Q & A Saturday – When Do I Need Flood Insurance?

Welcome to our Q & A Saturday video.

In these Q & A Videos we will answer your questions about real estate.  Any real estate related topic from questions about  selling your house, buying a house, real estate investor questions, land lording questions, local market questions and many others things are all fair game. 

Today’s question is “When Do I Need Flood Insurance?

In this video Shaun talks about when you will need flood insurance for your house.

 

Some of the main points covered in this video are:

1)      What is Flood Insurance?

2)      What is my risk?

3)      When do I have to get it?

4)      Should I get it if I do not have to?

 

The National Flood Insurance Program (NFIP) was created by Congress in the 60s to help with people that were victims of floods since most homeowner’s insurance policies did not cover these events.  The program is run by FEMA and rates are based on risk levels for a given property based mostly on the location and the expected probability of a flood occurring.

Unfortunately there is a lot of controversy as to how accurate the flood maps are and if these probabilities are realistic.  Also in the last few years many maps have been redone, putting many properties in flood zones that were not before, and rates have increased, sometimes significantly.

The short story is if you are deemed to be in a “High Risk” zone and have a mortgage held by pretty much any back you will be required to have flood insurance.  If you have a mortgage through a private they may require it as well but might not.  If you own the property outright it is your choice to have the coverage or not.  There can be good reason to have the coverage but you also may feel it is a waste of money and would rather self insure (as in pay for any flood damage yourself with money you have set aside for repairs).

Flood insurance has become a much bigger concern the last few years as it can be very expensive now so those costs have made some places very unaffordable for people to buy.  Some changes were made that made things a little easier on people but it has still become a much more important consideration when buying a property than it was even a few years ago.

 

 

Do you have a house in a Flood Plain?  Do you need to sell a house in Massachusetts or New Hampshire and can’t afford the flood insurance?  If you would like to sell your home  fast and hassle free  schedule a consultation  with us today.

 

Hope you enjoyed the video and leave any other questions you have about the topic below or any other topics you would like to see covered in future videos.  I encourage anyone that has things they would like to talk about to let me know what they are.  You can always fill out a contact us form here and put Q & A in the subject, just leave a comment with your questions below here, send an email to info@masshomesale.com, or post it on our Facebook page or Twitter account.

 

Some useful resources:

          The Governments “Flood Smart” website to learn more and see your risk.

          Our main article on Selling a House As Is.

          Our Video on Selling a House As Is.

          All of our posts on Selling a House As Is.

          If you want to sell a house in Massachusetts or in New Hampshire we can help.

 

 

 

 

 

 

(Image credit: Japanese Floods via RT.com)

 

Q & A Saturday – What is The Right of 1st Refusal?

Welcome to our Q & A Saturday video.

In these Q & A Videos we will answer your questions about real estate.  Any real estate related topic from questions about selling your house, buying a house, real estate investor questions, land lording questions, local market questions and many others things are all fair game. 

Today’s question is “What is The Right of 1st Refusal?

Real Estate Contract - Right Of 1st Refusal Clause

In this video Shaun talks about what a right of 1st refusal clause is and when you might see it when selling your home.

 

Some of the main points covered in this video are:

1)      What is The Right of 1st Refusal clause?

2)      When a retail buyer might use it.

3)      What some of the advantages are of using one are.

4)      What some of the disadvantages are of using one are.

5)      Why an investor might offer one.

 

A right of 1st refusal clause is not a widely seem technique in real estate transactions.  However it is not particularly rare either so it is good to understand what it is and when it might come up.  When dealing with real estate agents and transactions on the retail market you do not see it very much.  When it does come up is when a buyer puts in an offer with some other contingencies that the seller is not crazy about.  When this happens they might agree to add this type of clause to smooth out the differences.  Basically what a right of 1st refusal does is add a clause saying that the seller can still accept other offers on the property but the buyer has the right to exercise their right to buy the property, but will waive the other contingencies.  For the seller it gives them the ability to accept an offer that they mostly like without being totally bound by a contingency that might not play out.  The most common situation to see this is when the offer is subject to the buyer selling another property.  The buyer is helped since their offers may otherwise be rejected since people will worry that this contingency will not be met or at least not met for a long time and it will drag out the process. 

