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Tag: home buying process (Page 1 of 14)

The home buying process consists of many steps. You’re going to need to find a real estate agent, obtain a mortgage, close on the home, etc. By the way, was only to name a few. In general, there are around at least 7 to 10 steps. In this archive, you’re going to find anything and everything related to buying a home. The first thing to do is research, and hopefully, the information you find here will be a great homebuyer guide.

The first step of the home buying process is to find a real estate agent. Looking for a real estate agent has been made easy nowadays with the internet. All you need to do is simply run a quick Google search for Realtors in your area. Then again, you can always ask friends and family for referrals. Another essential part of the process is to get pre-qualified and then pre-approved. The latter is the closest you can get to showing creditworthiness without actually buying the home itself. Therefore, I recommend that you get pre-approved before submitting offers. That way, the seller will know you’re a serious homebuyer who isn’t window shopping and wasting time.

Lastly, you’re going to begin the closing process. This will consist of negotiating, a home inspection, and appraisal. However, you’re subject to encounter more obstacles along the way. In summary, the home buying process is often very complex and frustrating. Ensure you’re prepared as much as possible as the homebuyer and make sure to hire a good real estate agent.

10 Little-Known Ways to Find a Quality Listing Agent in Your CityEmma DiehlHomeLight Blog

You’re standing at an open house. In the back of your mind, you also know you have a home to sell. Suddenly you’re bombarded by a pushy sales pitch and uncomfortable questions about your moving plans. You think to yourself: This is why many people dread finding a listing agent.

And you wouldn’t be wrong. The quest to find the right listing agent can be fraught with stress and pressure. However, have faith — there are some amazing agents out there who will help you maximize value and navigate selling obstacles. Research from HomeLight shows that the best agents are worth their salt, helping to sell homes for as much as 10% more than the average agent.

What’s more, improvements like client reviews on the web and public sales histories have made it a whole lot easier to find the gems. So, skip the open house hopping, put on your research cap, and follow these tips on how to find a listing agent who you can be sure checks all your boxes.

A man holding a phone to demonstrate how to find a good listing agent.
Source: (Thom Holmes / Unsplash)

1. Focus on the agent, not the brokerage

Do you see a ton of Coldwell Banker, Keller Williams, or RE/MAX signs in your neighborhood? Some real estate franchisors may have more prominent branding in your city than others, making you inclined to trust a certain office simply because you’re more familiar with the name.

While certain brokerages do offer better training and tools to their agents, it doesn’t always translate directly as a better listing experience because real estate agents are independent contractors, not employees. So, the quality of the service you receive is going to depend more on the individual agent. Focus on what the agent brings to the table, rather than which office they’re part of, as you make your decision.

2. Watch out for all sizzle, no steak sales pitch

Some agents will appear engaged and enthusiastic to help you, until you sign the listing agreement. Then they become mysteriously difficult to get a hold of. Others might communicate well but let you down when it comes to market knowledge or business acumen, leaving you with a lot of “what ifs” after a rocky sale.

Once you sign the listing agreement, you’re usually giving the agent the exclusive right to sell your home for the next two to six months. That makes it difficult, legally, to fire this agent and get a new one, which can really set you back.

So avoid signing with an agent on the spot. Instead, listen to their pitch and let them offer you their information. This gives you a chance to do your homework. You can always get back in touch after you’ve done more research.

3. You’re hiring for a job — so call references

This tip comes from John Kriza, a top-selling Chester County, Pennsylvania real estate agent with two decades of experience selling homes: “Anybody can say anything about themselves they want when they’re sitting across the table from you,” Kriza warns. “But having past clients who are willing to go on the record and vouch for you is important.”

Kriza comes to seller consultations with a list of references on hand and encourages potential clients to contact them. Having that list signals that an agent is on good terms with old clients. Plus, speaking with these people who’ve worked with an agent firsthand can give you a more candid idea of what the agent’s work style is like and if it lines up with your preferences.

An image of a couple looking up how to find good listing agents on a laptop.
Source: (Matthew Henry / Burst)

4. Look at an agent’s stats like an athlete’s box score

Numbers don’t lie. Athletes, for example, are measured by what’s called a “box score,” which aggregates performance indicators like their field goal or free-throw percentages.

What you may not realize is that real estate agents have “stats,” too — such as percent of listings sold, average days on market, and number of five star reviews. Yet these key performance indicators are often overlooked by their clients.

Here are some of the stats that would make up your agent’s “box score” so to speak:

Years of experience:

Finance and real estate expert Dave Ramsey recommends working with a listing agent who has no less than two years of full-time experience selling homes. That way, they know the ins and outs of the process, including forms to file, deadlines to meet, and contacts in the area. However, there are exceptions to this if you like what you see from a smart and driven agent who’s newer to the business.

Average days on market:

Compare an agent’s average days on market (DOM) with the average DOM of your market. If an agent sells homes faster than the area average, they know how to price and market homes and keep them from going stale on the market. Keep an eye out for HomeLight’s “Sells Homes Fast” badge, which is awarded to the top 5% of agents based on average DOM for seller transactions.

Transactions per year:

If an agent sells fewer than four homes in a year, they’re likely a hobbyist or part-timer who helps friends and family on the side. A dozen or two sales per year is probably indicative that an agent is more established and has consistent clients. Agents with 50 to 100 plus sales most likely have help in the form of transaction coordinators or a team working below them. In this case, it’s helpful to find out how involved the listing agent is with each of their individual clients, or if you’d primarily be working with someone else on their team.

Homes sold in your area:

When you go through HomeLight to meet your real estate agent, you’ll be able to see their number of transactions isolated by year. In addition, our transaction heat map drills down into the number of transactions at the neighborhood level. To get even more granular, you can do a search for your location using the “Transactions Near You” feature.

An agent who regularly sells homes just down the street from yours could have valuable insight into your specific market. They’ll also be advocates and experts for the area, highlighting perks like nearby shops, parks, and restaurants.

Average over asking price or sale-to-list ratio:

The sale-to-list price ratio is a number assigned to a transaction telling you what percent of the asking price a home actually sells for. If a house is listed at $325,000, and sells at $318,000, the sale-to-list ratio would be 98%. If a house sells over asking, the sale-to-list ratio will be over 100%.

An agent’s average sale-to-list ratio indicates how accurate they are at pricing homes, and how much of a seller’s list price they’re likely able to deliver. The higher their average sale-to-list price ratio for sell-side transactions, the better their track record.

5. Prioritize experience tailored to your home sale

In your search for a listing agent, you’ll likely find several qualified agents with a history of selling homes successfully. That’s a good start. To narrow down your pool further, you should look at the following factors to determine how relevant their experience is to you. Check to see if their previous sales look familiar when it comes to:

  • Price point: An agent with million-dollar listings may be impressive, but they likely won’t be passionate about pricing and marketing your $350,000 home.
  • Location: When an agent has sold homes on your street or within your neighborhood, they’re better equipped to market not only the home but the benefits of the surrounding area.
  • Property type. Make sure the listing agent has expertise in selling your type of property. If you want to list a condo, don’t work with an agent who solely sells single-family homes and won’t understand how to navigate your bylaws and HOA fees.
An image of keys in a door to demonstrate how to find a good listing agent.
Source: (Jaye Haych / Unsplash)

6. Get the agent talking about your home and market

Your home is going to be the biggest topic of discussion between you and your listing agent. So use your home early on in the process as a way to gauge a real estate agent’s skills and acumen.

Use the CMA to get a sense of their knowledge

For one, the listing agent should provide you with a comparative market analysis (CMA). The CMA pulls together pricing information and property details on recently sold homes like yours called “comps” to come up with a pricing strategy. The CMA should be provided free of charge and give you a chance to ask questions like: What do you believe my property is worth? How did you come up with that conclusion?

At this point, a good listing agent will be able to walk you through their thinking as far as what price range your home falls in, what they would list your home for (high end or low end of the price range), and why. Their answer should indicate whether they’re able to speak intelligently to the market as a whole, the nuances of your neighborhood, and what they’re seeing in the comps.

Listen for specifics and honesty

A good listing agent should be getting as granular about the types of buyers your home is likely to attract and how it measures up to your neighbors — i.e., “You have a beautiful sunroom which is unique and adds value, but I had to account for a $20,000-$35,000 price discount for your lack of cosmetic upgrades.” An agent who sugar coats or glosses over your home’s flaws is probably just trying to win your business, and will likely flip the switch once you’ve signed the agreement.

7. Investigate their social media presence

To avoid hiring an agent with the old, outdated “Post and Pray” marketing mentality, you’ll want to scope out how they’ve promoted their listings in the past and whether they have a robust social media presence. When they get a new listing, do they put it on Facebook or Instagram? How much engagement do those posts get? Do the photos they’re posting look professional and like real estate “eye candy?” Would your home get the same treatment?

This type of research will give you a sense of an agent’s general digital savviness, the strength of their social media following, and whether you can trust that they’ll take advantage of all the modern tools available to market your property.

8. Give points for digital offerings like virtual tours

You should also find out how far your agent has leaned into digital offerings. Virtual tours may have boomed in the past year in response to the pandemic, but the technology is here to stay. See if your agent has embraced any of the following tools or practices for making the transaction more efficient and safe:

HomeLight identifies agents who are helping clients buy and sell safely during COVID-19 by giving them a Move Safe Certified badge.

An image of a toy house to demonstrate how to find a good listing agent.
Source: (Sarah Pflug / Burst)

9. Pick the listing agent with a ‘no job too small’ mentality

Traits like flexibility, responsiveness, and humility in an agent could actually be a better indicator of whether you’ll have a great home-selling experience than their level of monetary success.

If an agent doesn’t appear too smug to take care of the little tasks like flipping on the light switches between showings, running out to Home Depot to get wall spackle in an emergency, or answering the smallest question to put your mind at ease, then it’s probably a sign that they’re going to treat this sale — and your home — with dedication, care, and attention to detail.

An example is the case of sellers in Columbia, Mo. whose agent sold their house while they traveled the country in an RV. That level of service exists. You can inquire about how hands-on an agent is when you do your reference calls, or ask your listing agent straight up how involved they tend to be in efforts like home prep, staging, and showing the home.

The best listing agent vs. the best listing agent for you

We won’t sugar coat it: The real estate industry is a mixed bag with lots of people claiming to “do real estate” when they only sell a handful of homes per year. The challenge of finding a great listing agent is actually why we started HomeLight back in 2012.

Now, after nearly 10 years of working with people selling their home and matching them with superior listing agents in their area, we’ve just dished on some of the main clues and signs we’ve seen at HomeLight over the years that an agent is (or isn’t) the right fit for you and your property.

Remember, when you hire a listing agent, you form a partnership. Who do you want in your corner during the stressful moments? Who do you get the sense will make you feel like their only client? Who can speak about your home and location most authentically? These are the questions that will guide you toward the right person. Whenever you’re ready to start your search, HomeLight is here to help introduce you to some fantastic candidates.

Header Image Source: (Matthew Henry / Burst)

You’re tired of the pushy sales pitches. Take back control of your agent search with our guide on how to find a good listing agent you can trust.HomeLight Blog

How Do I Find a Good (Scratch That — Great!) Real Estate Agent?Christine BartschHomeLight Blog

How on earth do I find a good real estate agent? you’re wondering as you attempt to squeeze in a little research between work meetings or while the kids are still at school. With a sandwich in one hand and your phone in the other, you’re overwhelmed with what’s only the first step in the home-selling process. There are so many in my city, and I don’t know who to trust!

Americans are busier than ever, and finding a good real estate agent is just one more task on a very long to-do list. For many, taking a “this agent will do” mentality might seem like the only way forward, with 77% of sellers resigning to hiring the first agent they contact!

However, a lack of research can seriously hurt your bottom line, as we’ve found that the best agents in a market sell homes for as much as 10% more than average. So who are these rockstars of your market and how can you find them?

Here are 10 pro tips to narrow your search and zero in on your top candidates!

Friends who are discussing good real estate agents.
Source: (Ben Duchac / Unsplash)

1. Don’t go with someone just because they helped a friend or family member.

Thirty years ago, asking friends or family for real estate agent recommendations was the only way to vet a real estate agent — which is why it became the go-to agent-finding method. But that trend is changing, thanks to the agent information available online.

According to the National Association of Realtors’ (NAR) “2020 Profile of Home Buyers and Sellers,” only 41% of sellers used a real estate agent found their agent through a referral by friends or family.

