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How To Do A Comparative Market Analysis

“Appraisals,” “comps,” “CMAs” – keeping up with the latest real estate lingo can seem intimidating. But if you’re interested in the home selling process, you should understand what a comparative market analysis, or a CMA, is.

What’s A CMA?

By definition, a comparative market analysis is a tool used in real estate to estimate your home’s value based on current trends in the housing market.

In other words, while it’s typical to first consider location and square footage as affecting your home’s value, CMAs look at numerous different elements and compare them with similar properties in your area.

A CMA will give you a better sense of what a fair listing price for your property is or, if you’re also in the homebuying process, what price to propose as a competitive offer.  

What Isn’t A CMA: CMAs vs. Appraisals

The distinctions between a CMA and an official home appraisal – another method of evaluating your home’s worth – can seem blurry. So, let’s break down what these differences are.

To put it simply, a CMA is a broader and more informal assessment of a home’s value while an official home appraisal is more formal and typically must be scheduled far in advance. Additionally, because CMAs can be conducted remotely, some real estate agents may mock one up for free.

However, the primary difference between a CMA and an appraisal is which clients these indicators cater to.  

CMAs are well-suited for the home seller as a tool for pricing, while home buyers typically need an appraisal to assess the property’s value. Additionally, appraisals are usually required during the lending process, whereas CMAs aren’t a requirement.

How A CMA Works: The Process

CMA flow chart: Comparative Market Analysis Process

In most cases, sellers working with real estate experts won’t see much of the CMA process. And although CMAs do require a fair amount of knowledge about your area’s housing market, they aren’t impossible to understand on your own

Let’s look at the process these professionals take to put together a CMA.

When conducting a CMA, the first step is searching your area for comparable sales, otherwise known as “comps.” Comps are recently sold homes in your area that’ll ultimately help estimate your property’s value. Typically, comps meet the following criteria: 

  • At least three comps are selected for a CMA – the more comps that are used, the more accurate your estimate will be.
  • A comp should be a property sold within 3 – 6 months of creating a CMA. If there’s a clear lack of recent on-the-market homes in your area, a real estate agent may use unsold, listed homes or expired listings to conduct a CMA.

The next step is to identify all the differences between the comparable sales and your home. Real estate experts will usually price out these differences with the help of a contractor to make the comps as identical to your property as possible. 

For example, let’s say your home has an addition that a comparable property doesn’t have. A real estate agent would typically work with a contractor to determine the value your addition gives your property. Desirable features, like a fireplace, remodeled deck or addition will add to the sales price of the comparable property, while undesirable features will deduct from the sales price. 

After all these adjustments comes reconciliation. In this stage, a certain weight is given to each comp based on how similar the property is to your home. Then, a specific estimate of what your price should be is calculated.

How To Do A CMA

If you find yourself intimidated by the concept of CMAs, you’re probably not alone. A quick search online pulls up endless images of graphs, charts and lots of numbers.

There are lots of moving parts to conducting a CMA on your own – but we’re here to break them down.

Step 1: Find Your Comps

As we discussed earlier, real estate experts start their CMA process with finding comparable sales properties.

Using an online listing site of your choice, look for homes that can compare to your property. When comparing a potential comp to your home, you’ll want to look at eight different components:

  • Location
  • Lot size
  • Square footage
  • Age and condition of the property
  • number of bedrooms and bathrooms
  • Special features
  • Date of sale
  • Terms of financing and sale

Each of these components play a role in the value of your comparable sale – to make things easier, you’ll want to find homes that mirror your property as closely as possible.

You can also check out FSBO’s Pricing Scout tool, which finds comparable sales based on square footage and room amount. This resource is easy to use and free, and it’ll give you a pricing estimate to help guide your CMA.

Step 2: Research

To gauge your area’s market, you may want to conduct some light research. To do so, consider looking at some local real estate data. This can include:

  • Your area’s average home selling price
  • Recently sold homes in your area
  • The value increase of homes in your area since the time you purchased your home

Being familiar with this information can help you both gain a better sense of potential listing prices and identify reasonable offers in the future.

Step 3: Adjustments

The next step in conducting a CMA is to factor in those special features in your home that may add value. This includes fireplaces, updates and additions. Although you may not get all your money back from these features, they’ll certainly add value to your home.

