Most rivers overflow about twice a year. However, there are some locations that experience floods much more often than others. Sometimes, floods completely destroy houses while in other cases, a flood might only leave a house with minor damage.

If your house has been flooded, you might be wondering if you can sell it. The answer will depend on a variety of factors, but in most cases, you can get away with selling a flooded house. Learning how to sell a flooded house isn’t hard, but there are some things you need to look out for and consider. 

Keep reading and learn more about what you need to think about when selling a flood damaged house.

What You Need To Know About Selling a Flood Damaged House

Figuring out how to sell a house that has flooded, of course, is much more complicated than selling an ordinary house. You will also need to ask yourself a few questions when selling such a house. For example, is it better to repair the house and stay in it or just sell it?

More importantly, how much will a flood decrease the value of your home? Is it even worth selling a flooded home from a financial standpoint? What if no one wants to buy the house due to the extent of the damage?

In terms of home repairs, you will need to consider a few different factors. Depending on the extent of the damage, repairing the house may actually be impossible for you. In this case, the only option would be to sell the house. 

However, if the damage is only minor, you might be able to do some repairs and keep from selling the house if you don’t want to. You will also need to think about if it is even possible to continue living in the house after the flood damage. For example, if your house went through a bad flood and several parts of the house were destroyed, you may not be able to safely live in that house anymore and you may have no choice but to sell the property. 

The Change in Value

But what about the value of the house? You might be wondering, “Can I sell my flooded house and still make a profit?” Unfortunately, flood damage can take a good chunk out of your property’s value. 

Even if your home was only slightly damaged by a flood, the water damage alone will decrease the value of your home. If much of the house was destroyed by the flood, the value of the home will go down even more. Of course, the worse the flooding is, the more drastic the decrease in value will be. 

In some cases, the property’s value might decline as much as 30%. While this is certainly bad news for you, it isn’t all bad. You can still make some money by selling the house. This is in contrast to the money that you would need to spend to repair the house so that it is liveable again. 

But if you do plan to sell your flood-damaged house, where should you start?

Find a Service to Help You

When it comes to selling a house that has been damaged by a flood, the last thing you should do is try to sell it on your own. If you try to do that, you will find that you won’t get very far and you might not even know where to start. That’s why seeking someone who can help you sell your house is so important. 

Keep in mind that you will want to avoid your average real estate agent. An ordinary agent likely won’t know what to do with your flooded house either. Instead, you will want to seek out a very experienced and high-quality service or seller to help you like iBuyer. 

Such a service will likely have experience selling flooded homes before and should be able to help you as much as possible. Besides having experience selling flooded homes, you should make sure that this service also knows all about the laws behind selling damaged homes and homes that may have structural problems. Preferably, the service should also have plenty of knowledge regarding the price of renovations for flooded homes as well as how to make a flooded property look appealing to potential buyers and real estate investors.

As long as you find a reputable home selling or buying service with this kind of knowledge and experience, you will be in good hands and you shouldn’t have to worry much about anything. Hiring a good service like iBuyer will also help put the price of the property into perspective. Be prepared for the service to tell you that you won’t be able to get very much money for your damaged home. 

The Benefits of Finding a Good Service

Many house-selling services are trained at being able to come up with the right price for homes, including flooded or badly damaged homes. While you could try listing your property for a higher price, you will find that most people will not be willing to spend very much for a flooded home. The higher the price of a damaged piece of property is, the harder it will be to sell. 

If you don’t mind sitting on the property for months at a time, this might not be a problem for you. However, if you want to part with the property as fast as possible, then it is best to go with the service’s recommendation and go with a lower price. Besides, a good service will also do all the work of communicating with potential buyers. 

A skilled home-selling service can make even the most damaged of properties seem appealing. This is not to mention that you won’t have to communicate with the potential buyers yourself. This will give you more time to consider other factors concerning the sale of your flooded property. 

But remember that such a service will mainly function to guide you through this process. If the service says something that you don’t agree, with you are free to disagree and do something else. 

Be Sure To Disclose the Severity of the Damage

If you try to sell your home without disclosing that it has been flooded to the buyer, you could get in serious legal trouble. If you’re not careful, you might end up paying some very hefty fines and the buyer might even file a lawsuit against you. This, of course, is not something you want to deal with when you’re just trying to sell your house. 

For that reason, you will need to be as clear as possible when disclosing the damage of the property. Again, a good home-selling service like iBuyer can help with that. In particular, your service should know all about the disclosure laws in your state and what you need to do to follow those laws when selling the property. 

Keep in mind that disclosure laws for properties differ from state to state. What might be alright in one state might be illegal in another. Most states will require you to disclose certain information such as if the property has been flooded before, how often it has been flooded before, and so on. You might also have to disclose the location of your property such as if it is built on a floodplain or if it is near a reservoir. 

You may also need to disclose whether or not your property is covered by flood insurance. If not, this may complicate matters further and may be difficult to financially deal with. Keep in mind that when you disclose all of this information to potential buyers that the information doesn’t have to be written in a scary way. 