“Everybody knows someone who has a real estate license. In the Dallas-Fort Worth area we have over 20,000 real estate agents, however not everyone is an experienced professional,” explains Lily Moore, a top-selling agent in her Texas market. “It’s great to ask your friends and family, but that doesn’t mean the agent they recommend is going to be a good match. Maybe they worked with the agent 10 years ago, or they suggest a part-time agent who sells real estate as a hobby.”

Hiring a friend or family-recommended agent can also put a strain on relationships. It’s not so easy to push back if you disagree with your agent on pricing, marketing, or home repair projects — or even fire your agent when you know conflict could damage your friendship. And the last thing you want is to be walking on eggshells with your agent about a transaction that should be objective and free of emotion.

2. Conduct interviews with multiple agents before committing to anyone.

Commitment has practically become mandatory in the 21st-century. Get a cellphone, and you make a years-long commitment to purchase service. Go to a gym once and suddenly you’re stuck in a contract.

So many people feel like when they speak with a real estate agent about selling their house — they’re obligated to list your property with them.

Not so fast.

No company would hire the very first prospect who asked for a job without first running background checks and interviewing them to make sure they’re a good fit, and neither should you.

It’s time to set the pressure of social politeness aside, take your time, and meet with a number of agents before you make any commitment. Remember, every agent you meet with is interviewing for the job of selling your house — and just like any employer you have the right to consider a wide range of candidates before signing.

3. Factor in expertise by property type, whether it’s SFH, condos, or townhomes.

Between searching online and asking friends for recommendations, your list of potential agents may be getting rather long. You’ve got too many candidates to interview them all. One good way to hone down your list is to eliminate anyone who isn’t experienced with selling your property type.

If you’re selling a single family home on an acre of land, you don’t want to hire an agent who specializes in selling urban-area condos.

“You need to be careful about hiring an agent who specializes in condominiums to sell your single family home, because things can get complicated when your Realtor® is unfamiliar with your property type,” cautions Moore.

“The contracts and forms are different, and I have unfortunately seen agents make huge mistakes that cost their sellers thousands of dollars because the Realtor® didn’t check the right box.”

A neighborhood where a good real estate agent works.
Source: (Olivia Hutcherson / Unsplash)

4. Narrow down your list based on neighborhood expertise.

Home buyers aren’t just looking to buy a house, they’re looking to buy into a community with the kind of right atmosphere, amenities, and attractions. So it’s important for sellers to find an agent with experience marketing and selling properties in your specific neighborhood. That’s why every agent profile on HomeLight features an interactive map that indicates an agent’s concentration of homes sold by neighborhood.

“Sellers should ask every agent these questions first, ‘How many houses have you sold in my neighborhood?’ and ‘Where is your office located?’” suggests Moore.

“If they haven’t sold any or many houses in your area, or their office is 45 minutes or more away from your neighborhood, then they don’t know anything about marketing the local schools, the parks, or the community centers to potential buyers.”

Agents with local expertise will also have a network of nearby contractors to call in to help you get your home ready to sell.

5. Gauge industry knowledge on their recommendations for home prep.

The advice an agent gives to guide you in prepping your house for sale can tell you a lot about the effort they plan to put in.

Are they recommending that you put no effort into fixing up your house and just list at a low price? Are they recommending a major overhaul remodeling every room in the house that’ll cost you tens of thousands of dollars? Both are red flags that indicate an agent isn’t the right fit to sell your house.

“There are agents who will recommend listing as-is at a low price because they’re just trying to get a quick commission. A great real estate agent is going to come in, walk the house and let you know what you can do to increase the price by $25,000 to $30,000 just by putting $4,000 worth of work into improving the property,” advises Moore.

A good real estate agent speaking with a client.
Source: (Matthew Henry / Burst)

6. Give more weight to past performance than promises.

Every agent puts on their game face when they meet with prospective sellers, but just because they can talk a good game doesn’t mean they have the track record to back up their sales pitch.

Thankfully, stats don’t lie — which is why checking out an agent’s performance history is a vital part of finding a great agent. Here’s the key stats you need to look at:

Yearly number of transactions: The number of homes an agent sells annually is one good indicator of their success and experience. An agent who sells 30-40 homes each year obviously knows how to market and price a house to sell well.

Days on market: Days on market (DOM) tracks the time between when a house is listed and when it goes under contact with a buyer. If an agent’s average DOM is lower than average, it’s a good sign that they price homes correctly to attract quick offers and come out of the gate with a strong marketing plan for their listings.

Sale-to-list-price ratio: The sale-to-list price ratio tells you what percent of the asking price a home actually sells for. An agent’s average sale-to-list ratio indicates how accurate they are at pricing homes, and how much of a seller’s list price they’re likely able to deliver. The higher their average sale-to-list price ratio for sell-side transactions, the better their track record.

Awards and local involvement: If your agent has received recognition from fellow Realtors® or the local community for their real estate work, that’s a pretty good indicator of their dedication and involvement with your neck of the woods, which can translate into having more informed conversations with buyers about your property.

7. Look for ‘above and beyond’ tendencies in client reviews.

While you’re looking up your agent’s stats on their online profiles, it’s a good idea to take a look through their written reviews from past clients. But don’t just go by the number of 4- and 5-star reviews they’ve received. To find out if an agent you will go “above and beyond for you, take the time to dig into the review details.

What you’re looking for are personal stories that share concrete details on just how the agent went out of their way to help past clients.

For example, did the agent spend time preparing their client’s home for the market while their clients traveled the country in an RV? Have they helped past clients downsize after a medical emergency and helped declutter the home on an impossible deadline? Did the agent work out a complex lien against the property to get it sold?

Believe it or not, these are all real examples of things agents have done in the past to make sure their clients were happy. And you shouldn’t expect anything less!

It’s also wise to count how many times client reviews mention key qualities that all great agents have, like offering quality home prep advice, exhibiting patience, and great communication:

“Communication is important because agents need to move at the speed of the market. It’s a red flag if an agent takes 24 to 48 hours to respond to you,” says Moore.

A client calling a good real estate agent on the phone.
Source: (Andy Art / Unsplash)

8. Ask your agent finalists for references from past clients — and take time to call them.

Online reviews that share concrete details and personalized stories are a great way to narrow down your long list of potential agents, but when you’re getting close to hiring an agent, it’s important to ask your finalists for references who you can talk to personally.

“In the real estate industry, you can get online reviews from pretty much anybody. Family and friends can write reviews saying what a great person you are, but being a great person doesn’t make you a great real estate agent,” explains Moore.

“That’s why I provide references for my prospective sellers, so they can call up past clients and ask about their experience with me.”

9. Evaluate an agent’s additional certifications and specialties.

Just like snowflakes, no two home sales are alike and your unique property may call for an agent who has additional certifications or specializations beyond the standard real estate license.

NAR lists over 25 different specialized credentials that designate agents as experts in working with unique property types, clients, or sale types, including:

Even if you don’t need this level of specialized help, it’s a good idea to take a look at what designations, certifications, and specializations your agent has listed on their business cards, online profiles, or websites. These credentials say that your agent is dedicated to their profession and devoted to meeting their clients’ needs.

A coffee shop where a good real estate agent works.
Source: (Toa Heftiba / Unsplash)

10. Give bonus points to any agent who’s making a big community impact.

Good agents have in-depth knowledge about your neighborhood that’ll help them sell your house fast. Great agents go the extra mile and give back to the community.

There are plenty of ways that great agents show their community commitment, such as organizing charity events, or even making videos about moving to your city. These are signs that your agent has a great local reputation and are focused on building true relationships with their clients rather than treating sellers like transactional acquaintances.

“We personally put time and money back into our community by sponsoring local baseball and basketball teams, and we support the Children’s Hunger Fund in Dallas. We also host an event once a year where we invite the whole neighborhood and provide free ice cream to show that we can all be better together,” says Moore.

It’s worth the effort to find the right agent

Finding a great real estate agent to sell your home – your most valuable asset – is a huge pain point. In fact, it’s the reason HomeLight got started. We are committed to helping sellers fully evaluate potential candidates by providing detailed, stat-based profiles on our agents, interactive maps that track local home sale statistics, and offering multiple agent recommendations that fit your specific criteria. Whenever you’re ready, we’re here to help.

Header Image (Source: (Matthew Henry / Burst)

“How do I find a good real estate agent?” you think as you juggle a million other daily tasks. Use these 10 tips to narrow your search!HomeLight Blog

The Proof is in the Plat Map: Your Neighborhood, DividedSally TunmerHomeLight Blog

Plat map: file under “things you would never know about unless you were buying a house, and maybe not even then.” A plat map is one of many documents in what seems like a deluge of paperwork a buyer encounters in the homebuying process.

If you’re wondering what on earth a plat map is and what it’s used for, you’re not alone. According to the National Association of Realtors®, a plat map is “a map, drawn to scale, showing the divisions of the piece of land” — that piece of land being where your home is located.

Plat, not to be confused with plot, shows more than the layout of a single property. If a plot is micro, then a plat is macro. It’s a parceled-out map of a defined area, like a neighborhood or subdivision. Essentially, a plat map is a bird’s-eye-view of your property and the surrounding area.

Typically, a plat map can be found somewhere in the pile of papers your title company presents to you at closing. It’s also something you or your agent can seek out ahead of time.

For those of us new to plat maps, which are probably all first-time homebuyers and even experienced homebuyers, what looks like a jumble of shapes and numbers can be hard to decipher.

Not to mention, you’ve surely had a site visit and walkthrough of your home before making an offer, unless purchasing it sight-unseen — not an uncommon practice during the pandemic. At this point, you know the location and have some sense of the area. So the question remains: What’s the purpose and benefit of a plat map?

Once you understand exactly what’s on a plat map and how to read one, it can offer a lot of useful information. We’ve done the research and talked to the experts to give you the critical insight on all things plat maps.

A plat map of Port Richey.
Source: (ghs1922 / flickr)

Plat maps: The what and the why

Let’s dig in further into what all a plat map shows and why it should matter to you, starting with a little history.

The origins of plat maps — also called cadastral maps, survey plats, or plat books — can be traced back to the 1850s as the first maps to document rural land ownership in the United States. Plat maps have evolved with the times, and it wasn’t until fairly recently that you could see a digital plat map.

The first plat map publisher was J.Q. Cummings, who founded Rockford Map Publishers in 1944. He meticulously researched and drew his plat maps by hand. Beginning in the early 21st century, with the help of Geographic Information System (GIS) mapping technology and computer software, plat maps were created digitally and eventually developed for smartphone and Google Earth compatibility.

Not all homes are platted. If the land around the house hasn’t been fully surveyed, or divided into different lots, then your house might not be found anywhere on a plat map until there’s more development around it.

What’s on a plat map and why it matters

A plat map outlines how your property is divided, the boundaries of the property, and all the surrounding property in the designated area, including other houses, residential land, streets, and any public land, like parks and playgrounds.

Sometimes, notes will accompany a plat map. The notes section can identify details like who is permitted to use certain tracts, who is responsible for maintaining public spaces, if there are any reserved areas for future development, and the locations of any protected trees or wetlands.

So, why is a plat map important? For starters, it provides an indisputable legal description of the property you own. Sellers don’t always list lot sizes and parameters accurately, so this is a valuable tool if there are any questions or discrepancies.

Furthermore, plat maps can confirm a lot of features and details about your future home-base, like trespassing lines, if the home is located in a flood zone, what direction each side of the house faces, any restricted areas of the property, and more.

These small details can have big implications. Some ways that analyzing the different components of a plat map could inform your purchasing and lifestyle decisions include:

  • Ensuring the lot size listed by the seller matches what’s on the plat map — a.k.a. confirming you’re purchasing everything that’s legally yours and paying the right price for it. There are instances when a lot size is listed incorrectly, especially for oddly shaped lots.
  • If you need flood insurance, and how to properly prepare for living in a flood zone
  • If the house would be compatible with solar panel installations
  • The available land space to build upon for a carriage house, shed, swimming pool, or another structure or outdoor feature
  • Determining if a neighboring structure or fence encroaches on your property

If you are an investor or land developer, plat maps are super important. Plat maps are essential for developers interested in owning a large piece of land to build new construction property on, or who want to consolidate existing property.

Plat maps will dictate lot sizes and boundaries for subdivisions, show roadways, rights of way, common areas, and other important details to know when developing real estate. They are also used for larger-scale planning and zoning projects, like creating neighborhoods and incorporating official towns or cities.