Step 4: Check Yourself

Before definitively settling on a price, make sure you cross-check your estimate with other listing prices in your area or your FSBO Pricing Scout estimate. You want to be sure you’re asking a reasonable price, but one that still makes you happy.

How Accurate Is A CMA?

The accuracy of CMAs can vary among real estate professionals and will also vary when conducting one yourself. Keep in mind that the number of comps you use and how well you know your area will play a role in the accuracy of your estimate.

Conducting a CMA on your own may sacrifice some pricing accuracy, but you’ll still walk away with a good idea of your home’s worth.

Do I Need A CMA?

CMAs are an easily accessible and effective way to learn about your area’s housing market. They’re a great first step to take, especially if you’re feeling unsure as a first-time home seller.

If you’d like some more help finding a pricing estimate, FSBO’s Pricing Scout tool can instantly assess your home’s value for free. Just remember to conduct your own research as well – you know your home best!  

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Should I Sell My House? A 3 Step Guide to Deciding

Planting a “for sale” sign in front of a house might seem like the beginning of the home sale process. The truth is, it’s only one step of a journey that typically starts weeks or even months earlier. Setting a price, listing a home for sale and showing the home to potential buyers are all vital steps, but perhaps the most important step is the first one: clarifying your goals and making sure it’s the right time to sell.

Before you move forward with selling your home, start by answering these questions:

• Why do I want to sell?
• What will a new home offer that my existing home does not?
• Do I need to sell within a certain amount of time?
• How much preparation or repair work is needed to sell my home?
• Do I have enough equity in my home to make a down payment on a new house and/or achieve other financial goals?
• Is making a profit on the sale of my home a must? If so, how much of a profit?

The answers to these questions can help you figure out whether you should sell now or wait for a better opportunity. When you get to the financial questions, take these three steps to make a fully informed decision.

Step I: Gauge Your Current Finances

If you’ve paid off all your debt (aside from your mortgage) and have an emergency fund to cover at least six months of your expenses, that’s a good start. However, when you sell your home, you’ll need to cover several upfront costs in the process.

Your first order of business? Do some math to see approximately how much money you’ll have to work with before purchasing your next home. To do that, calculate the equity in your current home. Here’s how:

Current value of your home – What you owe your mortgage lender = Your equity

If you aren’t sure about the value of your home, you’ll need to come up with a solid estimate. There are several ways you can approach this. One is to simply hire a professional appraiser, who will examine all the data on recent nearby sales and factor in your home’s size, features, age, condition, location and other traits to provide an unbiased estimate. Another way is to ask a real estate agent for a comparative market analysis (CMA), which is a detailed report on recently sold homes in your neighborhood. The information in a CMA will help guide you to a competitive asking price. If you’re willing to put in a little time and do the research yourself, you can conduct your own comparative market analysis.

Once you have an estimate, check out your current mortgage bill or other mortgage documents for the amount you owe your lender, including any second mortgage or line of credit you might have as well.

Now you can subtract what you owe from what your house is worth to get a rough idea of your equity. For example: if your home is worth approximately $265,000 and you owe $135,000 to your mortgage lender, you have $130,000 of equity ($265,000 – $135,000 = $130,000).

Your next step is to figure out your net equity, which is your total equity minus the expenses you expect to pay as you move through the selling process, including:

• Home repairs or improvements
• Listing fees if you sell by owner or seller’s agent commissions if hire an agent
• Appraisal fee
• Title insurance and other charges

At this point, take a long look at the condition of your home. Gauge the investment you’ll need to make before listing. Identify the repairs your home needs before you put it on the market and what kinds of upgrades would help you sell more quickly.

Once you have these numbers, add them up on a spreadsheet to see where you stand. If you hire an agent to sell your home, your spreadsheet for that $265,000 home could look something like this:
 
Total equity (ex. $130,000) minus the following:

Home repairs/improvements: $5,000
Traditional Agent Commission: $15,900
Appraisal: $300
Title Insurance: $1,200
Attorneys Fee: $500
Moving: $1,500
Other fees (inspection, etc.): $500

Net equity: $105,100

 

You can save on commission fees and increase your net equity by using The Independent package from ForSaleByOwner.com:

Total equity (ex. $130,000) minus the following

Home repairs/improvements: $5,000
ForSaleByOwner package fee: $0
Buyer’s Agent Commission: $6,625
Appraisal: $300
Title Insurance: $1,200
Attorneys Fee: $500
Moving: $1,500
Other fees (inspection, etc.): $500

Net equity: $114,276

 

Whatever your circumstances are, establishing that net equity number is a critical part of making your home selling decision. This will help determine if you’re in good position to move forward and what the best method for selling your home will be.
 