The Details

While disclosures can be offputting for some buyers, you can word them in a way that doesn’t make them sound as threatening. After all, you don’t want to deter potential buyers by making the damages sound worse than they really are. However, you will also not want to undermine the damages either. 

Instead, it is best to list the damage exactly as it is. That way, you won’t run into legal trouble if the buyer thinks that you were not honest in disclosing information about the property. For example, it is important to disclose how much water affected the home. 

A few inches of water may not be anything for potential homebuyers to worry about. On the other hand, if three to four feet of water flooded your house, then this is a much more serious problem since the water penetrated a great deal of your house. You will also need to disclose any renovations you made after the flood, even if they were minor. 

If you did not make any renovations or repairs after the flood, you will need to specify this as well. That way, the potential homebuyers will understand the full situation concerning the property. Then, they can make a decision whether to buy the home or not as it is. 

Consider Making Some Repairs on the Property

If your house has been seriously damaged by a flood, you might find it very difficult to sell, even with the help of an experienced real estate service. After all, most people will not want to buy a property that is completely destroyed. Instead, some might be willing to buy a property that has only a bit of damage. 

This might sound like a hopeless situation for you if your property has been significantly destroyed by a flood. However, you can improve the situation by doing some repairs. It might sound counterintuitive to repair a home that you’re going to sell, but doing so can actually make the whole process a lot easier for you. 

Keep in mind that you should not repair your entire house. Instead, you just need to make it habitable so that potential homebuyers will have more of an interest in it. It is best to stick with relatively minor repairs. 

That way, the condition of the house will increase but you won’t have to invest too much money into it. Keep in mind that you might even be able to make your money back on certain repairs since some repairs can actually increase the value of your home. Again, it is important to have a good service on your side to help you decide what repairs are important to make. 

Choosing the Repairs

For example, having the floors repaired is very important, especially if the home is full of carpeting. Flooded carpeting will only contribute to mold in the home. Once mold takes hold, it can become a health hazard for those with asthma or bad allergies, and mold, in general, will make it much less likely that people will consider buying your home. 

For that reason, it is best to repair the floors before selling the house. A mold remediation certificate may make the property more appealing to potential buyers or investors. If the walls have visible signs of water damage, consider repainting them. 

Repainting isn’t expensive and it can make the property look much better and fresher. 

How To Sell a Flooded House With Ease

Learning how to sell a flooded house doesn’t have to be difficult as long as you know what to do and where to start. You should always start with a good home-selling service like iBuyer.com on your side to walk you through the disclosure laws, necessary repairs, and so on.

You should also make sure that you disclose everything to potential buyers so you don’t get into legal trouble.

The post Selling a Flood Damaged House appeared first on iBuyer Blog.

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Buying a house. It is likely going to be the biggest financial investment you will ever have to make in your life. Once you own the house, you are likely going to be there for the new few decades. 

Because this is such a big investment for an individual or couple, there is a lot of paperwork and a lot of time that goes into this process compared to a normal purchase. The average closing time on a house varies from 30 to 75 days. 

One thing new home buyers struggle with is how to read a closing disclosure. Some buyers may not even know what this is. 

While it can admittedly be a lot to take in at one time, this is not as complicated as you might think to understand once you start to break it down. 

Do you want to know how to understand a closing disclosure before you are ready to lock down your dream home? This is the closing disclosure explained. 

What Is a Closing Disclosure? 

Before we can break down a closing disclosure for you, you need to understand what a closing disclosure even is. To put it quite simply, it is an overview of all of the expenses, rates, and fees that come with your loan and for buying a house. 

These can include but are not limited to the loan rate and interest fees, what you will make in mortgage payments each month, finance charges, and any other closing costs that you might incur for your mortgage. 

How Long Do You Have to Respond to Disclosure? 

When you receive a closing disclosure, you will have three days to respond to it and review it. 

Why three days? This is the requirement under the TILA-RESPA. It helps protect buyers from being pressured into an immediate purchase without going over all of the details. 

The time gives buyers a chance to review all of the documents and review all of the charges. Then, they can decide if they are willing to accept all of the payments agreed upon and all of the rates agreed upon. 

A buyer needs to look this over thoroughly because once they sign a disclosure, they cannot change the mortgage rates and interest that were agreed upon. 

Be careful with how long you take to do this though. If you take the full three days, there are some instances where the price of say a mortgage rate can be changed by the lender. Also, you could possibly lose the home to another bidder in that stretch. 

Loan Terms 

Ok, so you have the closing disclosure and you are going over the overview of costs. Something you need to make note of is the loan terms that are going to be in the documents. 

Some of the biggest examples of this include the loan amount, the interest rate, the monthly principal and interest, plus any other additional payments or penalties. 

With the loan amount, the closing disclosure will lay out how much money you are going to receive from the lender. This is the money that should pay for the purchase of the house besides the down payment that you put up. It can also potentially cover other fees that may come up during the purchase. 

The interest rate is essentially how much the mortgage rate is going to be from the lender. This can vary significantly depending on when you get a mortgage. 