A plat map of Garden Grove District.
Source (re-sized): (Orange County Archives via Creative Commons Legal Code)

Plat maps vs. property surveys: What’s the difference?

While plat maps and property surveys are very similar, they aren’t exactly the same thing. Plat maps show the legal property lines that belong to the owner, but they offer more of a big-picture view of an entire neighborhood or subdivision, whereas a survey is a more in-depth look of a single property. Typically, the title company will order a survey of the property at the request of the buyer.

Plat maps can indicate a need for a survey if there is any question about a structure or feature of a neighboring property extending past its boundaries, known as an encroachment.

“If we notice any encroachments — fence is off the line, shed’s off the line — we can approach the seller before settlement and have any issues resolved,” says Sue Smith, a real estate agent in Northern Virginia who completes 84% more sales than the average agent in her market.

“I don’t like surprises, and I don’t like my clients to be surprised. I believe the settlement is a time to be happy as opposed to a time when you negotiate your contract. It’s a time to sign your papers and get your keys,” says Smith. Reviewing the plat map and ordering a survey in advance of closing will ensure that smooth and joyful experience.

Easements shown on a plat map could also signal the need for a survey to get a closer look at an individual property.

According to the National Association of Home Builders, the definition of an easement is the “right-of-way granted to a person or company authorizing access to the owner’s land; for example, a utility company may be granted an easement to install pipes or wires. An owner may voluntarily grant an easement, or in some cases, be compelled to grant one by a local jurisdiction.”

Glennda Baker, a real estate agent in Smyrna, Georgia with 29 years’ experience specializing in single-family homes, illustrates just how much easements can affect property regulations.

A previous client of Baker’s was under contract for a home that had a sewer easement by the storm drain runoff on the right and back sides of the house, which is “very common.”

Because of her knowledge and familiarity with the local market, she knew because of a terrible flood that occurred in the area in 2009, her client would need a survey, “because these setback lines on these drains change if there’s been a flood,” and sure enough, the flood map had changed. By a lot.

She pressed her client, who did not want to spend $650 on the survey, and it was a good thing she did, because the survey revealed that the buffer on the storm drain had extended from 7 feet to 25 feet. This decreased the building area on the lot. That meant in a worst-case scenario, if something irreparable happened to the house (like it burned to the ground), they could not rebuild a house of the same size that would be anywhere close to the same value.

There are all kinds of easements that can run through a property and prevent the owner from building any kind of addition, like a pool, fence, or shed.

“That’s why you engage a professional real estate agent — because a professional real estate agent can give you a warning of the pitfalls of buying without a survey,” says Baker.

While plat maps are an excellent reference and legal proof of a property’s ownership boundaries, a survey takes verification a step further for added protection.

A plat map of Bolsa Road.
Source (re-sized): (Orange County Archives via Creative Commons Legal Code)

Where can you find plat maps?

There are three main entities that produce plat maps: the Bureau of Land Management, local government, and title companies. The Bureau of Land Management provides plat maps for federal lands. Those are available to search through in their digital archives and at the nearest federal land office.

Once a licensed surveyor creates a plat map for a residential area, it is recorded as public record. City and county records offices as well as online databases like Q Public will have these plat maps available to search.

Once under contract for a property, buyers will have direct access to the location’s plat map through the title company. The title company will deliver the plat map along with the rest of the documents from the title search.

For history, family tree and ancestry projects, historic plat maps can be found by looking through archives of the Bureau of Land Management, Library of Congress, and searching specific locations and time periods online.

Breaking down the plat map

We know that in general, a plat map shows the layout of a residential area, divided by the individual plots and public areas, but let’s get down to the nuts and bolts of it.

On a plat map, you can expect to find:

  • The street names and the neighborhood or subdivision name will appear where applicable.
  • The orientation will signify the placement of each property by cardinal direction, showing which sides of the house face north, south, east, and west.
  • Plot details: Each plot will have an assigned parcel number, a lot number, a house number, and the measurements of the plot in square feet.
  • Easements will show any parts of the plat area that the city or private companies have the rights to, meaning reserved areas that can be occupied or built on for specified purposes. These types of easements include:
    • Utility easements include access for water, power, gas lines, phone, and internet.
    • Access easements are reserved for certain roads and community trails.
    • Native growth protection: This is an easement granted for the protection of vegetation within a critical area or its associated buffer. Its purpose is to preserve natural resources that benefit “public health, safety, and welfare” by controlling “surface water and erosion, maintenance of slope stability, visual and aural buffering, and protection of plant and animal habitat.”
  • Greenbelts or open space: Greenbelt.org defines greenbelts as “undeveloped, wild, or agricultural land that surrounds urban areas.” Greenbelts can be any natural land, from wildlife habitats, wetlands, and recreational parks.
  • Recreation areas: Trails, playgrounds, fields, and courts for sporting activities, parks
  • Monuments: Monuments on a plat map are simply any boundary or point on a map, which is physically marked on the land itself by a surveyor.
  • Roads: any roads or streets located within the defined plat area
The legend of a plat map.
Source: (AM Engineering)

How do you read a plat map?

So now we know what’s on a plat map, but how do you find all of these things? Let’s look at where each element is on the map and how it appears.

Keep in mind, all the plots — or each separate property unit — are represented by the individual square- or rectangle-shaped boxes on the map. Symbols and drawings will vary from one plat map to another, so always reference the legend.

Source: (AM Engineering)

To find the directional orientation of the plots, look for a prominent arrow-like figure, usually towards the top or the side of the map. This will show where north is, labeled with an “N” where the arrow is pointing, so you can tell which sides of the plot face north, south, east, and west.

Source: (AM Engineering)

The house number is located right outside the edge of the plot box at the street line.

Source: (AM Engineering)

The lot number is listed inside the plot box. The word “lot” will be listed with the number, or the legend will clarify which number inside the box is the lot number.

Source: (AM Engineering)

The parcel number is the other number listed inside each plot box that is not the lot number.

Source: (AM Engineering)

The plot dimensions can be calculated by looking at the numbers listed with a decimal or with the symbol for feet next to the number. These measurements appear around the plot’s edges, inside of the box. If multiple plots have the same dimensions, the number may be listed only once, meaning it’s consistent with the other plots.

Source: (AM Engineering)

Easements will be labeled along roads for access easements, within individual plots for drainage and utility easements, and anywhere else on the plat map indicated by the word “easement” and the corresponding type. Some easements, like sewer and utilities, will include the dimensions of the exact size.

Source: (AM Engineering)

The legend will indicate how to find monuments, which could be labeled with symbols like small solid black boxes or cross marks.

Source: (AM Engineering)

Recreation areas are labeled usually within a circular shape outside of the main residential area.

Source: (AM Engineering)

As you can see, what might seem like an insignificant document stuffed inside a folder from the title company holds a lot of pertinent information. While we all want to get to the closing table as quickly as possible, don’t sleep on your property’s plat map. It could be a crucial missing piece that shows exactly what you’re buying, which in some cases, might be different than what you thought.

Header Image Source: (Orange County Archives via Creative Commons Legal Code resized)

What is a plat map? While plat maps might seem like just another piece of paperwork, they are a valuable property tool for homebuyers.HomeLight Blog

Got an Old Fuse Box? What to Know About Selling Your HomeChristine BartschHomeLight Blog

Victorian, Mid-Century Modern, Art Deco, Colonial, you name it — buyers appreciate old houses with beautiful architecture and charm. But their love affair with history ends with outdated electrical systems still running on the original wiring. And an old fuse box, while it won’t technically prohibit you from selling a home, will hurt its value and raise other issues with the sale.

“In North Carolina, you can absolutely sell a house with an old fuse box,” explains Russell Wing, a top-selling real estate agent in the Charlotte, North Carolina area. “However, lenders and the insurance companies have a big problem with homes that have old fuse boxes instead of a modern breaker panel.”

Honestly, replacing your old fuse box is often the best option rather than trying to sell a house that isn’t up to today’s standards — and it might not cost as much as you think to make the swap depending on your home’s overall wiring. With this guide, you’ll get a little background on residential electrical systems, plus expert guidance on your options to move forward with a sale.

A living room with lights to demonstrate if you can sell a house with an old fuse box.
Source: (Ashley Byrd / Unsplash)

A brief history of electrical systems (and why it matters for your home sale)

Thomas Edison began illuminating the country in the 1880s, but by 1925, only half of all U.S. homes had electrical power. That early power wasn’t very robust at just 120-volts and 30Amps, a standard that stayed into the early 1950s.

As demand and usage of electricity expanded, so did the standard, increasing to 240 volts through a 60Amp fuse box during the 1950s and early 1960s. By the mid-1960s, early versions of the modern circuit breaker panel box became the electrical standard.

Like a ‘shut off’ valve for your electric

Fuse boxes and breaker panels serve the same purpose: to protect your electrical system by breaking the circuit if too much electrical current starts flowing through your system.

Functionally, the main difference is that with an old fuse box, the filament burns up when power surges, which is why you must replace blown fuses. With breaker boxes, an electromagnet breaks the circuit, which can easily be reset with the pull of a lever.

Increased electrical demands on the modern home

But replacing fuses isn’t the main inconvenience of an old fuse box; it’s that outdated fuse box systems aren’t designed to handle the electrical demands of the modern family.

When you add cellphones, televisions, computers, and other electronics on top of the lighting and appliances that electrical systems were originally designed to handle, an old 60Amp fuse box system cannot match the service provided by today’s modern 200Amp service in newer homes.

No buyer wants a house that will blow a fuse if you use the microwave while you’re charging your phone. Not to mention the safety hazards that arise.

A computer and lamp to depict if you can sell a house with an old fuse box.
Source: (Radek Grzybowski / Unsplash)

FYI: safety hazards of a fuse box

Fuse boxes aren’t as reliable and efficient as breaker panel boxes, but contrary to popular belief, fuse boxes aren’t automatically unsafe. The danger arises when old fuse boxes are modified by homeowners to handle higher electrical usage.

This is most often done by putting bigger fuses into old fuse boxes than they were designed to handle. For example, forcing a 60Amp fuse into a fuse box rated for 30Amp fuses may prevent the fuses from blowing, but you’re overtaxing your outdated electrical system, which creates a fire hazard.

“Electrical fires kill multiple people across our country every year. If you’ve got an old fuse box, just put your hand on it and it’ll be warm,” advises Wing.

How do I sell a home that has an old fuse box in it?

You have three main options available if you’re selling a house that still has an old fuse box. You can replace it, lower your asking price, or sell it as-is — a label that will most likely appeal to cash buyers and investors.

Let’s review each option more in-depth:

1. Replace the fuse box with a modern breaker panel

The cost of updating electrical systems is the big reason why home sellers shy away from replacing old fuse boxes before selling. According to Fixr, rewiring a 2,000 square foot home averages around $8,500.

The good news is that a house doesn’t always need to be fully rewired when you swap out an old fuse box for a new breaker panel.

“Whether or not you need to rewire the house when you replace an old fuse box depends on the age of the home. If your historic home has the old knob and tube wiring that can short out and start a fire, it’ll need to be replaced,” explains Wing. “But in a lot of cases, you can just change out the fuse box itself for a circuit breaker box in homes built in the ‘60s, ‘50s, or even the late 1940s. If you’re just putting in a new fuse box, you’ll probably spend $1,500.”

2. Price the home to account for the dated system (and any other needed repairs)

Option two requires reducing your listing price to account for passing on the expense of updating the fuse box (and potentially your wiring) to your buyer.

If you’re selling in a seller’s market, or listing in a neighborhood filled with outdated electrical systems, you may be able to get by with reducing the price solely based on an estimate for fuse box replacement and rewiring costs from a licensed electrician.

However, if your home is one of the last ones around with an old fuse box, or your market is sluggish, then you’ll need to reduce your price even more to get an offer. In that case, your price reduction may cost you thousands more than the $1,500 to $8,000 that you’d spend updating your fuse box and wiring.

Even if you do get a decent offer on your house with an old fuse box, that doesn’t mean the sale will close.

The house is essentially a lender’s insurance policy against the potential for borrowers to default on their mortgage. Should the buyer fail to keep up payments, the bank can foreclose on the property and sell it to offset their losses. With so much at stake, mortgage companies are reluctant to lend out on homes with the fire hazard potential of an old fuse box.

“The last thing you want is to get close to closing on your home sale, and then boom, the appraiser says that we’ve got to replace the old fuse box before the sale can close,” explains Wing.