While the exact clause can take any form usually the basic form will state that the buyer has the right of 1st refusal and spell out what they need to do to exercise that right.  Usually it will involve waiving the clause in question and often all other contingencies.  Also the usual consequence will be forfeiting the deposit if they cannot buy the property, which this means as a seller you would want a pretty sizeable deposit when accepting this kind of clause in this type of situation.

With an investor the situations are usually a little different.  Most of the time this will only come up in situations where they offer an Option or Lease Option type of contract on the property.  In these cases they are only asking for the right to buy the property already.  With a lease option often a seller might want to just sell buy is willing to rent if they eventually can sell.  Sometimes a right of 1st refusal might be given so they can continue to try to sell the property while the investor is looking to secure a tenant for the property.  Usually if the seller gets another offer prior to the investor fully executing their contract they can sell it unless the investor is willing to execute the deal and pay the rent without having a tenant in place.  The less complicated situation would be an option to purchase where the investor might not have the cash on hand to purchase the deal but wants to have a contract on it to be able to try to secure financing, or a partner, or a wholesale buyer or just do more complete due diligence on the property.  In these situations the buyer would have to decide if the seller had another offer if they felt it was a good enough deal that they would be able to solve these problems quickly and exercise the option or if they will just let it go.   

 

 

Do you need to sell a house in Massachusetts or New Hampshire and not sure if you want to entertain a right of 1st refusal clause?  If you would like to sell your home fast and hassle free schedule a consultation with us today.

 

Hope you enjoyed the video and leave any other questions you have about the topic below or any other topics you would like to see covered in future videos.  I encourage anyone that has things they would like to talk about to let me know what they are.  You can always fill out a contact us form here and put Q & A in the subject, just leave a comment with your questions below here, send an email to info@masshomesale.com, or post it on our Facebook page or Twitter account.

 

Some useful resources:

–          Our Video on using What is a Lease Option.

–          Our Video on using A Real Estate Agent when buying.

–          Our Video on Selling FSBO.

–          If you want to sell a house in Massachusetts or in New Hampshire we can help.

 

 

  

 

 

(Image credit: Real Estate Contract via setestate.net)

 

Q & A Saturday – What is an Assumable Mortgage?

Welcome to our Q & A Saturday video.

In these Q & A Videos we will answer your questions about real estate.  Any real estate related topic from questions about selling your house, buying a house, real estate investor questions, land lording questions, local market questions and many others things are all fair game. 

Today’s question is “What is an Assumable Mortgage?

Assumable Mortgages - Creative Real Estate

In this video Shaun talks about what is an Assumable Mortgage and how they work.

 

Some of the main points covered in this video are:

1)      What is an Assumable Mortgage.

2)      What are the advantages.

3)      What are some of the drawbacks.

4)      What types of mortgages are most likely to be assumable.

 

An assumable mortgage used to be a pretty common way to purchase a house until the early 1980’s.  Sellers would offer their houses up with possible financing in place and there was not much to taking over a mortgage and the seller no longer being obligated to paying the loan, the new owner would be.  However at that time banks realized they were losing a lot of potential income as rates were in the double digits for home mortgages and the loans being assumed were far less than this.  At this time the “Due on sale” Clause started being very common and soon would be found in all conventional mortgage loans.  Typically today the only loans that can potentially be assumed are FHA and VA loans.  Even with those the new borrower will have to go through a qualifying process that is not much different than the one needed to get a new loan.

There are definitely some advantages to the seller if the loan is assumed vs. being taken “subject to”, which essentially is the same result except that the sellers name is still on the loan and they are ultimately still responsible if the new buyer does not pay it.  Therefore, MUCH less risk for the seller in this scenario.  On the opposite side it will be more risky for the buyer since in this case they are responsible for the loan when in a Sub To deal they can walk away unscathed (The ethics of this is a different story…).