In 2022, the average mortgage rate is over 5%. This time last year, the average mortgage rate was less than 2.9%. It is important that you look at this closely because when it comes to the mortgage rate, the difference between 2% can be thousands of dollars. Make sure you know what the average rate is before you sign any disclosure papers. 

As for principal and interest monthly, these are the expected payments that you will make to your lender every month. This will be put towards your total mortgage plus the interest on top of it for not being able to pay all of the mortgage off in one payment. 

Make sure you know what both of these numbers are before you sign anything and make sure that the principal and interest payments are ones that you can afford to make monthly compared to your expected monthly income after taxes. 

Possible Additional Payments 

Besides the explanation in the loan terms above, there may be some additional payments there that you need to be aware of. 

One of those payments is a possible prepayment penalty. Some lenders charge this if you pay off your mortgage earlier than what was outlined in the closing disclosures. 

This can arguably be used as a way for lenders to ensure that they are going to keep getting the interest payments along with your payments towards the principle of the mortgage. Luckily, this practice seems to be phasing out from lenders compared to past years. 

Another possible payment that you need to be aware of is something called a balloon payment. Again, this is not something that all lenders do these days, but it is a possibility with certain lenders. 

Basically, with balloon payments, you would be required to pay one large lump sum payment at the end of your mortgage payments. If this is the case with your mortgage payment plan, you may have to pay less per month on your monthly payments leading up to it. 

Be careful if this is in your disclosures without realizing it. While it may benefit you in the short term, you will need to save up the money to pay that balloon payment off in the long term because you can escape your debt with the lender. 

These are not usually ideal payments for a buyer to have in a closing disclosure. Some may have no choice if they want a mortgage to be accepted in the short term. However, if you have a problem with these items in your disclosure, do not be afraid to send them back to the lender and see if you can get them removed. 

Possible Payments 

The next section on how to read closing disclosure focuses on other payments that you may have to make regarding your mortgage. Here, the lender will break down everything that goes into the payments mentioned above plus any possible payments that relate to that. 

One section is going to estimate the total monthly payment that you are going to have to make. That section will mention the monthly principal agreed upon along with the interest payment on the mortgage that was mentioned above.

Along with those two, you will have to factor in mortgage insurance plus a possible escrow payment. When it comes to mortgage insurance, this will most likely only be a factor if you are paying a low percentage of the mortgage off on a down payment.

Usually, the baseline for this is to pay around 20% of the mortgage as a down payment to avoid mortgage insurance payments. 

The other part of this payment that may be outlined here is the escrow payment you could be responsible for. For those unfamiliar, the escrow is the amount of money a buyer will set aside to pay initial homeowner’s insurance payments along with the initial property tax payments. 

In other words, you are paying those taxes and insurance plans in advance. The sellers and the lenders want to make sure that you have the financial means to live in this home after your loan. 

However, it is not mandatory to put those payments in escrow. If you do not do this, then estimated expenses such as homeowner’s insurance and property taxes will be laid out in this section. 

Closing Costs 

When you are closing a deal to buy a home, do not forget that there is a closing cost fee to wrap all of this up. That fee usually covers the work done by real estate agents and even real estate attorneys to get all of the paperwork set up for purchase as soon as possible. 

It can even cover other things such as application fees to get this home purchase through smoothly. 

So, how much should you expect to have to pay in closing costs? Well, the answer varies from 3-6%. In most cases, the more expensive areas such as New York and Washington D.C. are going to have higher closing cost percentages than moving to states such as Oklahoma or New Mexico. 

Additional Costs 

In case you are not tired of seeing additional small costs that go into purchasing a home, we have a few more to throw your way. 

Because this is everyone’s favorite thing to deal with, you need to factor in the possible taxes that come with making this purchase. The main one is the minor transfer fees that are involved when you are purchasing the deed of a house from somebody. 

The government is going to want their piece of the pie, and you are going to have to pay a tax to have the deed transferred over to your ownership. 

Depending on where you live, you could see a lot more additional taxes on top of this. If you live in a state like California, New York, or New Jersey, the state and property taxes on a deal like this can be significant. 

On top of this, you have to think about taxes on top of state taxes if you are buying a condo in a big city such as New York City. There, you could get hit with significant city taxes. 

Then, there are smaller additional costs that you may end up being responsible for such as homeowner’s association fees. This is relevant if you live in a neighborhood where a homeowner’s association already exists. 

In addition to that, you need to prepare money for things such as a home inspection fee and a home warranty fee. 

Disclosures in Loan 

This part of the closing disclosure will outline the exact agreements that you made as terms of your loan. An example can be a situation where you end up being late on a monthly payment. This section will outline if the lender has the right to kick you out of your house immediately or give you a certain timeline to come up with the money for your payment. 

Another example can be coming up with an agreement if you do not have all of the money for a monthly payment to pay at one time. With this, you can have a disclosure that says that partial payments of a monthly payment are accepted if a minimum amount is met and there is a set timeline to come up with the rest of the money. 

Then, you need to be aware of what happens if you are late on a payment. Will the lender take your home from you? Or will they charge you a significant amount in interest as a late fee to make you not want to be late again? 