3. Sell your house as-is to a cash buyer

Options two and three may sound the same, but there’s one very big difference: a cash buyer isn’t going through a lender, so there’s no chance that an appraisal citing the old fuse box will kill the deal.

You’re also selling the property as-is, which means that you can avoid any post-inspection negotiations over the price or any repair requests. Cash buyers are most often investors planning to rent out or flip the property, so they’re going to replace main components anyway as part of their remodel plans.

You’ll also benefit from a quick closing timeline. While this can be a swift and easy way to unload your home without the hassle and expense of replacing the old fuse box, it also means you’ll probably receive less than the fair market value of the home in the form of a price discount.

You can request a cash offer through HomeLight’s Simple Sale platform, our network of nationwide verified real estate buyers who buy homes in any condition. Just tell us a little bit about the property, and we’ll tap into our pool of buyers and connect you with the highest bidder. We estimate a home’s “Simple Sale” price to be 90%-95% of market value on average, but it could be less depending on the buyer.

Lights to depict if you can sell a house with an old fuse box.
Source: (Federica Giusti / Unsplash)

FAQs about selling homes with old fuse boxes

Buying an older home with an outdated electrical system is old hat for real estate investors, but for primary residence home buyers, the prospect of purchasing property with an old fuse box may have them worried. Put their minds at ease with these answers to their most pressing questions.

Is it illegal to have an old fuse box?

No, you’re not going to be hauled off to jail if your home has an old fuse box. It’s definitely legal to have one; however, your home may not be up to code.

The National Fire Protection Association publishes the National Electrical Code, which has been adopted by all 50 states. The NEC requires that panel breakers be installed on the outside of your home so that in the event of a fire, firefighters can immediately shut off the electrical system.

Historic homes may have their old fuse boxes mounted in the basement, garage, or even behind a panel inside the home. That’s not only a fire hazard, it may also make it difficult to get homeowners insurance.

Can you get homeowners insurance with a fuse box?

It’s difficult but not impossible to get insurance with an old fuse box. Some insurance companies won’t insure a house unless you replace the old fuse box, but other insurance companies will.

“You can always approach your current insurance company and chances are that your agent will re-insure the property,” suggests Wing.

While you’ll probably be able to find a company willing to insure a home with an old fuse box, it won’t be cheap. Most insurance companies will charge a premium to insure houses with higher risk fuse boxes over circuit breaker panel boxes.

Yes, you can sell a house with an old fuse box. But should you?

Selling an older home that still has its original wiring and an old fuse box may not be easy, but it’s definitely doable. Whether you simply list for less or seek out a cash buyer, you can sell a house with an old fuse box and save yourself the time, effort, and expense of replacing it with a modern breaker box.

However, if you want to sell your home fast and for the most amount of money, the smart move is to replace that fuse box before listing.

Source (resized): (Jereme Rauckman via Creative Commons Legal Code)

Technically you can sell a house with an old fuse box. However, replacing it with a circuit breaker is often the smart move so that you can maximize value.HomeLight Blog

How to Sell a Fixer-Upper House Fast: 9 Shortcuts to an OfferMelissa RudyHomeLight Blog

Your house needs more than a little TLC, and now something like a job transfer, family emergency, or financial rough patch has created urgency to unload it. You need to figure out how to sell a fixer-upper house — and do it fast — to avoid additional strain.

“We’ve learned that in order to sell a fix-and-flip property fast, the key is to find the balance between doing too much — spending excessive money or time that we won’t get a return on — and still making the house attractive enough in order to sell fast,” says Richard Latimer, the owner of a homebuying business in Huntsville, Alabama, where he helps people improve and sell unwanted or neglected properties.

If your house needs work and you don’t have the time, money, or inclination to make a full transformation, follow these 9 expert tips and tricks to sell it quickly, flaws and all, while recouping as much of your investment as possible.

Cleaning supplies to demonstrate how to sell a fixer upper house fast.
Source: (Rasanoa vz / Unsplash)

1. Create a clean canvas

No matter how rough or outdated your house may be, a deep cleaning makes a big difference in how it shows to potential buyers. According to HomeLight’s data, a deep clean can add more than $1,700 to a home’s sale price, and is likely to speed up the sale process.

Eva Cedillo, a top-performing agent in San Joaquin County, California, says a deep clean is by far the most important step in fast-tracking a fixer-upper sale. “90% of the time, the buyer is going to do a full rehab anyway, so they’re just looking for a clean slate,” she notes.

When going after the grime, focus on these key areas:

Declutter all counters, open areas, closets, and built-in storage areas:

Not only will this make the house appear more spacious and appealing to buyers, it will also make it easier to tackle the deep cleaning tasks.

Get the kitchen spic-and-span by scrubbing down all surfaces:

Empty the cabinets and wipe out any crumbs or dirt from the inside, purging contents as you go. Then, clean out and wipe down the inside and outside of the refrigerator, dishwasher, and oven. Finally, scrub down the stovetop and all countertops. Finally, sweep and mop the floors.

Clean all bathroom surfaces, including sinks, toilets, showers, bathtubs, and mirrors:

Freshen up bathroom tile with your preferred cleaning product or a natural mix of hot soapy water. Stanley Steemer recommends soaking grout in a mixture of one-fourth cup hydrogen peroxide, one-half cup baking soda, and one teaspoon of dish soap for 5-10 minutes and then scrubbing grout lines with a brush.

Wash the inside and outside of all windows, including windowsills, window tracks, and blinds:

Use a vacuum brush attachment to remove dust, debris, and bugs from the windowsills, recommends Molly Maid, a professional home cleaning service since 1984. Get rid of any mold with bleach water or a white vinegar solution. Apply a baking soda-vinegar mix to the remaining gunk. Let it soak and scrub it off with an old toothbrush.

Top it off with these cleaning tips:

  • Dust the fixtures and furniture in each room from the top up, starting with ceiling fans and higher furniture like bookcases and working your way down.
  • Wipe down all baseboards, doors, door frames, and window frames. Use a Mr. Clean Eraser to remove any scuffs.
  • Sweep and mop all hard flooring surfaces. Vacuum all carpets and then have them professionally cleaned. Even if the buyer ends up replacing the flooring, the freshly cleaned carpet will give the impression that the home has been well-maintained.

2. Knock out the low-hanging repairs

When time is of the essence, it’s probably not realistic to start tearing out kitchens and knocking out walls. And in most cases, an investor or flipper who purchases the home will want to make those bigger renovations themselves, as they have the expertise and resources to tackle them faster and less expensively.

That said, there are some minor repairs and upgrades you can do to make the house safe and comfortable in case the buyer wants to live there while making the bigger improvements.

Consult this list for guidance:

Blue kitchen cabinets to demonstrate how to sell a fixer upper house fast.
Source: (Vincent Erhart / Unsplash)

3. Disclose any potential “deal-killers”

In an ideal investing scenario, a fixer-upper would have only cosmetic issues, where the renovations would be low-cost and straightforward. That’s not to say you won’t be able to find a buyer who’s willing to take on a property with more baggage — you’ll just have to be prepared to adjust your pricing expectations.

If you know (or suspect) that your fixer-upper might have pricey problems, some experts recommend getting a pre-listing inspection so you know exactly what you’re dealing with. If you wait until the buyer’s inspection to uncover any potential pitfalls, you could face delays later in the process or the contract could fall through, sending you back to square one.

“A pre-inspection report negates the ability for potential buyers to haggle over non-functional systems or degraded house parts that they see,” says seasoned real estate investor Andy Kolodgie. “We’ve also found that pre-inspection reports actually create a more competitive environment for bidding, as all sides understand exactly what is available.”

Below are some of the major issues that inspectors will look for, especially with a home that needs work:

  • Faulty HVAC system
  • Electrical problems
  • Plumbing issues
  • Damaged or old roof
  • Structural/foundation issues
  • Insect/pest infestations
  • Mold
  • Water damage

4. Improve drive-by impressions with quick curb appeal boosters

While you may not have the time for a full-scale landscaping project, a few quick spruce-ups can help project the image of a clean, well-maintained home and help speed up the sale:

  • Declutter the porch, yard, and driveway. Store or purge any bicycles, toys, trash cans, empty planters, shoes, and other odds and ends.
  • Remove any weeds, leaves, branches and other lawn debris.
  • Cut the grass and trim the bushes.
  • Add some fresh mulch.
  • Give the shutters, front door, and exterior trim a fresh coat of paint if needed.
  • Power wash the outside of the house.
An image of a house and yard to demonstrate how to sell a fixer upper house fast.
Source: (Aubrey Odom / Unsplash)

5. Partner with a fixer-upper-friendly real estate agent

A great real estate agent is a valuable tool for any seller, but particularly for a seller looking to quickly unload a fixer-upper on a tight timeline. That’s because when a house needs TLC, the agent will be better equipped to:

  • Help you calculate how much the required repairs will cost
  • Set a realistic price that reflects the work that is required and ensures a profit for the investor while still meeting your financial needs
  • Recommend when it makes sense to list at market value and offer a credit
  • Potentially assist with the cost of basic repairs (Cedillo says she usually fronts the money for paint and carpet before listing a fixer-upper)
  • Target a network of investors and house flippers who are seeking properties to renovate
  • Shift the emphasis away from the property’s flaws and highlight its selling points

6. Set a fair and realistic price

Every seller wants to get the best possible price for their property. For an updated, well-maintained house in a desirable location, you can easily fetch the top of your price range. But a fixer-upper that’s selling as-is won’t command as high of a sale price.

Start with neighborhood comps.

Just as he would for a turnkey property, Kolodgie always looks at neighborhood comps to get an idea of what properties of similar sizes are selling for in the area.

“Looking at comps to price a fixer-upper can be beneficial to help you figure out what price you should be under,” he explains. “In faster-paced markets, starting with the comps and reducing the price by 110%-120% of the repair cost will typically lead to eager home buyers. However, in slower markets with less demand or inventory, the cost may need to be substantially reduced, or it could be sitting for several months to a year or more.”

Calculate the ARV.

When investors are considering buying a fixer-upper, the most important number is the after repair value (ARV), which is what the property would fetch on the open market after any necessary repairs and updates have been made. Most flippers prefer to keep their total investment at 70% of ARV or less, which will ensure that they still earn a healthy profit after deducting any commissions, closing costs, and capital gains taxes.

“If you’re selling the fixer-upper in a high-end market, the renovation budget will be higher. If you are in a lower market, new paint and replacing the countertops may be enough,” explains Nick Ron, founder and CEO of House Buyers of America.

“Study the market, analyze the homes selling at the top of that market, and think about what it will cost for the buyer to get your property up to that amount.”

Once you’ve determined the ARV, Ron recommends using this formula to calculate the maximum offer price:

65-85% of the ARV – the repair costs = maximum offer price

For example, if your fixer-upper’s ARV is $305,000 and needs around $50,000 in repairs, the minimum price would be $148,250 and the maximum price would be $209,250. Pinpointing these numbers early on will help minimize negotiation delays and ultimately get you to closing faster.

7. Play up the home’s potential in the listing

You may not be able to boast about quartz countertops, brand-new hardwood floors, or professional landscaping, but even the roughest property will have some selling points for the right buyers. Emphasizing those features is key to attracting more interest — and more offers — early on.

When crafting your fixer-upper’s listing, your agent should highlight some of the key elements that investors are looking for:

  • Potential resale value after repair. “Price point is key,” Cedillo says. “Investors want a deal. They want to make money on a flip.”
  • Any competitive differentiators. Does the property have any “sizzle features” that make it unique? Glen Gallucci, a veteran real estate investor and founder of Peak Properties LLC, recalls an older fixer-upper where it was difficult to add central air conditioning, so he installed AC units in almost every room of the house. It was a feature that really stood out when showing the house on hot, humid days.
  • Prime location and lot. Even if your property needs some serious TLC, if it’s situated in a desirable neighborhood or on a large, private lot, your agent should play up those selling points.
  • Floor plan: A fixer-upper may need a serious facelift, but an appealing layout will be more likely to attract interested buyers.
A house on a large lot demonstrating how to sell a fixer upper house fast.
Source: (Sigmund / Unsplash)

8. Consider going the ‘wholetailing’ route

Zach Kolman, a wholesale property investor in Tampa Bay, Florida, often uses the “wholetailing” strategy to unload fixer-uppers quickly. The idea is to fix up the house enough that an end buyer who is looking for a project can get traditional financing, since the property isn’t distressed and doesn’t call for major, time-consuming updates that would keep a bank from lending on it.