The only real reason to want to take on as assumed mortgage would be if the terms are much better than the ones available to the new borrower.  Unlike a Subject To situation the borrower needs to qualify so the only reason to assume is if the rates and terms are very good.  Currently with the very low interest rates on mortgages there is not likely to be a big spread here.

In summary while assumable mortgages used to be very common they no longer are.  Only a small subset of mortgages generally have the possibility of being assumable and with the more stringent qualifying process needed (unlike back in the 70s and 80s) the advantages of the process is limited as well for the buyer.  So while still possible it is not a very useful method to sell a house and not a particularly advantageous method to buy one either.

 

 

Do you need to sell a house in Massachusetts or New Hampshire and not sure if you can sel with an assumable mortgage?  If you would like to sell your home fast and hassle free schedule a consultation with us today.

 

Hope you enjoyed the video and leave any other questions you have about the topic below or any other topics you would like to see covered in future videos.  I encourage anyone that has things they would like to talk about to let me know what they are.  You can always fill out a contact us form here and put Q & A in the subject, just leave a comment with your questions below here, send an email to info@masshomesale.com, or post it on our Facebook page or Twitter account.

 

Some useful resources:

–          Our Video on Selling a House with Seller Financing

–          Our Video on Selling a House with Subject Too Financing

–          Our Video on The Due On Sale Clause

–          Our Video on Selling a House with a Wrap Mortgage

–         Our Video on What are the Different Types of Seller Financing

–          Guest post on 3 Reason to Sell with a Lease Option

–         Our Video on Selling a House with a Lease Option

–          All our articles/videos on Financing and Lease Options

–          If you want to sell a house in Massachusetts or in New Hampshire we can help.

 

 

 

 

 

 

(Image credit: Assumable Mortgages via PRMI)

 

Q & A Saturday – Should I Use Price Per Square Foot to Value My House?

Welcome to our Q & A Saturday video.

In these Q & A Videos we will answer your questions about real estate.  Any real estate related topic from questions about selling your house, buying a house, real estate investor questions, land lording questions, local market questions and many others things are all fair game. 

Today’s question is “Should I Use Price Per Square Foot to Value My House?

Price Per Square Foot Mistake - Massachusetts and New Hampshire Real Estate

In this video Shaun talks about how a price per SQFT number relates to the value of your house.

 

Some of the main points covered in this video are:

1)      What exactly price per square foot is.

2)      Limitations of price per SQFT.

3)      How price per SQFT usually changes with the size of a property.

4)      The situations where it can be useful.

5)      Some other methods for valuing that we’ve discussed before.

 

Valuing a property using the price per square foot method is usually a very poor way to find the value of a property.  This number generally will not account for the location of the property, the size of it, the current condition or any other number of important factors.  Even when using more targeted versions of the number that might only include places that sold within some parameters it still very rarely accounts for all the different factors.

One of the most ironic parts of using the price per square foot method is that even with everything else being the same; it is only good if the places are very similar in their square footage!  In general if you have places in the same area price per square foot will get lower as a place gets bigger.  So even once you adjust for everything else if the two places differ in size by a large amount price per square foot will still not give a very good estimate of the value.

So the only instances where this method works is when you have properties in the same location, with extremely similar condition and level of finishes that are also very close in size.  Anything else is just a poor representation of value.  As mentioned in the video one example that could use this is a condo association with a couple different size units that are still pretty similar.  The case we have was a situation where we have a place in a complex with 2 different sizes for small 2 bed room 1 bathroom units.  We have one of the bigger ones that are only about 5% larger.  So if we wanted to value our unit and none of that size sold but several of the slightly smaller ones sold.  If all the places were in similar condition there isn’t much else to adjust for other than the small size difference so the only adjustment needed would be a small bump for the extra space therefore this is not a bad way to do it.  That being said in the same complex using the 1 bedroom units that are only 60% as large would be of no value to use price per square foot because there are other important factors to consider.

