What's the difference beween a market analysis and an appraisal

From Realty Times,

What's the Difference Between a CMA and an Appraisal? By Blanche Evans   

 

How do you find out the value of your home? There are two ways - a comparative market analysis, or CMA, and a professional appraisal.

The CMA is used to determine current market value so that you can choose the listing price where your home will sell quickly and for the highest amount possible. 

 

Your real estate professional gets the information for the CMA from the multiple listing service, or MLS, where brokers and their agents pool information on listed properties for sale. The MLS also contains sold data, historical trends and property tax roll data.

The CMA includes recently sold homes and homes for sale in your immediate neighborhood that are most similar to your home in appearance, features, and general price range. Establishing a home's fair market value is equally important to buyers and their lenders. When your buyer applies for a loan, the bank will order an appraisal.

Where the bank appraisal differs from a CMA is that it is performed by a licensed appraiser - not a real estate agent. Even though the appraiser is hired by the bank, the appraiser has no vested interest in the transaction.

The appraisal is designed to protect the bank, so that it doesn't loan too much money for a single property. The appraiser visits your home and compares it to other similar homes using square footage, finishes, age, condition, location, and more.

The data is compared to property tax records and recent solds as well as sales trends to determine the arc of prices up or down. Appraisers also use information from the local MLS.

If an appraisal comes in lower than the asking price of the home, the bank will not make the loan, and the seller will likely reduce the price for the buyer.

One thing is certain, no home will sell for more than it's worth in any market. If you price your home based on the information suggested by the CMA, chances are good that the buyer's appraisal will support the sales price.

If you price your home above comparables, it's a sure way to insure your home won't sell.

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, NJ, we are the title insurance agent that does it all for you.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

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Tips for first time home buyers

Realty Times has an excellent article on tips for first time home buyers. Here it is:

7 Tips For First Time Home Buyers by Sonny Lee

The real estate market is beginning to rebound with both buyers and sellers taking notice. If you are ready to kick off the home buying process take the correct steps before the New Year. Make sure to be prepared for what 2014 has to offer with our home buying tips. In order to cover all of your bases and find the home that is financially sound and an investment you will enjoy for years to come.

1. Do Your Research Most likely a home purchase is one of the largest purchases you will make in your lifetime. Any large purchase should involve extensive research through professional venues and on your own. Begin your research with establishing a thorough knowledge of the buying process, pricing and your projected purchase area. Know the communities in which you are interested along with specific properties you admire in order to move forward with a wish-list and the confidence in knowing what you want.

2. Why Working with an Agent Saves If you are a real estate professional or have extensive knowledge to the point you can successfully navigate the purchase process, then by all means, proceed. However, it cannot be stressed enough that navigating a real estate deal without a professional agent or prior experience in real estate can be a financial burden and stressful situation to say the least. Even though an agent will receive a commission on the sale, this commission is most likely much less than the potential money lost through inexperience and negotiating a sale on your own. An agent will help you to find your way through the web of paperwork, placing offers, negotiating final prices and leading you through closing costs.

3. Get a Loan Pre-Approval This step is extremely important. If you do not get pre-approved for a loan then you may find a home of your dreams and not be able to proceed due to a loan that is not approved too late in the game. This helps you to set a price and move forward with a financially sound purchase. When it is time to acquire a loan, shop around for a lender that offers you an interest rate you are pleased with since it will be with you for quite some time. There is nothing wrong with speaking with several lenders. After you are pre-approved make sure to pay close attention to your finances and do not make any rash decisions or large purchases until after the purchase of your new home. This is incredibly important especially around the holidays when you are most likely spending more than normal.

4. Know Your Budget After pre-approval you will be more familiar with a price range to work with. It is good to know a range within you can begin your search and that you are comfortable with. This budget will need to take into consideration not only the price of the home, but also HOA fees, closing costs, insurance and costs incurred throughout the move. Sticking to a budget is good financial practice, but also key throughout the home buying process. If you don’t look at homes that are out of your price range then you will not get sucked into thinking you can “make it work.” Remember that this purchase will follow you for years down the road. Make sound investments that work with your budget and equity will follow, if you over-purchase though it can end up hurting you in the long run.