“For example, you might make the major repairs like electrical, mold remediation, septic, or plumbing issues, without updating the kitchens, floors, or bathrooms,” Kolman explains. “The house will no longer be in such rough shape that a bank wouldn’t lend on it, but not in such good shape it would demand top dollar for a buyer who wants a turnkey property.”

By using the wholetail method, you can widen the pool of potential buyers to include not only investors looking for a project, but also people who are looking to do their own work to make the house exactly what they want.

9. Prioritize cash buyers

While there may be bargain hunters who will opt to buy a fixer-upper on the open market, when it comes to really fast-tracking a sale, cash is king. Cash sales can close in as little as two weeks, compared to an average of 48 days for a buyer who is getting a mortgage.

Beyond those signs on the side of the road proclaiming “we buy ugly houses,” the iBuyer trend has made it even easier to find cash buyers online. HomeLight’s Simple Sale allows you to tap into the country’s biggest network of iBuyers — just enter your address and then answer a few questions about your property, and we’ll recommend the best matches for cash buyers seeking homes in your area.

Selling your fixer-upper as-is doesn’t have to mean sacrificing all of your profits, but it does mean thinking carefully about picking and choosing which improvements to make, setting the right price, highlighting hidden selling points, and being open to cash buyers. Partnering with an agent who has a track record for selling homes that need TLC can give you a step up toward achieving those goals.

Header Image Source: (Phil Hearing / Unsplash)

You need to figure out how to sell a fixer-upper house — and do it fast — to avoid additional strain. So what’s the plan?HomeLight Blog

5 Keys To Know About an ‘As Is’ Home Sale Before You Try OneValerie KalfrinHomeLight Blog

A couch with a red wine stain. An iPad with software issues. A car with a few dents and scratches. These are all items that you may see listed for sale “as is” on sites like Facebook Marketplace or Craigslist.

With the addition of “as is,” the seller sends shoppers a message: Hey, you can buy this thing, and here’s the price I’m asking for. But you must accept the item at hand in its current condition, warts and all, including any flaws that aren’t immediately visible or apparent.

So how do “as is” sales in furniture and retail translate to “as is” sales in real estate?

Like selling a well-loved armchair or old Jeep with a WYSIWYG mentality, some sellers also try their hand at an “as is” home sale.

While “as is” is always a bit of a red flag for a buyer, an “as is home sale” carries some extra baggage — namely, that you’re trying to unload a hassle or a fixer-upper. And because a house is one of the most expensive things you can buy, those red flags are amplified with a transaction of this size.

If you don’t have a lot of money for repairs around the house or you need to move in a hurry, selling your home “as is” might appeal to you. However, buyers, at a minimum, are going to want a guarantee that a home is safe and livable before they move in. Let’s look at five things you should know about an “as is” home sale before you list your biggest asset like a damaged La-Z-Boy.

1. ‘As is’ isn’t a free pass to hide known issues.

Buyers fear inheriting a house with a host of hidden problems. According to the 2020 Profile of Home Buyers and Sellers from the National Association of Realtors (NAR), 44% of buyers who purchased new homes did so to avoid renovations and problems with plumbing or electricity.

Enter real estate disclosures

To protect buyers, real estate disclosure laws make it illegal for you to sweep major issues under the rug. Unless you live in a “Caveat Emptor” (or “Buyer Beware”) state, such as Arkansas, most states require you to disclose any “material defects” in your home and will hold you liable if you don’t reveal them upfront.

What’s more, even some “Caveat Emptor” states, such as Alabama, require disclosing information about issues that might affect a buyer’s health or safety. (Curious about your area’s disclosure laws? Consult our guide to all 50 states’ mandated disclosures).

Sharing issues that you’re aware of

“I think that’s probably the most important piece of this,” says Kim Tupper, a real estate agent of more than a decade in southeastern Pennsylvania who sells properties more than 69% faster than the average agent in the Lincoln University area.

“Your disclosure has to be everything that you know is wrong with the house. You can’t hide anything in that ‘as is.’”

In other words, you can disclose there’s a leaky roof, and ‘as is’ will mean, “I’m really not planning on repairing that for you.” But you can’t keep quiet about it, and neither can your agent. You might not be aware of every flaw — that’s for the home inspection to notice — but once you are, you can’t hide them, and legally, neither can your agent.

Risks of sweeping home flaws under the rug

As associate attorney Brett Wasserman puts it, actively concealing anything that could cause a potential buyer to value the property for less would be fraudulent. “You would want to disclose more than less. You don’t want to give the buyer any reason to turn around and say, ‘You didn’t tell me about this… I want X amount back,’” says Wasserman, an associate attorney who handles real estate law at the legal offices of Marc Bronstein in Santa Monica, California.

A home inspector reviewing an as is home sale.
(Source: Michal Jarmoluk / Pixabay)

2. Buyers can still get an inspection to unearth problems.

A home inspection is part of a buyer’s due diligence. In fact, 95% of purchased homes undergo an inspection before closing. By saying your sale is “as is,” you’re not preventing a buyer from requesting an inspection, just signaling that no matter what the inspection finds, you don’t want to negotiate on price. If a buyer’s contract includes an inspection contingency, they can walk away with their earnest money if the inspection uncovers a red flag such as a crack in the foundation, even during an “as is” home sale.

Because of the likelihood of an inspection, you’re better off being honest to avoid potential liability, adds top-selling real estate agent Vendela Bonner, who has served the Philadelphia, Pennsylvania, area for more than a decade. “A buyer will buy a property if you’ve had a roof leak. The more important thing is whether or not it was fixed,” she says. “Do you have a warranty after you’ve fixed it? That’s a yes or no answer.”

3. Buyers tend to presume that ‘as is’ means the seller is stubborn or lazy.

When you consider the issues that might crop up during a home inspection such as electrical, plumbing, and structural problems, it’s understandable that some sellers want to throw up their hands and say, “Let’s sell this as-is.”

But not every “as is” home sale falls into that category.

Simplifying the sale while remaining flexible

Tupper has met many sellers, such as out-of-town adult children trying to sell a parent’s home, who are looking for a simple transaction because they don’t know the property well. However, even if they want to list the property “as is,” they’re willing to work with buyers on repairs related to health and safety matters — even if all they can manage financially is a credit at closing.

“None of them have been completely against entertaining any request from the buyer,” she says. “There are going to be those situations where the seller literally has no money … but especially when it comes to a safety or health-related issue, those sellers are willing to help out or willing to work with you.”

Use creative language to soften the ‘as is’ label

To avoid such preconceptions that “as is” carries, talk with your real agent about how to list your “as is” home sale without those two little words. For instance, Tupper in the Multiple Listing Service, or MLS, notes that inspections arranged by the buyer will be used for “informational purposes only” to provide buyers and their agents with such a heads-up.

“I just think that’s a little bit more acceptable expectation for the buyer … We never want to give the impression that the sellers are not motivated,” she says. “I don’t think it’s worth the perception and getting less showings because of that perception when in fact, that seller may be willing to credit the buyer if they don’t want to do [repairs] themselves.”

A person buying an as is home.
(Source: Gerd Altmann / Pixabay)

4. Cash buyers or investors will be more receptive to the ‘as is’ label.

Investors increasingly play a large role in the housing market, according to NPR, citing data from CoreLogic that investors purchased 1 in 5 starter-priced homes in 2019. In fact, NAR notes that cash sales comprised 19% of December’s housing sales.

While this has made it difficult for first-time buyers to compete in an increasingly crowded space, an investor or house-flipper tends to be less discerning about cosmetic repairs such as new paint and light fixtures than other potential buyers. This makes them a good buyer pool to target if you hope to sell “as is.”

How investors see “as is” differently

One survey of over 2,000 adults from real estate brokerage Coldwell Banker found that 80% of Americans want a move-in-ready home instead of one that requires renovations. By comparison, it’s common for house flippers to purchase a home without getting an inspection first and be comfortable purchasing properties in poor condition. The trade off is that an investor is going to factor the cost of necessary repairs and renovations into their offer, resulting in a lower bid than what a traditional buyer would pay.

However, by way of paying with all cash, an investor can offer you additional benefits, such as a fast and flexible closing. You also won’t have to deal with the hassles of stagings and showings, since most cash buyers prefer to make offers on homes that haven’t hit the market yet.

How to get a cash offer

If you seek a no-fuss, “as is” home sale, we’d recommend requesting a cash offer through HomeLight’s Simple Sale platform. Investors in our network often prefer to buy homes as-is, in any condition, and we handle all the buyer-side costs and paperwork on your behalf.

We get that convenience is huge, but we’ll also do our best to match you with the cash buyer who’s willing to offer you the highest price for your home. We do this by identifying the best cash buyer “match” for your property and location, based on that buyer’s preferred price point and the types of properties they’ve typically bought in the past.

To get started, answer a few questions about your home and selling timeline. Alongside your cash offer, we’ll present you with an estimation of what you could fetch on the market with the help of a top agent so you can easily compare your options.

A person buying an as is house.
(Source: Gerd Altmann / Pixabay)

5. When you sell ‘as is,’ you likely won’t get full market value.

Shane Underwood, a top-selling real estate agent in Lexington, Kentucky, has worked with homeowners relieved they were able to sell “as is” to a flipper because of personal or property issues. The drawback? They get “pennies on the dollar,” he says.

While a flipper targeting rundown properties often offers no more than 70% of a property’s after-repair value for a house they plan to flip, traditional buyers who notice that an “as is” home needs work also subtract a lot from the value.

For instance, if your carpeting reflects lots of wear and tear, you could replace it for $1 to $3 per square foot for builder-grade olefin and polyester, a cosmetic upgrade that makes a big impression. A buyer considering replacing the carpet might calculate using a higher grade that costs more.

“A buyer almost always estimates higher than what it would have been than if [the seller] had done that repair themselves,” Tupper says. “If the seller tells me that they want to list it ‘as is,’ or with buyer’s inspection for informational purposes only, they may get a lower price just because they have taken that stance.”

So in summary, whether you sell “as is” to an investor or “as is” to a regular buyer, the label tends to draw lower offers, period.

Selling ‘as is’ is just one of your home-selling options

Even if an “as is” home sale is your best bet because of your current circumstances, talk with your agent about how to maximize your offers. For instance, top HomeLight agents say that you can avoid leaving money on the table simply by deep cleaning and decluttering your home before putting it on the market. These projects not only help your home show better but have an exponential return on investment, making your home show better and adding thousands of dollars to your bottom line.

Also, talk with your agent about the current market. Tupper recently sold an older four-bedroom Colonial with two and a half baths, a two-car garage, and an unfinished basement for a family uprooting to Texas to restart a business. The family didn’t have the resources for upgrades, so after little traffic, Tupper suggested renting it until market conditions improved. It later sold above expectations for $370,000.

“It was just a function of good timing,” she says.

 

Header Image Source: (tkoch / Pixabay)

Let’s look at five things you should know about an as is home sale before you list your biggest asset like a damaged La-Z-Boy.HomeLight Blog

8 Tips for Selling a Rental Property: Navigating Taxes and TenantsMelissa RudyHomeLight Blog

DISCLAIMER: As a friendly reminder, this blog post is meant for educational purposes only and is not intended to be construed as financial, tax, or legal advice. HomeLight always encourages you to reach out to a tax professional, real estate attorney, or other advisor regarding your personal situation.

Owning a rental property is great… until it’s not. Kyle McCorkel, a seasoned real estate investor in Hummelstown, Pennsylvania, saw the writing on the wall when the property taxes for one of his rentals spiked by more than $2,000 annually. At that point he knew it was time to sell. Shortly after, a pandemic-driven housing market boom encouraged him to unload an additional two rentals while prices were hot.

“My expenses were going up faster than rent was going up, so I decided to seize the opportunity to cash out and move my equity into better performing investments,” he says.

Let’s not sugar coat it, though. Tricky tax rules, existing lease terms, and wear-and-tear from tenants can make selling a rental property a major headache. However, when the time is right, you need to act — and with the right approach and preparations, you can make a graceful exit without too much disruption.

With tenant communications and handling repairs weighing on your to-do list, here’s what experienced rental property owners, landlords, and real estate agents say it will take to pull off a smooth rental property sale.

An image of money used to depict selling a rental property.
Source: (Jessica Lewis / Unsplash)

1. Don’t get blindsided by hefty capital gains taxes.

When you go to sell a house you’ve used as your main residence, the upside you make from that sale is usually tax-free. Generally, you can make a $250,000 (if single) and $500,000 (if married) profit without owing in taxes on the sale so long as you’ve owned the house for two years, and lived in it for two of the past five years.

