; it’s available at most home improvement stores.

     

    Trim tree branches: Branches that overhang roofs or areas where you park your car—or which are simply overgrown—represent a risk to structures, vehicles and people. Keep trees trimmed and remove those that are weak or sickly to prevent them from falling on or near your home. Tree trimming and removal pricing varies greatly, and you may have additional restrictions if you live in an historic community—or if the trees are close to power lines.

    Check with your municipality about any regulations and contact your local Chamber of Commerce, municipal offices or contractor rating sites like merchantcircle.com or angieslist.com to get the names of reputable pros. Tree trimming and removal can be dangerous, so don’t attempt it on your own unless you’re experienced.

     

    By keeping your home in good repair and stocking up on the supplies you’ll need before the rush for rock salt and shovels begins, you’ll be as ready as possible to tough out the storm.

  • Five Reasons to Replace Your Windows

    Replacing your home’s windows can seem like a task that is not your top priority, but the benefits you can gain will make a huge difference.  Over time, windows need to be replaced, just like your appliances or roof shingles. Don’t wait until the weather gets cold, now is a good time to take a look at your windows and determine if they will need to be replaced.

    1. Energy Efficiency
    If you are starting to notice your energy bills are going up, you might want to take a look at your windows to see if they are the cause of the problem.  Window replacement is a common recommendation among construction professionals as a way to improve energy efficiency. According to a study on the energy performance of residential windows, new windows reduce annual heating and cooling costs by 22%.  Although new windows are an investment, they will save you money in the long run. Now is the time to swap out your old windows with double-pane, energy-efficient windows.

    2. Window Defects
    If you start to notice any defects in your windows, such as small cracks or chips, it is a good time to replace your windows.  Leaving a crack will only cause more damage in the future. Some problems include air leaks, water leaks, and letting in small insects. Visible cracks also weaken the strength of your window.  Having a crack or broken window can cause a lot of problems down the road. It is a good idea to replace them sooner rather than later to save money.

    3. Security
    Windows are an entry and exit point to your home so windows that aren’t opening or locking correctly pose a security risk. Some signs that burglars might look for to identify vulnerable windows include old or wooden windows, windows with cracks, or condensation in windows.  You also don’t want small critters like bugs or chipmunks getting through window openings.

    4. Curb Appeal
    Updating your windows might seem odd to increase your curb appeal, but instead of simply focusing on changing the outer appearance of your home, be sure to incorporate changes that add into your home’s structural integrity and energy efficiency. For instance, if your window frames have rotted then you’re ready for new windows.  They will not only improve the functionality of your home, but the appearance too. Installing new windows will increase the value of your home and make it more appealing.

    5. Value
    If you’re thinking of selling your home in a few years, replacing the windows can help your home stand out in a crowded market, plus raise its value before you list your home. Some buyers love buying homes that are not only move-in ready, but updated with modern amenities. New windows improve your home’s marketability and help you command a higher selling price.

    If you have old windows in your home or are planning on listing your home soon, now is the time to replace your windows.

  • Comparative Market Analysis Basics

    With the end of the year here, home sellers are doing whatever they can to make their homes the most on the market. To attract prospective buyers, things like well-maintained curb appeal and properly staged rooms are a major help. But there is one factor that can drive buyers to—or from—a home in a hurry. If the sales price is wrong on an otherwise perfect home, it may never stand a chance of selling.

    If you’re planning to list your home this fall, you’ll obviously want to set a fair and competitive price. To do so, make sure your professional real estate agent completes a comparative market analysis, or a CMA. This report of similar homes that are currently listed, have recently sold or have even been withdrawn from the market, can give sellers the extra confidence and peace of mind that they are setting the right price to get their home sold.

    Why is it so important to compare your home to others on the market? Reviewing other homes that are currently for sale makes you familiar with your competition, but it won’t dictate your sales price point. Instead, your agent will review similar homes that already have sold (typically within the last three months). These homes paint a truer picture of what buyers are willing to pay—and where appraisers are likely to value your home. Armed with this knowledge, sellers can more easily set the right price for their homes.