 

Do you need to sell a house in Massachusetts or New Hampshire and not sure how to value it?  If you would like to sell your home fast and hassle free schedule a consultation with us today.

 

Hope you enjoyed the video and leave any other questions you have about the topic below or any other topics you would like to see covered in future videos.  I encourage anyone that has things they would like to talk about to let me know what they are.  You can always fill out a contact us form here and put Q & A in the subject, just leave a comment with your questions below here, send an email to info@masshomesale.com, or post it on our Facebook page or Twitter account.

 

Some useful resources:

–          Last week’s video on valuing property with The Assessed Values.

–          Our Video on how Inaccurate Zestimates are.

–          If you want to sell a house in Massachusetts or in New Hampshire we can help.

 

 

 

 

(Image credit: Price Per Square Foot Mistake via The Valley of Hearts Delight)

 

Q & A Saturday – Can I Sell a House with a Dated Electrical System?

Welcome to our Q & A Saturday video.

In these Q & A Videos we will answer your questions about real estate.  Any real estate related topic from questions about selling your house, buying a house, real estate investor questions, land lording questions, local market questions and many others things are all fair game. 

Today’s question is “Can I Sell a House with a Dated Electrical System?

Knob and Tube Wiring: Old Electrical - Real Estate Sales
Fuse Box: Old Electrical - Real Estate Sales

In this video Shaun talks about some of the issues that come up when trying to sell a house that has old electrical work.

 

Some of the main points covered in this video are:

1)      Knob and Tube Wiring

2)      Fuse Boxes

3)      Federal Pacific Electrical panels

4)      Buyer safety concerns

5)      Financing Issues

6)      Homeowners insurance issues

 

Many homes have older electrical elements in them, especially houses in older areas like Massachusetts and New Hampshire.  These older electrical systems do not meet modern building code.  Many are perfectly safe but others do pose safety concerns.  Even those that have been safe pose concerns to buyers that are not sure if they are safe as well as lenders that might not lend on these properties as well as insurance companies that might not issue policies on these houses. 

The biggest issues come from Knob and Tube Wiring then having Fuse Boxes and finally the other big one is Federal Pacific Electrical panels.  Knob and Tube wiring is probably the safest of the 3 and is the one that causes the most issues.  It is easy to see if it is exposed and it is VERY old and was not designed for today’s high draw electronic devices.  However you do not actually hear that much about fires resulting from these elements.  However buyers are spooked by it and MUCH more importantly some lenders will not issue a loan where it is noted on an appraisal and now most insurers will not issue policies with known knob and tube, which will also indirectly result in not being able to get financing on the property as no bank will give a loan that does not have property insurance.

The next biggest issue comes from having a fuse box.  Pretty much all the same issues above except they are slightly more dangerous.  Not really but they are easier to setup unsafe situations such as putting a fuse with the incorrect load in a slot or the old sticking a penny behind the blown fuse to keep the circuit going (but with no protection now).  Other than being slightly more dangerous the financing issues and insurance issues are not as bad as knob and tube, yet.  The financing and insurance issues do come up but they are much more hit and miss.  If you can get insurance you might have a much higher premium or you may be given a time limit (often as little as 30 days) to replace the fuses or have your coverage terminated.  Finally the last major issue is Federal Pacific electrical panels.  This company was a very large supplier of electrical panels from the 50s to the 80s.  Ironically this last one is probably the most dangerous problem as these have shown to not work well and can be a distinct fire hazard.  Now with these the biggest issue will be a buyers concern if they know about them or if they have a good home inspector that points it out to them.  At this point I have only heard a few examples of there being major financing or insurance issues because of these panels.  I have heard it come up but at this point it is not nearly as common as the other issues.