However, the IRS doesn’t extend the same generous capital gains tax breaks to property investors as it does to owners selling a primary residence. You’re playing the ball game with different rules.

Most likely, your rental property has increased in value over time, resulting in a capital gain i.e., the profit you earn when you sell) like any other house. However, since you’ve been renting the property rather than living in it, you won’t qualify for the “use” test of the capital gains exclusion, meaning that any profit you make, even under the $250,000/$500,000 threshold, could be taxable.

If you’ve owned the rental property for just one year or less, the profits will be considered short-term capital gains, which are taxed at the same rate as your income. That means depending on your tax bracket, you could owe anywhere from 10% to 37% per tax code as of this writing.

But if you’ve owned the property for more than one year, the long-term capital gains are taxed at a lower rate: 15% for joint filers earning between $78,750 and $488,850, or 20% for filers with taxable income of $488,851 or more.

If your taxable income is less than $80,000, you’re off the hook for paying capital gains taxes. But even if you earn more than that, there may be workarounds to avoiding them (read on to learn more).

2. Defer capital gains taxes with the 1031 exchange.

Maybe it’s time to unload a poor-performing rental property in a declining neighborhood, but you want to try your luck in an up-and-coming area. With the 1031 exchange, you may be able to sell one property and then buy another “like-kind” property with more income potential, without having to pony up the capital gains tax.

What exactly does “like-kind” mean? Well, you can’t use the 1031 exchange to buy a personal residence that you intend to live in — it has to be another investment property that you plan to rent out or flip. And the clock starts ticking as soon as you’ve sold the first property. You have 45 days to find and identify up to three properties you’re interested in purchasing, and a total of 180 days to close on the chosen property.

“In addition to the timing of the sale and subsequent purchase, there are many other rules that you must follow with a 1031 exchange, so the most important first step is to contact a qualified intermediary, whose job is to facilitate all aspects of the exchange and ensure that you follow all the required steps,” says Eric Hughes, founder and CEO of Rental Income Investors, an advisory service for new investors in New York.

A house with trees and sky to demonstrate the process of selling a rental property.
Source: (I Do Nothing But Love / Unsplash)

3. Consider living in your rental before selling.

If you don’t want to use the 1031 exchange to parlay your profits into a like-kind property, another option is to move into your rental home before you sell. As long as you live there for at least two years, you’ll pass the IRS’ “ownership and use” tests, which require that you’ve:

  • Owned the home for at least two years (the ownership test)
  • Lived in the home as your main home for at two years of the past five years (the use test)

When you pass these tests, you’ll be eligible to waive capital gains taxes for up to $250,000 (if filing single) or $500,000 (filing jointly). However, if the rental property is an investment turned sour, you may be better off unloading it now to cut your losses.

4. Honor your lease period, or give tenants ample notice to vacate.

If your rental property is occupied when you decide to sell, one option would be to negotiate with the tenants and offer an incentive for them to vacate. But if they’re intent on staying put, or if you have a good tenant and want to use that as a selling point, you’ll have to respect the terms of the lease.

In most states, the lease agreement will be transferred with the sale and the new owner can only make changes after the current lease has expired. “If your tenant has six months left on their lease, then buyers will have to accept the lease agreement as part of their purchase,” says Robert Taylor, a residential real estate investor with over 15 years of experience with renting and flipping homes in Cameron Park, California.

If your tenants are month to month, you can choose to give them notice to vacate. Check to see what the rules are in your state. In Taylor’s state of California, landlords must give 30-day notice to tenants who have lived in a property less than a year, and 60-day notice if they’ve lived in the property longer than a year.

“Also keep in mind that different states have different rules during the COVID pandemic regarding giving tenants notice,” Taylor warns. “Additionally, evictions without cause are currently prohibited due to federal moratoriums.”

An image of a woman in an empty house meant to depict selling a rental property.
Source: (Kari Shea / Unsplash)

5. Use a good tenant as a selling point.

Hughes points out that for some investors, an occupied property is preferable to an empty one. “If you’re selling with a tenant, remember that you’re marketing the property to investors only, so you should include information in the listing that investors will care about,” he says. These might include:

  • How long has the tenant been in place?
  • What’s the monthly rent?
  • Is the rent paid consistently on time?
  • Does the tenant cover any utilities?
  • What security deposits, licenses, or other permits are in place with the lease?
  • When does the lease expire?
  • Does the tenant take good care of the property?

To keep your tenants happy and cooperative during the selling process, you might consider offering some type of incentive — perhaps gift cards or discounts on rent — in exchange for keeping the property looking its best and being amenable to showings.

6. Evaluate the property for needed repairs (they’re tax deductible!).

It might be tempting to get a rental property off your hands as quickly as possible by listing it right away, warts and all. And you might get lucky enough to find an investor who wants a house that needs some work in exchange for a better deal. But it might be worth your while to fix that leaky faucet, jammed window, or creaky door before you sell.

“Generally speaking, a clean, updated, home sells for a higher price than a rental property in need of repairs,” says Taylor. “However, the cost of lost rents, repairs, and other expenses can often exceed any profit you may have made fixing up your property to sell it.”

When deciding whether or not to spend the time and money on a repair before listing, ask yourself these questions:

  • What’s the condition of the real estate market? Is it a low-inventory seller’s market, where buyers are more likely to forgive undone repairs, or are you competing against many other properties at your price point?
  • Will you need to work around tenants to make the repairs?
  • Do the repairs require the property to be empty, thus sacrificing rental income?

As long as you’re not doing a 1031 exchange, any repairs you make on a rental property — defined by the IRS as “expenses to keep your property in good working condition but that don’t add to the value of the property”— will be tax-deductible. The key is to know the difference between “repairs,” which are immediately deductible, and “improvements,” which the IRS treats differently because they’re seen as adding value.

“For example, if you replace the roof of your rental, the IRS considers that an improvement that must be depreciated over several years,” says Taylor.

“But if you make a repair by replacing some flashing or roof shingles, that could be considered a tax-deductible repair.”

When in doubt, consult a skilled tax professional for clarity.

Roof shingles on a house to depict selling a rental property.
Source: (Greg Rosenke / Unsplash)

7. Don’t count on rental income to drive up the price.

While a good, well-paying tenant could make your single-family property more marketable to investors, don’t expect it to inflate the value.

“When single-family rental homes are appraised, they are appraised just like any other single-family home,” explains Taylor. “But if your rental property falls under the classification of multi-family housing, meaning it has five or more units, your appraisal will be based on the rental income.”

That means raising a tenant’s rent won’t have an effect on the appraised value, but it could make your property more attractive to investors looking for reliable rental income.

8. Hire an investor-savvy real estate agent to market your property.

It might be tempting to try to sell your rental property on your own, but the marginal amount you’d save on commission costs (about 5.8%, per the national average) could pale in comparison to the higher price that a real estate agent would fetch.

Researchers at leading real estate data source Collateral Analytics, now owned by Black Knight, looked at numerous geographic real estate markets, including Phoenix, San Diego, and Boston from 2016-2017 to study the price differential between FSBOs vs. traditional agent-represented sales.

A chart depicting sales prices when selling a rental home in Phoenix.
Source: (Black Knight)

Their report concluded that the gap in “selling prices for FSBOs when compared to MLS sales is remarkably close to average commission rates.” On average, the study found, FSBOs sell for 5.5% less, and in some cases nearly 6% less, than agent-assisted sales, indicating that expertise real estate agents bring to a sale often more than makes up for their cost.

To get an even bigger advantage, consider looking for an agent who specializes in working with investment properties and can offer insider’s access to:

  • Rent trends in your area
  • Tax implications of selling a rental
  • A network of investors seeking properties like yours
  • Return on investment
  • After-repair value (AVR), an important metric for investors

It is possible to sell your single-family rental property and still maintain your sanity. If you’re not sure where to start, connect with an experienced real estate agent to get you on the right path. Along the way, you just might find your next rental investment waiting in the wings.

Header Image Source: (Trinity Nguyen / Unsplash) 

Tricky tax rules, existing lease terms, and wear-and-tear from tenants can make selling a rental property a major headache.HomeLight Blog

Understanding Residential Appraisals: The Homeowner’s Essential GuideValerie KalfrinHomeLight Blog

Waiting for the results of a residential appraisal can make you teeter between anxiety—“They said our house is worth what?”—and relief: “Yes, our price is right!” Yet as important as an appraisal is on the way to the closing table, many homeowners tend to misunderstand the overall process.

“A lot of times when I’m going into a listing appointment, I will ask the client if they understand that we need to sell the home twice: not only to the buyer, but also to the appraiser,” says Christie Wilkins, a top-selling real estate agent in the Duluth, Georgia area.

Starting out at the right price point is critical. Statistics from the National Association of Realtors show that appraisal issues accounted for 21% of delayed contracts and 11% of terminated contracts in December 2020.

“It’s never fun for a seller when you go under contract and then three weeks in, you find out that your home hasn’t appraised and your deal has the potential to fall apart,” Wilkins says. “I always like to walk them through what happens in that particular situation and what the options are.”

Great idea! Consider this your residential appraisal walkthrough, covering an appraiser’s general qualifications, how these professionals calculate value, and some common misperceptions about residential appraisals.

A woman on an iPad looking at a residential appraisal.
Source: (Tetiana SHYSHKINA / Unsplash)

Starting the appraisal process

As a seller, you can request a pre-listing appraisal, which can help you and your agent set an asking price if your market is changing fast or if you have a particularly unique home for which finding comparable properties (or “comps”) might be difficult.

According to Mike Ford, a Southern California-based general certified real estate appraiser since 1986, paying $450 to $550 is typically the minimum amount necessary for a credible home appraisal. Fees vary based on factors like the size of your property, where you live, and the overall complexity of the appraisal.

In a typical real estate transaction, though, you as a seller don’t have to do anything to get the ball rolling. The buyer’s mortgage lender will contact a third-party appraisal management company (AMC) to arrange for a residential appraisal, which verifies for the lender that the house is worth what the buyer wants to borrow for the purchase.

A residential appraiser must be:

Licensed and certified:

An appraiser must be licensed or certified in your state, according to the Appraisal Institute of Chicago, Illinois, a global professional organization of real estate appraisers since 1932.

Some appraisers have additional designations because of their education and experience, such as an SRA (Senior Residential Appraiser) designation for appraisers knowledgeable about analyzing and valuing residential real property.

Don’t be nervous if you happen to get a trainee appraiser, adds Mason Spurgeon, a certified general real estate appraiser since 2004 who handles appraisals in Missouri, Illinois, and Iowa.

All appraisers must work as trainees first, and they take courses in appraisal principles, procedures, and uniform standards of appraisal practice, he says. Plus, a certified appraiser takes responsibility for a trainee’s work.

Unbiased and independent:

While you won’t choose the appraiser who visits your property, the buyer won’t, either, because the appraiser’s client is the buyer’s lender. Appraisers are supposed to be independent, third-party experts — or “an objective and unbiased source of real estate information” — who work for a flat fee, not a commission. “Neither the lender nor the consumer benefits by entering into a mortgage that is more than the value of the property,” the Appraisal Institute writes.

Geographically competent:

An appraiser might have a large coverage area, but they should be somewhat familiar with the previous sales and market conditions wherever they’re evaluating property.

“If you get an appraiser who doesn’t really know that neighborhood and the building products and everything else, you can really see some low values,” Wilkins says.

This also comes into play with new economic developments, such as if Amazon.com plans to build a distribution center in your area. Your corner of the market might be hopping, but an appraiser unfamiliar with this news could be out of their element and might pull sales to compare to your property that are too old. That’s why it’s wise for appraisers to ask colleagues about an area that’s new to them.

Two people looking at a residential appraisal.
Source: (Romain Dancre / Unsplash)

Gathering relevant paperwork and information

An appraiser’s job involves a review of public records and comparable sales, as well as an inspection of your property’s interior and exterior. “We don’t turn the faucets on or that sort of thing,” Spurgeon says.

“We walk through it and do the best we can to see the surface amenities.”

Regardless, you should make sure that your property is tidy and accessible so that an appraiser can measure and view it accurately. Also, gather any relevant paperwork or digital documents, which may include:

Your most recent tax receipt or deed:

Appraisers find legal descriptions or parcel numbers helpful, provided they’re accurate. Your home’s square footage, easements, census tract, and source of utilities are among the many pieces of information that an appraiser gathers for their final report. “I’m very meticulous when I measure the outside of a home. I use a laser,” Spurgeon says. “Sometimes the assessor doesn’t measure correctly.”