    What aspects go into a CMA? With so many homes on the market, how is a real estate professional to know which homes to compare a seller’s home to? Well, they examine a few key factors in homes that have recently sold:

    1. Age
    When real estate agents look for comparable homes, they look for homes that were built around the same time. Particularly in today’s planned developments, construction and layout among homes are similar, which makes for a more even comparison. So, if a home that has recently sold has the same layout as a seller’s home, it might be a good candidate for the CMA.

    2. Size
    Of course, square footage is also an important factor when completing a CMA. But, as we’ve mentioned, when real estate agents compare similar homes, they also look at the layout. Why? It is a lot easier to compare two two-story homes to each other than it is to compare one two-story home with a ranch. Agents will look for homes that have similar square footage and structure when they are completing a comparative market analysis.

    3. Location
    Frankly, a two-story home in the city and a two-story home in a far-off suburb are not ideal for a CMA. Though they may have a similar construction date and layout, their respective locations make them far less than a match when it comes to an equal comparison. Instead, agents look for homes that have recently sold in or near the same neighborhoods where their clients are planning to list their homes.

    4. Extras
    So, a real estate agent finds a few homes with similar construction dates, layouts, and locations. What do they look for next? The amenities. Ideally, if a seller is hoping to set a higher price point, their home will have a few more amenities or upgrades than homes that have recently sold. We’re talking about finished basements, upgraded flooring and possibly an incredible walk-out deck. OK, that may be a stretch, but if a seller is hoping to set a higher price, upgrades matter when it comes to a CMA.

  • Realtor® vs. Real Estate Agent: Deciphering the Difference

    While you may think the terms “real estate agent” and “realtor” can be used interchangeably, that is just not the case. In fact, there are several differences between the two. Today, we’re shedding some light on a few of those determining factors – along with some similarities, too.

    First and foremost, they’re both legit. Both real estate agents and realtors have taken the necessary courses and passed the required licensure exam to help buyers and sellers complete their real estate transactions. That may be their biggest similarity. Their biggest difference is pretty simple too… Realtors belong to the National Association of Realtors (NAR), while real estate agents do not. What does that mean?

    Realtors practice real estate under the NAR code of ethics. Basically, they agree to work with other real estate professionals to ensure that their clients’ best interests are met. What does that mean to a buyer and seller? Well, obviously, it means their realtor pledges to do their best to help their client buy or sell a home. What it does not mean for those clients is that their realtor will do this unethically. Realtors also pledge to treat all parties in a transaction with honesty.

    What are the consequences for violating the NAR code? That is pretty simple too. Realtors who are found to have acted in a way that is not in accordance with the code of ethics can have their “realtor” title removed.

    Do these differences mean that you’ll only receive honest, reputable service from a realtor? Absolutely not. What this information means is that you need to choose the person who will be representing your home sale or purchase very carefully.

    Here are three tips to help you make sure you select the right real estate agent:

    1. Take advice from family and friends.
    When a family member or friend has had a good (or bad) experience during a real estate transaction, they are bound to want to talk about it. If you have friends or family members who are particularly happy with their home sale or purchase, find out what it was they liked most about their real estate professional – and find out if they would use that person again.

    2. Read the reviews.
    Family members and friends are not the only people who want to share their opinions about their real estate transactions. Use tools like social media sites and online reviews to confirm the word-of-mouth advice you receive.

    3. Conduct your own interviews.
    As with any advice, take real estate recommendations in stride. Reach out to the real estate agents or realtors who’ve helped your family and friends. But make sure they can help you too. Ask them about the things that matter most to you when it comes to your transaction. See if they will be a good fit for you. Once you’re satisfied, select your real estate professional, and rely on their honesty and expertise to carry your home sale or purchase to completion.