Also, with these types of disclosures, a lender can put one in there that can require a buyer to come up with the entire loan balance anytime they choose. 

Learn More About How to Read a Closing Disclosure

These are just some of the things that you need to know about how to read a closing disclosure. Make sure that the terms are what you agreed upon, read all of the clauses and rates, plus be prepared for all additional costs. 

What if you are on the seller’s side of this equation and want to sell your home quickly and painlessly? What if you can do the entire thing virtually with an iBuyer that can make you an offer online? See how much your home is worth today.

The post Closing Disclosure Explained: How To Read and Understand One appeared first on iBuyer Blog.

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Despite a cooling real estate market, home prices are still much higher than they were last year, this time. Increasing mortgage interest rates are adding uncertainty to the mix and reducing buyer demand, too.

If you’re trying to sell your home fast in these unpredictable times, you might consider dropping the price to attract more interest.

How do you know how far is too far when you go this route, though? Would a home inspection help you decide, or is a home appraisal best to find the ideal price?

Keep reading to explore the mysteries of home appraisal vs. inspection. 

What Is a Home Appraisal?

You can’t figure out the difference between appraisal and inspection until you know what each of these services entails. So, let’s get started by defining what a home appraisal is and what it isn’t.

Most lenders require a home appraisal as part of the mortgage origination process. It involves a professional estimation of a home’s value based on a physical inspection by a qualified individual and a comparison with similar home sales in the area.

The appraisal process lasts between thirty minutes and an hour, but it can take up to two weeks before the appraiser supplies their report regarding the value of the home. 

Lenders won’t give a buyer more money than they need to buy the home they want. They may even deny the mortgage application if the appraised value is lower than expected.

That’s because they need to know that they can get their money back if the borrower defaults on the loan. 

If the prospective buyer can’t get the mortgage they want, this can cause the sale to fall through, or delay the process while the buyer approaches another lender.  

The buyer pays for the home appraisal, which can cost anything from $250 to $800 depending on the home’s size and the expertise of the appraiser.

When Does a Buyer Need a Home Appraisal?

While almost every lender requires a home appraisal, there are few legal requirements governing these instances. In most cases, a buyer will need to get an appraisal when:

• Buying a home with a loan
• Refinancing an existing loan
• Transferring a home as a gift between family members

Some home sellers opt for an appraisal to help them establish a value for their home before listing it. In these cases, the seller pays for the appraisal. There’s a good chance the buyer will need to arrange a second appraisal when applying for their mortgage.

Realtor.com suggests that arranging a pre-appraisal isn’t in the best interest of the seller.  

When Is an Appraisal Unnecessary?

There are some instances where the buyer may forego an appraisal if desired. These are: 

• All-Cash Purchases
• Where the home has an appraisal younger than 120 days
• Refinancing with loans backed by the USDA, FHA, or VA

An appraisal waiver allows eligible borrowers to skip the appraisal process during the loan-approval process. There are strict eligibility requirements for these waivers. 

What’s Included in a Home Appraisal?

An appraiser looks at things that affect the value of the home. These include the following:Comparable Homes

When appraising a home, appraisers analyze recent sales of similar homes in the area to determine what buyers are willing to pay in the neighborhood. Looking at similar homes helps them determine a starting point for valuing the home. 

The Property

Once they have a starting point, the appraiser will consider the physical features of the home and adjust the price accordingly. These aspects include the size of the house and yard, the number of bathrooms and bedrooms, the home’s age, the view, and the overall location of local amenities. 

Permanent features like an irrigation system or a granny flat can add to the value of the home, while semi-permanent ones like sheds and above-ground pools don’t.Structural Aspects

The structural aspects of the home and its general condition have an impact on its value. 

The condition of the roof, siding, and foundation are of primary concern. The appraiser will look for code compliance, damages, cracks, and leaks that can lead to major repair bills for the buyer. 

High-quality materials used to construct the home add to its value.Home Interiors 

The appraiser looks at items that would stay behind when the buyer moves and includes these things in their estimation. These include floors, walls, appliances, doors, light fixtures, major appliances, and plumbing.

Remodeled and upgraded areas increase the value of the home.Floor Plan

An awkward floor plan can detract from the value of the home. Rooms with awkward shapes and segmentations aren’t popular among buyers, and old-fashioned layouts can also devalue a house. 

Some appraisers may compare the layout of the home with those of previously sold homes in the area, too. Relevant Permits

Appraisers peruse public records when evaluating homes. If they notice any additions or upgrades, they may inquire whether the owner has permits for the work. 

A lack of the necessary paperwork could negatively impact the value of the home and some municipalities may issue fines or force the homeowner to undo the improvements. 

What Are the Benefits of a Home Appraisal? 

The obvious benefit of an appraisal is that the buyer won’t end up paying an escalated price for the home they want or pay escalated property taxes in the future.

They might reveal flaws in the home that the buyer isn’t aware of, like a comparatively small floor plan or less-than-ideal location. 