Covenants and fees related to a homeowners’ or condominium association:

When you have your home appraised, you’ll need to be transparent about HOA fees and the like. New owners need to know about any rules or restrictions they will need to abide by, as well as the details of any dues or fees. HOA and other community fees are especially important to the buyer’s lender who needs to ensure the buyer can afford the fees on top of their mortgage.

A list of major home improvements and upgrades, including dates of installation, costs (include receipts), and permit confirmation (if available):

Appraisers must note the age and design style of your home, the type of attic and foundation, any car storage, the type of heating and cooling, appliances, and amenities. So any material that you provide can support the reasoning for your asking price. Wilkins suggests leaving this information in a spreadsheet on the kitchen counter for easy access.

Include information about neighborhood amenities, such as walkability and schools, if you can.

“There are going to be some things that an appraiser can’t physically see, and that can definitely be helpful. I did have a seller who did this, and they ended up having the highest appraised value in the neighborhood,” she says.

A kitchen used to depict the process of residential appraisal.
Source: (Clayton / Unsplash)

How an appraiser approaches value


Depending on the type of property, an appraiser calculates value using one of these methods that the Appraisal Institute describes:

The sales comparison approach: This is the most “apples to apples” comparison, where an appraiser compares the subject property to others of similar size and amenities, making adjustments for location, physical and economic characteristics, zoning, and even financing. “We shoot for at least five to six [comparable listings],” Spurgeon says.

The cost approach: Think of this as the sum of the parts equals the whole. An appraiser figures out the value of the land as if it were vacant, plus what the new cost of improvements on the property would be, minus depreciation. “This approach is particularly useful in valuing new or nearly new improvements and properties that are not frequently exchanged in the market,” the Appraisal Institute notes.

The income capitalization approach: This focuses on the value of the income that a property could produce, something that turns up more often with commercial and rental property than during a residential appraisal. An appraiser might calculate a property’s expected gross income along with its anticipated annual operating expenses.

For a residential appraisal, Spurgeon uses either the cost approach or the sales comparison approach, depending on the age and style of the property. For instance, the cost approach “is tough to do on a late nineteenth century home. You’ll have twelve-foot ceilings and trim that you can’t replace.”

If a property has particularly unique features and finishes, Wilkins says that she’ll provide an appraiser with the comparable properties that she used to arrive at the asking price. “I do a lot of luxury properties, and … you can’t just go based on square footage. The interiors are going to be different, from the quality of the woodwork and the cabinetry and the granite. … So certainly when I have a unique [property], I’m going to utilize those comps and set those out as well for that appraiser in advance.”

In addition to those calculations, appraisers take other factors into account, including:

  • Functional obsolescence: If your property’s layout and size is much different from other properties in the current market, an appraiser will note that as a loss in value. “Let’s say you have to walk through one bedroom to get to the other bedroom. Or the side walls are too short for modern equipment. We see that a lot on farms,” Spurgeon says.
  • External obsolescence: Anything that reduces the value of the home outside of the home itself, such as living near neighbors whose own home is an eyesore or a bustling street. For instance, people in Beverly Hills, California, who live about a block from the freeway could have a home valued at 10%-20% less than others several blocks away, purely because of the noise, Ford says.
A woman looking at a residential appraisal on a laptop.
Source: (Mateus Campos Felipe / Unsplash)

3 common misunderstandings about residential appraisals

With the abundance of home valuation tools online and different industry terms for appraised vs. market value in real estate, it’s only natural that many homeowners have some misunderstandings and misperceptions about residential appraisals. Here are a few common ones:

Misperception #1: An appraisal confirms the sale price.


Because sellers and buyers have emotional attachments to a home, they often assume that an appraisal is wrong if it doesn’t match the listing or contract price, the Appraisal Institute says. But an appraisal is only meant to reflect fair market value.

If an appraisal is low and the contract value can be supported, you’ll need comps to prove it. Wilkins said one seller terminated a contract involving a four-bedroom, 2,500-square-foot home after the appraisal came back $12,000 low. “Based on the comps that we had pulled, that was below value for that home.” A second buyer and appraisal later, the sale went through.

In other instances, an appraisal may save a buyer from overpaying for a home. That way, if said buyer ever falls on hard financial times and has to sell the home, they ideally won’t suffer as big of a loss because they purchased it at the right value to begin with.

Misperception #2: An appraiser never changes their report.

Wilkins has found it rare for an appraiser to modify a report unless there’s an error, such as the appraiser listing square footage incorrectly or mistaking a granite counter for laminate.

Ford echoes that you can submit what’s called a reconsideration of value to the appraiser. However, about 85%-90% of the time, the appraiser will be able to back up their opinion of value.

However, Spurgeon says appraisers do make adjustments. For instance, one of his colleagues recalculated a residential appraisal after an agent pointed out two comparable sales that the appraiser had overlooked. “An appraiser will admit when we’re wrong,” he says.

Misperception #3:  You can’t talk to the appraiser while they’re at your house.

Your real estate agent may advise you to give the appraiser space to work, much like with a home inspector, but some appraisers don’t mind chatting with homeowners while taking measurements and checking out the property.

An appraiser’s questions might even prompt them to provide information they’ve previously overlooked. “They follow me around and talk to me,” Spurgeon says. “It’s also nice to have the person there in case you see something: ‘There’s a hole here. What happened there?’”

Even though a residential appraisal can be nerve-racking, agents say to bear in mind that you and a buyer ultimately want the same thing: reassurance of a property’s worth.

“I would definitely recommend that a seller do everything possible to make sure that they’re going to get the most amount of value when it comes to an appraisal,” Wilkins said. “Because if you get the contract price, obviously, that’s good. But if it goes over and above, that’s going to make a buyer feel really good, too, like they’ve made a really good investment.”

Header Image Source: (I Do Nothing But Love / Unsplash) 

Consider this your complete guide to the residential appraisal, covering an appraiser’s qualifications, independence, and methods for determining value.HomeLight Blog

Evanston Is the First Municipality in the U.S. to Use Public Funds for Black Reparations — Here’s How it WorksAlesandra DubinHomeLight Blog

The systemic racism in real estate is well-documented — and its effects on people of color are real. This is especially true for Black people, who own a disproportionately low share of the homes in the U.S: For instance, consider that there’s a gap of nearly 30% between white and Black homeownership in America.

But what if there was something that could actually help reverse decades of damage? And what if that thing was … cannabis?

Those are questions that Evanston, Illinois, wants to answer with a revolutionary new program designed to use tax dollars generated from cannabis sales to help increase Black homeownership in the suburb. To be clear: Evanston is paying reparations, and pot is helping make it happen.

Here’s an introduction to Evanston’s ground-breaking reparations plan, and how it’s been working so far in the city where white homeownership is disproportionately high and the Black population has been diminishing.

An image of Northwestern University in Evanston to demonstrate recent reparation efforts.
Source: (hao chen / Unsplash)

Evanston’s diversity problem

Diversity in Evanston has long been recognized as a problem. The college town of about 74,000 residents, located 12 miles north of Chicago, is mostly white — and in the highest-home-value neighborhoods, it’s almost entirely white.

And the gap has only been growing in recent years: From 2000 to 2017, the Black population in Evanston decreased from 22.5% to 16.9% of the total population.

Locally, politicians and activists in Evanston had already recognized the issue and had been working on ideas for how to solve it.

“Our gaps were widening,” city alderman Robin Rue Simmons explained in an interview with The Guardian.

“I thought we were being delusional to continue in the same vein and believe we would bridge the gap.”

Bigger-picture housing inequality and the case for reparations

Now let’s step back and widen the frame for a moment. This is a nationwide problem — not limited just to Evanston. And the case for reparations has been gaining steam in recent years as part of scientific research, as well as in the larger cultural conversation.

In 2007, two Oregon State University professors published a study, “Housing Discrimination as a Basis for Black Reparations.” In it, they argued that historic housing and lending discrimination makes for a sound basis to consider Black reparations.

“Because of a number of policies and practices, particularly those of the federal government, many African Americans were unable to take advantage of the opportunity to buy a home on the favorable terms that were available to many white Americans,” the study noted.

Even when Black Americans could buy homes, these homes were less valuable and appreciated at lower rates, largely due to the same discriminatory policies and practices. All of this resulted in serious structural inequality in housing and the large wealth gap between Black and white households, and it in turn only further reinforced other aspects of racial inequality like access to schools.

Importantly, the study noted, the housing market won’t correct itself for this problem naturally over time. Therefore, the authors wrote, “Regardless of the specific measures that are taken, the essential point should be clear: Black reparations are called for, not just because of slavery but because of much more recent and very systematic injustices. Housing discrimination in the twentieth century forms an important part — though still only a part — of the case for Black reparations.”

An image of trees through blinds to demonstrate the importance of reparations in Evanston.
Source: (Adrien Olichon / Unsplash)

Evanston’s ground-breaking solution

Back to local politics in Evanston. In June 2019, the city council passed a resolution, 58-R-19, “affirming the city’s commitment to end structural racism and achieve racial equity.”

Next, a city equity and empowerment commission held community meetings to talk about reparations and gather input from the public. The commission summarized its findings from these meetings in a report for the city council, which created a subcommittee to start the planning.

By November of that year, the measure came to a vote at a meeting of the Evanston city council. While these types of meetings are often ho-hum affairs covering dry policy topics, this one came with a sense of history and pioneerism — and the measure passed nearly unanimously.

The vote was eight to one in favor of “A Resolution Establishing a City of Evanston Funding Source Devoted to Local Reparations.” In so voting, Evanston became the first municipality in the country to pledge public money to reparations for Black residents.

The language specified how it would happen: “The Chief Financial Officer is hereby authorized to divert all adult use cannabis funds received by the Illinois Department of Revenue for sales of adult use cannabis to a separate fund in a City account for local reparations.”

As part of the city’s 2020 budget, Evanston created a reparations fund that would draw tax revenue from adult recreational cannabis sales — up to $10 million. Members of the public are also invited to make a donation into the fund.

In February 2020, the reparations subcommittee met to discuss the history and possible solutions to housing and redlining in Evanston. Minutes show the meeting presented stark data on the state of housing in Black America.

For instance, Blacks have a 31.14% denial rate for mortgages; this population represents 14.6% of the U.S., but only receives 6% of new mortgages nationwide. In Chicago, of 13,190 Black applications for homeownership, only 5,200 were approved.

By the way, Black access to real estate is not only limited in terms of homeownership, but also in terms of professional access within the industry: According to research by Deloitte, fewer than 6% of active real estate agents and brokers identify as Black, compared with more than 11% of the population.

To address this, HomeLight recently announced a partnership with the National Association of Real Estate Brokers (NAREB) to launch the Black Real Estate Agent Program, an effort geared at making the industry more inclusive while helping Black real estate agents get started — and thrive — in the business.

Rolling out the reparations program

At the February 2020 meeting, Mark Edward Alston, owner of Skyway Realty and Alston & Associates Mortgage Company, and a public policy strategist in the areas of housing and finance, outlined suggestions for needed remedies. Among them, he suggested the reparations fund starts a grant of $10,000 to $15,000 for homeowners and homebuyers in Evanston, particularly in its 5th ward. They should receive down payment assistance in the form of a grant, he said.

Months later, in August 2020, a subcommittee appointed by the city council recommended that the council approve the use of $400,000 from the fund for housing assistance programs meant to benefit 16 households. The money would provide housing assistance for Black residents who were discriminated against by the city, or whose ancestors were discriminated against by the city in the years between 1900 and 1969.

What now?

At a meeting in November, Alderman Ann Rainey explained that the city expects to collect $1 million in the fund within its first year, both through cannabis sales as well as personal donations.

She also said the city plans to develop a committee to review eligibility and determine funding. So these are important steps forward, the city council agrees — but there’s plenty of work to be done.

“Everyone is frustrated,” said Rue Simmons, as cited in Evanston daily news pub The Daily Northwestern. “This program is overdue. It’s not enough. I’m hearing all of that and I am completely agreeing, but I just have to say how proud I am that we are making these steps towards repair.”