 

 

Do you want to sell a house with older electrical elements that could hamper your sale?  Do you need to sell a house in Massachusetts or New Hampshire and are not sure if these electrical issues will kill your sale?  If you would like to sell your home fast and hassle free schedule a consultation with us today.

 

Hope you enjoyed the video and leave any other questions you have about the topic below or any other topics you would like to see covered in future videos.  I encourage anyone that has things they would like to talk about to let me know what they are.  You can always fill out a contact us form here and put Q & A in the subject, just leave a comment with your questions below here, send an email to info@masshomesale.com, or post it on our Facebook page or Twitter account.

 

Some useful resources:

–          Last Week’s Video on Selling a House with Unpermitted Work.

–          All of our Articles and Videos on Selling a Home As Is.

–          Our Main Article on Selling a Home As Is.

–          Our Video on Selling a Home As Is.

–          Our Video on Selling a Home with a Failed Septic.

–          Our Video on Selling a Home with Fire Damage.

–          Our Video on Selling a Home with Mold.

–          Our Video on Selling a Home with a Damaged HVAC.

–          Our Video on Qualifying Your House for an FHA Loan.

–          Our Main Article on Qualifying Your House (and Buyer) for an FHA Loan.

–          If you want to sell a house in Massachusetts or in New Hampshire we can help.

 

 

 

 

(Image credit: Electric Fuse Box via Wilcox Electric Website)

(Image credit 2: Knob and Tube Wiring via Old House Web Website)

 

Q & A Saturday – How Do You Estimate Repairs?

Welcome to our Q & A Saturday video.

In these Q & A Videos we will answer your questions about real estate.  Any real estate related topic from questions about selling your house, buying a house, real estate investor questions, land lording questions, local market questions and many others things are all fair game. 

Today’s question is “How Do You Estimate Repairs?

How to Estimate Repairs - Massachusetts and New Hampshire Real Estate

In this video Shaun discusses how to figure out what repairs to do and estimate how much they will cost on a rehab project.

 

Some of the main points covered in this video are:

1)      What level of repairs are you doing?

2)      The best way to estimate – Don’t, get a pro to tell you!

3)      What to do if that is not an option

4)      Getting out and finding out costs

5)      Online resources to help you figure out repair costs

 

Finding the repairs for a rehab project is the biggest factor, after the ARV.   It is a little bit art and a little bit science.  Some things can be straight forward like getting the measurements for flooring in a normal room and getting a price per sqft installed.  However deciding what that flooring should be is more of an art.  It is important to know if you are going to have a rental or going to resell the property quickly to a home owner.  This will greatly affect what repairs and upgrades usually.

Once you know what kind of repairs you will need to do then the question of how to figure out what the costs will be to do them rises to the surface.  The best way is to get multiple contractors to give you estimates, which is rarely possible (and impractical even if it is possible).  After that if you have a contractor you know well and have a good relationship with getting them to walk the property with you before making an offer is the next best option.  After that if you have a construction background of some sort that is valuable obviously.  If you do not have that experience or a contractor that is willing to run through some places with you then you need to get out and figure out some pricing.

I still think that there is a lot of value in actually going out to some home improvement stores (Home Depot, Lowe’s, Local hardware or construction supply shops, etc…) and looking at materials and jotting down notes of what things cost.  That being said there are also several online tools that can help get you started (several linked below) and are things to look at while doing all of these other things as well.

 

Do you want to sell a house that is a fixer upper?  Do you need to sell a house in Massachusetts or New Hampshire and don’t want to figure out the repairs?  If you would like to sell your home fast and hassle free schedule a consultation with us today.

 

Hope you enjoyed the video and leave any other questions you have about the topic below or any other topics you would like to see covered in future videos.  I encourage anyone that has things they would like to talk about to let me know what they are.  You can always fill out a contact us form here and put Q & A in the subject, just leave a comment with your questions below here, send an email to info@masshomesale.com, or post it on our Facebook page or Twitter account.

 

Some useful resources:

–          Our recent video on How to find the ARV.