An appraisal can also help a seller prove the value of their house when rejecting a lowball offer.

So, while there are a few inspection elements that occur during an appraisal, you’ll still find many differences when comparing a home inspection vs an appraisal.

How Should You Prepare for an Appraisal?

An appraiser will see through any efforts to dazzle them with a last-minute overhaul of your home. Yet, there are a few things you should do before they arrive.

These include:

• Tidy up your interiors and your yard
• Make sure they can access all the rooms in your home
• Provide a list of upgrades and comparables (if you have them)

Your real estate agent can compile a list of house comps for you if desired. 

What Is a Home Inspection?

How the physical properties of a home determine its value may lead both buyers and sellers to ask, “Is an appraisal the same as an inspection?”. The answer is a resounding, “No!”

While most lenders don’t require a home inspection, buyers often want to know what they’re getting into before they agree to buy a home.

In most cases, they’ll include a home inspection contingency in their purchase agreement. That means, the buyer can back out of the deal or negotiate costs based on the findings of a qualified home inspector.

In this way, a home inspection report can seriously hamper the sale of your home, especially if you’re trying to sell your home as-is. 

What Do Home Inspectors Look For?

Home inspectors conduct a thorough check of almost every aspect of your home. These inspections include the following areas of a home:

• HVAC systems and filters
• Electrical and plumbing system
• Light fixtures
• Utilities
• Major appliances included in the sale
• Smoke detectors or carbon monoxide detectors
• Mold and mildew
• Presence of insects and pests

A home inspection does not include an evaluation of the following aspects:

• The home’s market value
• The location and neighborhood
• Comparable homes in the area
• The home’s size

It usually takes a few hours for the inspector to complete these checks, but the homeowner doesn’t need to stick around while they’re busy.

Once the inspector has examined all the accessible areas of the house, they compile a written report of their findings. They’ll often include pertinent photographs as well as recommendations.

These reports typically include details about how the homeowner has maintained each element, and how much more maintenance is likely.

In some cases, the home inspector will request further inspections by a plumber, electrician, or roofing specialist.

What is a Pre-Listing Home Inspection?

Sometimes a home seller will hire a home inspector before the buyer requests an inspection. This can help them iron out any problems that might impact the sale of their home.

This gives the seller time to decide whether it’s worth fixing these issues before they place their home on the market. These preliminary inspections may also reveal problems the homeowner is unaware of. 

Getting your home inspected early can also give you the edge when negotiating with buyers. 

A home inspection has many benefits for the buyer, too. It can help give them leverage when negotiating with a seller, help them feel that they’re buying a safe home, and prepare them for any necessary repairs.

For those who’ve opted for new home construction, a home inspection can prove the contractor did a good job. 

What Happens if Your Home Fails the Home Inspection?

You can’t fail a home inspection. It’s simply a report concerning the condition of the home.

Most homes will fall short in many areas, but that doesn’t mean they’re unsaleable. The purpose of a home inspection is to give the new owner an idea of likely repairs and how much they can expect to spend on the home after buying it.

Even homes with fire or flood damage can find a new owner. It’s unlikely that a mortgage lender will agree to provide finance for a home in very poor condition, but a fix and flip enthusiast with cash in hand might embrace the challenge. 

In most cases, the buyer will attempt to negotiate the price of the home down based on expensive repairs or replacements, like a roof or foundation. 

The seller and buyer can also agree to split the costs, or the buyer can opt to pay for the repairs themselves. In the worst-case scenario, the buyer might decide to back out of the sale due to the expenses involved.

Preparing Your Home for an Inspection

It makes sense to take care of niggling issues before the home inspector arrives. You don’t want to end up with unnecessary defects in your report.

Check your home for these issues when you first list it for sale, these small things can put buyers off during an open house event, too. The most important things you can do before your inspection include:

• Repairing any plumbing leaks
• Fixing running toilets.
• Applying caulking sealant to windows and bathroom tile
• Replacing non-functioning light bulbs
• Servicing your HVAC
• Cutting back the foliage around exterior structures

Create a folder containing information about any home improvements as well as service records for major appliances and present it to the home inspector when they arrive.

It’s a good idea to keep your pets out of the way on inspection day and make sure the inspector can easily access any necessary areas. 

Appraisal vs. Inspection Summarized

To sum up the differences between appraisal vs. inspection, a home appraisal involves an evaluation of a home’s market value while a home inspection centers on describing the condition of the home.

The outcome of a home appraisal depends on things like the home’s location, condition, size, and comparison with similar properties. Home inspection criteria include its structure, state of disrepair, and safety according to predetermined criteria.

In both cases, the buyer must pay for these time-consuming services, and they have the option to walk away from the deal if the outcome doesn’t suit them. 

There is an easier way to find out what price you could get for your home right now. Enter your home address to get an instant offer on your property without having to worry about the time delays inherent in appraisals or inspections.

The post Home Inspection vs Appraisal: The Differences, Explained. appeared first on iBuyer Blog.

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Did you know that over 5 million property transactions take place every year in the United States?