5. Create a Realistic Wish List Once a budget is established, your wish list is much easier to build upon. This list should include wants and needs, but most importantly it needs to capture a complete picture of the home and community you are looking for. Start big with the non-negotiables such as the specific communities you want to live in, the number of bedrooms and bathrooms you need, what style of homes you are interested in looking at, whether or not you need a garage, etc. After the larger must-haves are established it is easier to understand what is negotiable in the long-run. Don’t be afraid to wait until a home comes available that offers everything you need, but understand every home no matter how long you wait may not have everything you want. This does not mean you cannot work future upgrades or improvements into the final price of the home through negotiating with the help of an agent.

6. Find a Reliable Home Inspector Good home inspectors are on the same level as a good real estate agent. Imagine closing on your home, the process is finally over and then there is a leak in the basement, or the roof, or the electrical begins to malfunction. In order to avoid any pricey mishap research and procure an excellent home inspector since they will make sure if your dream home is in fact a safe place to live and a sound financial investment. Make sure your inspector is not only certified, but is also affiliated with a professional home inspector organization. Another point of conversation with inspectors is to procure an actual written report at the end of the inspection and not simply a check-list. We suggest going the extra step and being present for the inspection itself, you should not work with an inspector who is wary of having you there throughout the inspection.

7. Understand All Costs Involved Buying a home is not just a down payment and closing costs. Before beginning the process sit down and compile, along with your home budget, a list of closing cost fees and payments. On top of these costs there are also costs incurred post-purchase such as HOA fees, home insurance, taxes and maintenance. Some types of insurance for example are more important in certain areas of the country than others. For example, wildfire insurance is absolutely necessary in most parts of Arizona whereas in other parts of the country flood or tornado insurance is stressed.

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, NJ, we are the title insurance agent that does it all for you.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

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NY Times real estate trends for 2014

 Karnak says, "real estate is a puzzle."  The question, what will 2014 bring?  The NY Times tries to answer that question, too.

The coming year is expected to be a little kinder to home buyers. While affordability will continue to be a problem in hot markets like New York and San Francisco, buyers in general may find they have more homes to choose from and more lenders vying for their business.

MORTGAGE RATES CONTINUE TO CLIMB. As the economy improves and the Federal Reserve winds down its monetary stimulus, mortgage rates will rise to reflect that lack of stimulus...

But rates will continue to be low and the sign of a stronger economy.

LENDERS LOOSEN UP, A LITTLE. Rising rates will also mean fewer borrowers seeking to refinance out of higher-priced mortgages. Lenders will try to fill that gap in capacity by competing more aggressively for purchase business. 

What will down payment requirements be?  How about credit scores?

Regulatory guidelines that take effect in January will set parameters on how much easing lenders can do without straying outside the government’s “qualified mortgage.” Lending outside that safe harbor isn’t likely to be liberal, and will mainly consist of low-risk loans to the wealthy...

HOMEOWNERSHIP RATES FLATTEN OR FALL. It may seem counterintuitive that the level of homeownership would be unresponsive to improving market conditions. But the national rate is only just stabilizing — at around 65 percent — after dipping from the historically highs during the housing bubble.

 And those young adults who, because of a stronger economy, are finally able to find jobs and move out of their parents’ homes are more likely to rent than buy.

ARMS, CASH-OUT ‘REFIS’ MAKE A COMEBACK. Adjustable-rate mortgages, or ARMs, were viewed as risky after the housing-market collapse. But they are slowly regaining their appeal, and as rates on fixed-rate mortgages rise, more borrowers will take advantage of lower-rate adjustables.[See our earlier post on ARMS.]

Cash-out refinancing was also abandoned after the collapse emptied borrowers of equity [but] interest rates will still be low enough to make cash-out refinancing an option for many people. 

Only time will tell, and that time is just a few weeks away.  Read the full report.

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, NJ, we are the title insurance agent that does it all for you.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

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