–          Our recent video on How to find MAO.

–          The HomeAdvisor “True Cost” Guide.

–          Hanley Wood, LLC Remodeling 2016 Cost vs. Value Report 

–          Video explaining the (defunct apparently) HD PRO Estimator Tool.

–          Our Main Article on Selling a Home As Is.

–          All of our Articles and Videos on Selling a Home As Is.

–          If you want to sell a house that needs fixing in Massachusetts or in New Hampshire we can help.

 

 

 

 

(Image credit: Home_Improvement via Integrity Realty and Management)

 

Q & A Saturday – Are We in a Real Estate Bubble?

Welcome to our Q & A Saturday video.

In these Q & A Videos we will answer your questions about real estate.  Any real estate related topic from questions about selling your house, buying a house, real estate investor questions, land lording questions, local market questions and many others things are all fair game. 

Today’s question is “Are We in a Real Estate Bubble?

Real Estate Bubble - Massachusetts Real Estate

In this video Shaun discusses what is going on with our local real estate market and if we are in a bubble.

 

Some of the main points covered in this video are:

1)      What is going on the national level

2)      How does that compare to the markets in Eastern MA

3)      What indicators do we see saying yes or no?

 

After the great recession and the real estate market crash of last decade people are always wondering if it might happen again.  So are we in a real estate bubble?  Well nobody can say for sure.  In my opinion we are not in a full on bubble, however we are definitely well into the ramp up and one should be conscious of this when looking at buying a property.  Nationally I don’t think things are as far into the curve than we are in Massachusetts (and to a lesser extent in New Hampshire).  On that level you are seeing a slow-down in the basically unchecked rise in prices the last couple years.  Many metro areas have slowed down; however the major Boston Metro (which usually means all of Eastern MA and NH south of Manchester) was the only one I saw that had zero growth. 

The other major factor is that foreclosures are only starting to increase on the national level while MA is well entrench in a big rise.  Check out our last MA Foreclosure report showing the petitions, auctions and foreclosure deeds are all up significantly for 2015 over 2014.  Looking at petitions (the first step in a foreclosure) December 2015 was up over 118% from December 2014, it was also the highest total number filed in a month since 2012, they have climbed quarter over quarter the last 8 quarters and 9 of the last 10 as well.  This is all meant to show that foreclosure activity is rising and that is a BIG leading indicator of downward price pressure with the increase in inventory and generally lower prices they sell for.

 

Do you need to sell a house in Massachusetts or New Hampshire and want to get ahead of any bubble bursting?  If you would like to sell your home fast and hassle free schedule a consultation with us today.

 

Hope you enjoyed the video and leave any other questions you have about the topic below or any other topics you would like to see covered in future videos.  I encourage anyone that has things they would like to talk about to let me know what they are.  You can always fill out a contact us form here and put Q & A in the subject, just leave a comment with your questions below here, send an email to info@masshomesale.com, or post it on our Facebook page or Twitter account.

 

Some useful resources:

–          Our last MA Foreclosure report with the current month and full 2015 recap.

–          Our Foreclosure Trends Page updated whenever we have a new MA or NH report.

–          Our Market Trends Page updated several times a week with the towns and cities we work in.

–          Previous Video On The Boston Market.

–          Previous Video On Foreclosures.

–          If you want to sell a house that needs fixing in Massachusetts or in New Hampshire we can help.

 

 

 

 

(Image credit: Real Estate Bubble via LinkedIn Pulse)

 

Q & A Saturday – How Do You Find MAO?

Welcome to our Q & A Saturday video.

In these Q & A Videos we will answer your questions about real estate.  Any real estate related topic from questions about selling your house, buying a house, real estate investor questions, land lording questions, local market questions and many others things are all fair game. 

Today’s question is “How Do You Find MAO?

MAO - Maximum Allowable Offer - Massachusetts and New Hampshire Real Estate

In this video Shaun discusses what the Maximum Allowable Offer (MAO) of a house is and how to find this number.