This shows how important the entire real estate market is to the American economy. This market has provided ample opportunities for real estate investors to buy undervalued homes and renovate them before selling them for a profit.

Knowing how to run comps on a house can help you price the property accurately. It’s vital that you price your property accurately as setting the price too high can scare off potential buyers. This can end up costing you both time and money as you try to find another buyer for your home.

Interested in learning how to find comps for houses? You’ve found the perfect blog. Here’s everything you need to know about real estate comps and how to pull comps on a house.

What Are Real Estate Comps?

Real estate comps are groups of properties that share characteristics with each other. Due to the fact that the homes are similar, comparing the value and price of these homes help guide sellers looking to price their home on the market.

When it comes to valuing a home, things can get very complicated very quickly.  There are tons of factors that can influence the price of a home, making it an incredibly difficult task to do by yourself. These factors can also evolve and change, meaning that the value of a property today won’t stay the same forever.

What makes real estate comps great is that they give you an accurate picture of how much a property is worth based on previous experience within the market. Instead of having to do all the research yourself, you can simply look at the research that’s been done on a home similar to yours. You can then use that price as a guide to help you put your property on the market.

For example, if you have a two-bedroom home in Atlanta and want to figure out what the market value of your home is, you can use real estate comps to give you an idea of how much it’s worth. Since you are trying to sell a two-bedroom home, looking up the price of the last two-bedroom home that sold in the area would give you a good idea of how valuable your home is.

Factors To Consider

Real estate comps group properties that share similar characteristics. This is not limited to the number of bedrooms each home has but also extends to the location, size, and condition of the home. These variables help narrow down the market so that you can find the most accurate home to compare yours to.

Two homes that are both 200 square feet in size are not necessarily the same on the inside. Nowadays, the finishes and amenities within the home also count. If your home has solar panels, LED lighting, or even a new HVAC system, it could add to your overall property value.

In this case, you should compare your home to other homes in your area that have the same amenities and finishes.

Who Uses Comps?

As mentioned above, comps are a great way to give homeowners a good idea of what a home is worth. While this is a great way for homeowners to know how much to ask for their home, this is also useful to people looking to buy a home. This helps them figure out if a home is overpriced as they look for the best deal.

Homeowners

If you own a home and you want to sell it, the most important metric to work out is the price. The price that you sell your property for is essential as you may need the proceeds to pay off your mortgage or buy another house in another city.

Due to these pressures, sellers typically don’t have time to put their homes on the market for years and wait for negotiations to settle on a fair price for the property. Real estate agents and investors know that the key to selling a home fast is to accurately price it for the market.

When a home is perfectly priced, you open yourself up to the greatest number of potential buyers while also maximizing the amount of money you can make from the sale. If you price your home too high, you may scare off potential buyers. However, pricing the home too low may be throwing money away.

Real Estate Investors

Real estate investors are interested in generating a profit from a property. This can be through flipping the home for a profit or renting the home out to generate an income. Regardless of what the investor plans to do with the property, investors will always do their research to make sure that they are not overpaying for a home.

This is why real estate investors run comps on a home to find out what the home is worth in the market at that time. Especially if the investor plans to flip the home for a profit, a comp can give them a good idea of what the after-repair value of the home would look like.

How Do Homes Get Valued?

While comps simply compare the value of a home with other homes in the area, one of the biggest questions that arise is how to actually value a home. The truth is that there are tons of factors that influence a home’s value. Here’s a quick guide on how homes get valued.

The Property Market

As we may all be aware, everything is about supply and demand. This economic rule also applies in the real estate market as areas that don’t have a lot of housing tend to see a rise in property prices and even the cost of rent.

This is most evident when comparing the living costs in big cities compared to smaller towns. There is a massive difference between renting a three-bedroom apartment in Ohio compared to renting the exact same apartment in the middle of New York City.

Due to the fact that New York City is home to millions of people all looking for housing, the price to rent or buy a home is through the roof. This showcases the principle of how the property market in the area influences the price of the property there.

While some like to isolate this to be about the location, a more accurate way to look at it is the geographical demand for housing. This way you take the location and the demand for housing in that location into account.

Amenities

Homes come in all shapes and sizes. However, most homes come with the same basic rooms and amenities. This includes common rooms such as a bedroom, bathroom, lounge, and kitchen. However, the state and amenities within these rooms can help set the property apart from others in the market.

For example, a home with a brand-new kitchen is not the same as an old, wooden kitchen from the 30s. In this case, the state and quality of the amenities in the one home help increase the value of the entire property.

Amenities are not limited to the basic rooms but also include things that help make the home unique. Things such as solar panels and smart home devices go a long way in adding value to your home. This adds value by adding convenience but also helps futureproof your home at the same time.

Larger amenities such as a patio, swimming pool, hot tub, cinema room, outdoor kitchen, and even a guest room can all play a big role in increasing your home’s value. Each of these amenities adds value to your property but also allows you to accurately compare them with other homes in the area. This is because the more you have in common with another home, the more accurate the real estate comp is. 

How To Run Comps on a House

Comps are a great way to accurately value your property. While you may have a good idea of what the home is worth, comps can help give you a clearer picture of how to price the property.