Header Image Source: (Matthew Henry / Burst)

Evanston is testing a revolutionary new reparations program designed to use cannabis sale tax dollars to help increase Black homeownership.HomeLight Blog

Find Your Place Among the Stars: How to Buy a House in Beverly HillsLily Allen-DuenasHomeLight Blog

“Toto, I’ve a feeling we’re not in Kansas anymore!” No matter which way you tap those ruby-red slippers, there is truly no place like a home in Beverly Hills. As the land of the rich and the famous, where the big-league celebrities call home, Beverly Hills is a lauded international symbol of grandeur — a title it definitely deserves.

Whether it’s the iconic palm-lined Rodeo Drive, the abundant California sunshine, the screenings at Beverly Hill’s own Academy of Motion Picture Arts and Sciences, or being a part of the legendary celebrity community that draws you in, buying a home in Hollywood is no piece of cake. Beverly Hills is notorious for having a perennial perch on top of the market. With the average property value at $2 million, if you’re hunting for your dream home in Beverly Hills, expect the prices to be sky high.

We rolled up our sleeves, put our noses to the grindstone, and consulted top-ranked real estate expert Jason Suarez to cull the best insider tips about buying a house in Beverly Hills. It’s easy to get dazzled. We’re here to keep you from feeling frazzled, and to make sure you are fully prepared to navigate the neighborhoods and the posh Beverly Hills landscape! Ready to unlock the best kept secrets about the Beverly Hills housing market with this comprehensive guide? 3-2-1… Action!

An image of a pool and a house you could buy in Beverly Hills.
Source: (Ferdinand Asakome / Unsplash)

Budgeting to buy a house in Beverly Hills

The renowned 90210 ZIP code has a median property value of $2 million as of 2018, which is actually nearly nine times greater than the national average of $229,700. “Beverly Hills is the epicenter of luxury — the shopping, the restaurants, the properties, the landscape, the architecture. You’re literally entering a dream when you enter Beverly Hills,” Suarez says.

Some of the most expensive properties in all of America reside in Beverly Hills. While deals can be found, it is important to note that in 2021 home prices are up 11.2% from the previous year, with homes on the market usually selling for just 1% below listing price. That being said, these ultra-luxury homes can end up selling for a substantial amount under the listing price. In August 2019, the “Mountain of Beverly Hills” property, a vast 157 acreage alighting the hills just a 10-minute jaunt from Rodeo Drive, sold for $100,000 when the asking price was originally $1 billion.

While there is a Hollywood-worthy story behind that plot of land, it isn’t a complete and total anomaly. In October 2019, the Bel Air Mansion sold for $94 million when it was originally listed at $250 million.

While you’re likely not looking for elevators lined with alligator skins or four-lane bowling alleys in your home, keep in mind that it is possible for over-the-top price tags to be substantially slashed. That being said, the Los Angeles Times reported in July 2020 that the cheapest home listing in Beverly Hills came in at $929,000 — for a two-bedroom, two-bathroom house. In terms of mortgage payments, the U.S. Census reported that in the window between 2015 to 2019, the average monthly mortgage payments in Beverly Hills was $4,000.

Appreciate the appreciation

If you review the history of real estate in Beverly Hills, you’ll find that the value continually rises. When you buy a house in Beverly Hills, it’s important to remember that you’re also making an investment. As Suarez confirms, “It’s home first and an investment second.”

Suarez also says that there’s a reason why some of the wealthiest and smartest individuals in America have purchased homes in Beverly Hills.

“Beverly Hills is like a blue chip stock. It’s always going to hold value, and more often than not, it’s going to continue to go up.”

Beverly Hills real estate has appreciated 73.06% over the last 10 years. The national average for annual home appreciation is 3.8%, which means that, unsurprisingly, Beverly Hills is in the top 10% for real estate appreciation nationally.

Property tax

When budgeting to buy a house in Beverly Hills, keep in mind the property tax. There is an effective property tax rate of effective property tax rate of 1.1% in Beverly Hills, which leads to an average of $25,215 each year. While California’s controversial Proposition 13 protects homeowners from large tax increases in the years after purchasing a home, for the new homeowner, the fair market value of the property will determine the amount of taxes. However, Proposition 13 limits the amount that the tax can increase thereafter.

Factor in extra home insurance

Having home insurance that covers loss from natural disasters is critical because homes in Beverly Hills face the risk of wildfires and earthquakes. While homeowners and renters insurance do cover fires, in Southern California, it is recommended to purchase additional fire coverage to recompense the cost of reconstruction, replacement, or repairs to your property above the limit set by your property insurance policy. California wildfires have been raging across the state in recent years, and in 2020 Forbes named Los Angeles as the No. 1 metropolitan area for wildfire risk in the U.S. While more rare, earthquakes do impact Beverly Hills homes. Beverly Hills is right on a fault line and is at risk for both minor and major earthquakes. Homeowners and renters insurance do not cover earthquake damage, so adding earthquake insurance is crucial.

The importance of inspections

While there certainly are futuristic, trendsetting new builds happening in Beverly Hills, there actually is a fair amount of older housing stock as well. These older homes, paired with the price tag of properties in this city, mean getting all homes inspections completed is a must. “For buyers looking to buy a home in Beverly Hills, always make sure to do inspections. If it’s an older home make sure to check the electrical and plumbing, then check for termites, mold, water damage, retrofitting — things that are required by code — and earthquake safety,” recommends Los Angeles real estate attorney Alex Mehdipour, the founder of Mehdipour Law, PC.

The option to rent

If renting is more the name of your game, the average rent for a two-bedroom apartment in Beverly Hills was $2,950 as of December 2020. However, renting a single-family home has quite a different price point. In January 2021, the median rental price for a single-family home was $10,413. In the 90210, large apartment complexes are the single most common housing type, an estimated at 49.2% of the housing units in Beverly Hills. Studios are the least common type of rental units available. Lastly, you’re in luck! Beverly Hills is one of the select few LA cities with rent control.

An image of a condo to demonstrate how to buy a house in Beverly Hills.
Source: (Christopher Stark / Unsplash)

Understanding the Beverly Hills housing market

Typically, Beverly Hills houses are on the market for around 52 to 56 days, but the market began a more competitive trend in 2020, as the inventory went down and interest rates moved to historic lows.

Things are really heating up! In March 2020, the day after an off-market opportunity for a Beverly Hills house became known, it garnered 18 offers in 24 hours, and ended up selling for $6.75 million after a long negotiation among multiple buyers.

“When it comes to buying a house in Beverly Hills, there is no seasonal pattern. The market is steady, and doesn’t really have any ups or downs,” confirms Mehdipour. “To make your bid competitive, sellers are looking for shorter contingency periods and larger deposits.”

Moreover, in March and April 2019, L.A. County recorded 85 residential sales of $5 million or more. In the same bracket in 2020, there were 82 home sales of $5 million or more, with 14 transitions over $10 million. The real estate market in Beverly Hills appears to be pandemic-proof.

In terms of making your offer attractive to sellers, Suarez says it’s important to put your best foot forward. “Make it as easy and simple for the seller. Make sure it’s as professional as possible. You want your offer to be the most attractive, which means price, terms, presentation, simplicity.”

Currently, there are 17,559 housing units in Beverly Hills. Surprisingly, only 3.8% of Beverly Hills homes have been built after 2000, and the city of Beverly Hills has reported that 60% of Beverly Hills’ housing is more than 50 years old. Keep in mind that renovation and vigilant upkeep is the norm, so the homes are exceptionally modern and well-kept. While the size of homes vary greatly in Beverly Hills, 52.4% are one- or two-bedroom homes, whereas only 23.9% are four- or five-bedroom homes.

While Los Angeles is enormous, Beverly Hills is a relatively small town with just 33,792 residents, as reported in the January 2019 census. In fact, many public universities have more students enrolled than Beverly Hills has residents.

Granny units

As of January 2021, Beverly Hills has not officially finalized its updates to the residential zoning permits, which would allow for the construction of “accessory dwelling units,” also more simply called “granny units.” These are separate dwelling units, either attached or detached, that are located on the same land as the main house, and provide complete independent living facilities for one person or more. It is anticipated that soon the law will stimulate a boost in the production of second dwelling units to increase housing production and availability in Beverly Hills.

An image of Rodeo Drive to convey how to buy a house in Beverly Hills.
Source: (Colton Sturgeon / Unsplash)

Mapping out Beverly Hills

When you buy a house in Beverly Hills, you don’t need to have a celebrity star map in hand — a neighborhood map will do just fine! Quite simply, Beverly Hills is divided into north and south by Santa Monica Boulevard. The northern region is the land of mega-mansions and superstars, whereas the southern area is more residential and family-centric.

Beverly Hills Flats

When you think of Beverly Hills, you’re thinking of The Flats with its iconic palm-tree lined streets, that actually span 70 feet across. The Flats resides between Santa Monica Boulevard and Sunset Boulevard and is brimming with jaw-droppingly stunning homes in a variety of architectural styles, from Spanish Revival to Georgian Estates. You’ll even spot a few French-styled chateaus! Ergo, a substantial amount of the Beverly Hills Mansions are located in The Flats. The housing stock is primarily composed of single-family luxury homes on large lots. As the name suggests, the land is flat and excellent for walkers and runners. It’s also home to the picturesque Beverly Gardens Park, which hosts the biannual Beverly Hills Art Show where more than 200 artists showcase their work.

Trousdale Estates

Trousdale Estates is the northernmost arm of the city of Beverly Hills, covering a swatch of hillside, which affords it fantastic views of Beverly Hills and the larger city of Los Angeles itself. With carefully cultivated lush landscaping and greenery, Trousdale Estates gives a more relaxed and airy ambiance, and a hefty dose of privacy. The majority of the housing stock is modern and mid-century luxury homes, which are in high demand with celebrity A-listers and make Trousdale Estates the second-most-expensive neighborhood in Beverly Hills, with the median home price coming in at $8.5 million.

Beverly Hills Gateway

Beverly Hills Gateway is the most expensive neighborhood in the city, with the median home price of $10.5 million. Just north of the Flats, the Gateway slopes upward, as we move north into the Santa Monica Mountains. Home to ultra-elite restaurants, boutiques, and the famed Beverly Hills Hotel. It’s even where the Golden Globe Awards are hosted each year, at the Beverly Hilton. Expect to see a bevy of mansions and sprawling estates on the market here in the Gateway.

Doheny

South of Santa Monica Boulevard, Rodeo Drive, and the Golden Triangle — the downtown scene brimming with opulent stores, starlets, and paparazzi — you’ll find the neighborhoods of Doheny Southwest and Doheny Southeast. These neighborhoods are laid out on a grid system and are meticulously landscaped. In fact, each block has its very own unique species of trees, such as Southern magnolia and queen palm, which are uniformly planted. Home prices are in the single-digit millions, and it’s a close-knit, quiet neighborhood that is predominantly filled with families. The proximity to all the glitz and glam of the Golden Triangle and Rodeo Drive, while still being slightly removed from the precise diameter of the spotlight, is a huge draw to the Doheny neighborhood. Plus, this neighborhood is home to top-notch boutiques and cafes, most notably the immensely charming local favorite Urth Caffé.

Beverly Grove

While there are many apartment complexes in Beverly Hills sprinkled south of Santa Monica Boulevard, the highest concentration of them is found in Beverly Grove. This neighborhood is east of Doheny, and is actually the eastern-most area of the city. It also borders West Hollywood to the north. Beverly Grove is a working-class neighborhood in which some of the most affordable housing can be found. Beverly Grove is also home to the busy and bustling Beverly Center, a high-end shopping center that is overflowing with luxury designer shops, as well as beloved tried-and-true department stores.

Partner with a top agent to find your dream home

With eternal sunshine and luxurious living, Beverly Hills is a veritable dreamland. With some of the most expensive real estate in the nation, it’s important to have a top buyer’s agent at your side to help you navigate the ins and outs of the star-studded market. As Suarez says,  “Every day is the right time to buy a house in Beverly Hills, if you’re shopping for one.”

When looking to buy a house in Beverly Hills, it’s easy to get sticker shock. Yet top buyer’s agents in Beverly Hills help home buyers save an average $588,955 on a home. You read that right, that’s a savings of over half a million dollars! Plus, on average, the top buyers’ agents place 1.8 times the number of transactions as other agents in Beverly Hills.

In a city that is all about connections, a savvy top real estate agent is precisely who you need to have as your right-hand man — or woman! — to make your California dream a reality.

Header Image Source:  (John Fornander / Unsplash)

Take our hand while we whisk you away into the magic of La La Land, and make your dream to buy a house in Beverly Hills a reality.HomeLight Blog

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