 

Some of the main points covered in this video are:

1)      What is MAO?

2)      Why you need to find ARV first

3)      What percentage to use

4)      Figuring out your repairs

 

Finding the MAO (Maximum Allowable Offer) of a house is critical.  If you want to rehab and resell houses, or sell properties to people that do, you need to know how much to pay for them.  Everyone can have slightly different ways to calculate this number but the quick method usually involves taking a percentage of your After Repair Value (ARV) and subtracting off the estimate of repairs needed to get it worth that ARV.  As discussed in our last video ARV is the most important number you have to figure out since it is the biggest factor in getting your MAO.  Of course getting your repair estimates close is very important too but since the ARV is so much bigger than the repair costs small changes here will effect your MAO much more than much larger changes (on a percentage basis) to the repairs.

 

Do you want to sell a house that is a fixer upper?  Do you need to sell a house in Massachusetts or New Hampshire and want to see what are MAO is?  If you would like to sell your home fast and hassle free schedule a consultation with us today.

 

Hope you enjoyed the video and leave any other questions you have about the topic below or any other topics you would like to see covered in future videos.  I encourage anyone that has things they would like to talk about to let me know what they are.  You can always fill out a contact us form here and put Q & A in the subject, just leave a comment with your questions below here, send an email to info@masshomesale.com, or post it on our Facebook page or Twitter account.

 

Some useful resources:

–          Our last video on How to find the ARV.

–          Our video on All the Costs to Rehab a House

–          Our Main Article on Selling a Home As Is.

–          All of our Articles and Videos on Selling a Home As Is.

–          If you want to sell a house that needs fixing in Massachusetts or in New Hampshire we can help.

 

 

 

 

(Image credit: Adaption of MAYO via instituciones.sld.cu)

 

Q & A Saturday – How Do You Find The ARV?

Welcome to our Q & A Saturday video.

In these Q & A Videos we will answer your questions about real estate.  Any real estate related topic from questions about selling your house, buying a house, real estate investor questions, land lording questions, local market questions and many others things are all fair game. 

Today’s question is “How Do You Find The ARV?

 ARV - After Repair Value - Real Estate Investing

In this video Shaun discusses what the After Repair Value (ARV) of a house is and how to find this number.

 

Some of the main points covered in this video are:

1)      What is ARV?

2)      The Comparable Sales Method of finding it

3)      What are the most important factors to consider

4)      How old can they be?

5)      How far away can they be?

 

Finding the ARV (After Repair Value) of a house you are looking to fix and resell is the most important number you will need to figure out in evaluating a potential opportunity.  This is important for any rehabber doing a project, for any Wholesaler looking to sell deals to a rehabber, any real estate agent looking to work with investors as well as agents working with retail buyers and sellers as well.  The retail agents need to be able to tell sellers what value they can add if they do work vs. selling as a “fixer upper” and for buyers they need to let them know if it is worth buying a place that needs work and if the discount they are getting is big enough to not put them underwater after paying for the work.

To find the ARV we find the “comps” which are recent sales of similar properties in the same area.  The most important things to start to narrow down things are first make sure they are in the same city or town (If you live near the town line do not use ones in the other town), next make sure they are close to the house you are evaluating (Always try to keep it within half mile but closer is better) and finally they need to be recent (within 6 months but again the more recent the better).  Once you have this narrowed down try to find places with the same number of bedrooms and bathrooms and then as close as possible in the square footage (best to be within 10% but can go up to +/- 20%).  Other factors can go into it as well but these are the big ones.  Once you have a list you can adjust the prices if there are differences.  But you are now wondering “How do I find these comps?”, that is a big question.  The easiest way is if you have access to your local MLS service.  This is very easy to use if you can get onto it.  If you are not an agent or are not working closely with one that can help you do this you need to find other sources.  You can use things like Zillow, Trulia, Redfin etc. but it is a little harder and make sure you do NOT use the value estimates given like Zillow’s Zestimate which are terrible (See our Video on how bad those are).  Once you have 3-5 good comps then you can make a good estimate of the final ARV for a place!