Real estate investors often plan the entire project ahead of time and work using the after-repair value of the home. However, the market could change as time goes by. This would ultimately change the way you approach selling your home.

Looking for a quick guide on how to accurately value your home? Here’s a quick guide on how to do comps on a house.

1. List Your Home’s Characteristics

Real estate comps use common characteristics to try and find the value of your home. This is why listing your home’s unique characteristics is the best place to start. These characteristics will help you find similar homes in the area for you to compare prices with.

2. Research Recent Sales

Once you know what kind of home you’re looking for, you can then cross reference this information with recent sales in your area. Remember to look for the most recent sale as this would be the most accurate information to work with.

3. Consider the Property Market

The general property market should be taken into consideration as well. This is especially important if anything major has occurred after the last sale in the area. If the general property market is up, you can expect your home to be slightly more valuable than the comp. However, if the market is down, you may have to drop your price a little to attract buyers.

4. Take External Factors Into Account

There are tons of external factors to consider when selling your home. This includes the demand for property in the area and the state of the economy. While many may not like to think about these factors, they play an important role as they dictate whether it’s a seller’s or buyer’s market.

5. Do Some Math

The last step of the process is to do some math to work out a final price for the property. If you have a real estate comp with five homes at five prices, the easiest method to determine your home’s value is to average the five sales prices.

How To Get Comps for a House in Another Area

If you don’t have all the information you need about a home but want to do a quick real estate comp on the property, there are alternative ways to value the home. The most accurate method is to make use of trusted valuation tools.

These tools take basic data into account and estimate the value of any property based on accurate records of previous sales in that area. These valuation tools are incredibly easy to use and can give you the price of any property in any area with just the click of a few buttons.

While some valuation tools are expensive, iBuyer offers a solution for free on our website. Known as iValuation, this online tool lets you enter a physical address and it will do all the research for you in the background. This provides you with a real-time home value based on actual sales data.

Selling Homes Does Not Need To Be Difficult

Ever wondered how to run comps on a house? It’s a lot easier than you may think. While you may have needed to conduct market research by yourself in the past, there are dynamic online tools that make the entire process more efficient.

If you have any questions or want to learn more about how iBuyer can help you sell your home, feel free to contact us. You can also take a look at our website and make use of our online tools to help you accurately value your property.

The post How To Run Comps On a House: Find and Use Them Correctly appeared first on iBuyer Blog.

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Over $485 billion is spent on residential rental properties every year.

With over 27% of all Americans renting a home, rental properties make for some of the best investments. However, things can get a bit tricky if you have a house with tenants that you want to sell.

Tenant occupied homes can still be sold. In some cases, real estate investors are actually looking for tenant occupied homes for sale so that they don’t have to go through the effort to find someone to rent the place.

Interested in learning more about selling a rented home? You’ve found the perfect blog. Here’s everything you need to know about selling a rental property.

Rental Properties

Rental properties are a lot more common than you may think. With millions of Americans renting apartments and homes across the United States, rental properties have become some of the best investments for people looking to create a passive source of income.

Rental properties often refer to properties designed to be rented out in order to generate an income for the homeowner. While property companies purchase and rent out thousands of homes around the country and the world, many rental properties are individually owned.

This refers to families or individuals that own more than one property and wish to use their second property to provide them with an additional source of income. While these properties can be rented to tenants long-term, platforms like Airbnb have made it easier than ever before to rent to people on a short-term basis.

These kinds of platforms allowed rental properties to expand and become even more versatile investments. This also saw more people diversify their investments to include a second property specifically to rent out. While renting can provide you with a stable income, rising property prices may make you consider selling your rental property.

Should I Sell My Rental Property?

There are a few factors to keep in mind when thinking about selling your rental property. This includes the market condition, the amount of equity you have in the property, and the potential returns you could expect from the proceeds of the sale.

Property Equity

The equity that you have in the property refers to the difference between the home’s value and how much debt you still owe on the property. For example, if the property is worth $200 but you owe $100 on the home, your equity position is worth $100.

This effectively means that as soon as you sell the home, you need to send $100 to the bank or mortgage company, leaving you with $100 in profit that you get to take home. This is important as many people think that selling the home at $200 means that they walk away with everything.

Another factor to consider is capital gains tax. This tax is a levy placed on the profit or financial gain that your property has experienced while you’ve owned it. For example, if your home is worth $200 now but you originally paid $150 for it, the $50 gain is subject to tax.

Capital gains tax applies specifically to the $50 gain and can range from 0% to 37% depending on your personal circumstances. If you have held the asset for a long time, you won’t have to pay short-term capital gains tax. Short-term capital gains tax applies to people that made the initial investment within the last 12 months.

This tax is also dependent on the financial status of the taxpayer. Depending on the tax bracket that you fall under, you can pay between 10% and 37% in capital gains tax.

Potential Returns

If you rely on your rental property to provide you and your family with an additional source of income, you should consider how you’d deploy the proceeds of the sale to create another source of income. While the big sum of money may seem great at first, a regular, stable source of income lasts a lot longer than liquid cash.

The best way to go about this is to talk to a financial advisor and let them draft a professional portfolio for you. This can outline investments you can make along with the potential returns they can provide for you.

While most bank accounts offer 0% to 1% in interest, fixed deposits and ETFs can offer you far more in dividends and growth. The stock market is known to be unpredictable and risky, but many experts agree that general ETFs are some of the best investments you can make.

When comparing returns, remember to include all the costs associated with owning a home. This includes maintenance costs and property taxes. These costs are often forgotten but would be an extra saving if you were to sell your home and invest the cash elsewhere.

The Property Market

The most important factor to consider is the overall property market. The property market is known to grow steadily, but external factors can quickly increase the value of property in an entire area overnight. Property tends to heavily depend on the market and area to derive an accurate value.

This is why most property websites indicate what homes in the area recently sold to potential buyers. These prices are generally used to determine how much property is worth. If the price of property in the area is skyrocketing, it could be a great time to sell and stash the profits.

When the property price goes up, your equity in the home grows along with it. This means you can sell the home for more money and take more money home after paying off whatever debt you may have on the property.

Property prices fluctuate, which means what goes up can also come back down. This is another reason why you should capitalize on a seller’s market while you can.

How to Sell a Rental Property

There are many different ways you can sell your home. The most effective way to sell your home is to make use of online tools such as iBuyer.com. One of the most frustrating parts of selling a home is trying to filter through buyers to find the serious, qualified ones.

Platforms like iBuyer make this process effortless as they evaluate your property instantly with an accurate estimator and use the information you provide to match you with potential buyers that are looking for everything you’re offering.

This kind of service is more personalized than just posting an ad on a classified site. Personalization helps save you tons of time and effectively links you with serious buyers that are interested in viewing and buying your home.

Can You Sell a House With a Tenant in It?

If you have a rental property that has tenants in it, you can still sell the home. Many advise that the first people you should talk to about your intention to sell the home are the tenants. This is because they may be interested in making a bid for the place.

Even if your tenant does not want to move, you can sell the home inclusive of the rental agreement. This is perfect for buyers that want to purchase the home as an investment property.

This becomes tricky when the new owner does not want to rent the property but wants to live in it. In this case, the tenant would have to find another place to stay. 

How to Sell a House With Tenants

As mentioned above, it’s possible to sell a home with tenants living there. While there may be some extra paperwork to do, it can actually increase the price of your property to real estate investors looking to rent the place out. This is because they won’t have to go out of their way to find someone to rent the place from them.

If you want to learn how to sell a home with tenants, here are a few ways to go about it.

Offer the Home to Your Tenant

The first thing you should do if you plan to sell your rental property is to tell your current tenants about it. This is because they may be interested in making an offer for the place. As mentioned above, tenants often fall in love with the homes they rent and become used to living in the area.

This is why most renters end up buying the home they rent or a similar home in the same area. Even if your tenant does not have any interest in buying the home, it’s still the right thing to let them know in advance so that they can make alternative arrangements in case the home gets sold to someone who does not want to rent the place out.

In most cases, one to two months’ notice is ideal to let your tenants know that they need to find another place to stay. This depends entirely on the lease agreement that you have signed with them. If your agreement stipulates that they can stay for five more months, they are contractually allowed to stay for the remainder of their agreement.

Wait for the Lease to End

If you don’t want things to get complicated, you can simply wait for the tenant’s lease agreement to end before selling the home. This avoids any conflict with the tenant, as you would simply not renew their lease. This is also a better way to clear the home instead of having to ask the tenant to find another place to stay.

Most leases are between three and twelve months. This means that you can still advertise the property and even negotiate prices for the property as long as the potential buyer knows that they can only assume ownership after the lease agreement is completed.

This is also a great way to maximize the revenue that you receive from the property. By completing the lease agreement, you benefit from a few more months of rent while you try to find a potential buyer to take the property off your hands.

It can also help to find out what the new owner plans to do with the home. If they plan to do some renovations and rent the place out, it could be a good idea to introduce your tenants to the new owners before they move out of the rental property.

Sell the Property With the Tenants

Another option is to sell the property with the tenants and rental agreement in place. This effectively sells both the property and the lease agreement to a new owner. The new landlord can then collect rent from the tenant as soon as ownership of the property has changed hands.

This kind of deal is a real estate investor’s dream as they know how hard it can be to find a tenant that you can trust. If the home already comes with a long-term tenant, it’s almost a guarantee of income. This can even result in a higher price for the property.

Sell Your Tenant Occupied Property

Selling a property that already has a tenant in it can make the property appeal to real estate investors and even help raise the price. While there may be a few administrative tasks to handle to ensure everything goes smoothly, with the right help, there shouldn’t be any major issues.

If you have any questions or want to learn more about how to sell tenant occupied homes, feel free to contact us today.

iBuyer offers a wide range of services to help you save both time and money as you sell your home. 

The post Selling a Tenant Occupied Property appeared first on iBuyer Blog.

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