 

Do you want to sell a house that is a fixer upper?  Do you need to sell a house in Massachusetts or New Hampshire and don’t want to do the work to get that ARV?  If you would like to sell your home fast and hassle free schedule a consultation with us today.

 

Hope you enjoyed the video and leave any other questions you have about the topic below or any other topics you would like to see covered in future videos.  I encourage anyone that has things they would like to talk about to let me know what they are.  You can always fill out a contact us form here and put Q & A in the subject, just leave a comment with your questions below here, send an email to info@masshomesale.com, or post it on our Facebook page or Twitter account.

 

Some useful resources:

–          Our Main Article on Selling a Home As Is.

–          All of our Articles and Videos on Selling a Home As Is.

–          Our Video on how Inaccurate Zestimates Are.

–          If you want to sell a house that needs fixing in Massachusetts or in New Hampshire we can help.

 

 

 

 

Q & A Saturday – What are Closing Costs?

Welcome to our Q & A Saturday video.

In these Q & A Videos we will answer your questions about real estate.  Any real estate related topic from questions about selling your housebuying a house, real estate investor questionsland lording questions,  local market questions and many others things are all fair game. 

Today’s question is “What are Closing Costs?

Closing Disclosure Image - What Are Real Estate Closing Costs?

In this video Shaun discusses the many transaction costs to buy and sell real estate.

Some of the main points covered in this video are:

1)      What “Closing Costs” are

2)      What are some of the costs associated with buying a house

3)      What are some of the costs associated with selling a house

4)      Ballpark range a seller can expect to pay in closing costs for a normal transaction

5)      Shaun forgetting it is already the 2nd weekend of the new year :) 

 

If you have never bought or sold a piece of real estate the costs associated with the transaction can be pretty jarring when you first see them.  When buying a place all the costs associated with your mortgage loan can add up to a lot and this is on top of your attorney fees and recording fees, and any other things people stick on there for you.  When selling, especially when using an agent (like the vast majority of transactions) the costs can seem ridiculously high.  Starting with those real estate commissions that can easily add up to 5-7% of the selling price of your house, while these fees are not set and can be negotiated this is a pretty typical range.  Beyond that there will be recording fees, attorney fees and usually some number of other garbage fees that people will charge you.  Aside from that it is very common to be asked to pay some closing costs for the buyer.  This can add 3-4% to your fees if you agree to do it.  Now often the buyer will pay a little higher price, but not always and sometimes if you do not agree they just will not have enough cash on hand to buy the house.  All told it is not odd to see a seller lose 8-12% of the sale price of the house to closing costs.  For an investor running their numbers it is tough as we need to account for both sides of the transaction while running our number.  Last week we talked about the true cost of rehabbing a house and various closing costs can add up to 15-20% of the final sale price in costs so this is not some incidental number that does not have to be accounted for.  This accounting did not even account for a typical situation where we offer to pay most, or all, of our sellers closing costs so there is little mystery about how much money they will make.

 

Do you want to sell a house with little or no closing costs?  Do you need to sell a house in Massachusetts or New Hampshire?  If you would like to sell your home fast and hassle free schedule a consultation with us today.

 

Hope you enjoyed the video and leave any other questions you have about the topic below or any other topics you would like to see covered in future videos.  I encourage anyone that has things they would like to talk about to let me know what they are.  You can always fill out a contact us form here and put Q & A in the subject, just leave a comment with your questions below here, send an email to info@masshomesale.com, or post it on our  Facebook page or Twitter account.

 

Some useful resources:

–          Last week’s video on all the costs needed to Rehab a house.

–          All our articles/videos on Financing and Lease Options

–          If you want to sell a house in Massachusetts or in New Hampshire we can help.

 

 

 

 

(Image credit: Closing Disclosure Image via entitledirect.com)