Step 2: Consider Your Home Selling Options

Should You Sell with an Agent or on Your Own?

Your home-selling strategy and the proceeds you can expect to receive from your sale will revolve around your decision to hire an agent or sell your home on your own.

Hire an agent and your home will likely be seen by a high number of potential home buyers instantly – but you’ll probably need to pay commission fees when your home sells. Sell your home completely on your own and you won’t have to pay commission fees.

Whichever option you decide, chances are the process will involve considerable effort on your part. Either way you’ll be responsible for gathering most of the relevant documents, getting your home ready to sell and ordering and paying for any pre-inspections or appraisals. In some states, you’ll also have to hire (and pay) an attorney or an escrow agent to complete the sale.

If maximizing your profit is key to your decision to sell, becoming a For Sale By Owner may be the way to go. If selling your home fast with minimal effort is more important, hiring an agent is probably a better option.

Should You Sell Your Current Home or Buy a New One First?

A big part of the decision to sell your current home is figuring out when you should buy your next home. There’s no right or wrong answer for whether you should buy or sell first. For some, it boils down to preference. Some people do everything they can to avoid the stress of carrying two mortgages for a time, which is what you’ll probably need to do if you decide to buy before you sell. Others are more resistant to the notion of being “homeless,” which is unavoidable if you sell before you buy.

If you’re open to either scenario, looking at your current housing market can help you decide. In a buyer’s market, you have a better chance of making an offer on a home contingent on the sale of your current home. That means you can secure a purchase and have the home waiting for you while you go through the selling process. If you’re in a seller’s market, homeowners can be a lot more selective about the offers they receive. That means they’ll be far less likely to accept a contingency that forces them to wait around.

When Is the Best Month to Sell a House?

According to a recent study by ATTOM Data Solutions, most people wait until the summer to sell, with June, July and August accounting for the most home sales since 2011. But getting out in front of the crowd tends to yield the best results. The most profitable month was shown to be May, with homes selling at 5.9% above estimated market value.

Of course, that doesn’t mean you should rearrange your schedule and wait a year if you start to think about selling in June. There are pros and cons of selling in every season, and every market is different. If you have your choice of any season, however, you may want to plan for a springtime sale.

 

Step 3: Price It Right from the Start

You may have a solid estimate of your home’s value, but setting your asking price will take some research and consideration. One of the advantages of working with an agent is that you’ll have a market expert to help you arrive at a precise, competitive asking price. Without an agent, getting the price right might seem like a major hurdle. It’s true that you’ll need to do a little extra legwork, but determining an optimal price is actually a fairly simple process.

Researching homes that are “comparables” in your local market is the key. Find out what your home is worth using our Pricing Scout tool which can help provide a solid estimate in minutes.

What Makes a Property Comparable?

Both appraisers and real estate agents will base their price opinions on comparable sales, ideally those that occurred within the last three to six months in your neighborhood. When looking for comparable sales to use as a yardstick for pricing your home, consider each home’s condition, age, square footage, location and the number of bedrooms and baths. The sale date is also important since it will reflect the most recent changes in your market.

Typically, the most important home feature to concentrate on is the number of bedrooms and baths, which usually play a bigger role in valuation than square footage. For example, a two-bedroom home in a neighborhood of predominately three-bedroom homes – no matter how ample the square footage – will almost always sell at a discount. The same is true for a home with one bath, since a majority of buyers look for more than a single bath. Along the same lines, if most homes in the neighborhood have a certain feature – like air conditioning – the absence of that feature will drop the price.

Once you identify several recent sales as potential comparables, take the time to drive by them and see how they shape up from the outside. You want to make sure a home’s lot size and landscaping are similar to make sure it’s a true comparable.

Get Down to Pricing

You’ve already taken an important first step toward understanding what your home is worth. Next, seek out additional reliable sources of home pricing trends that you can use to construct your own market analysis. For instance, the Federal Housing Finance Agency has two tools that draw from home sale data pulled from federally insured loan programs.

The FHFA’s House Price Index tracks home prices in all 50 states, the District of Columbia, and most Metropolitan Statistical Areas (MSA). If your metropolitan area is included, FHFA’s index is a great gauge of your local market.

FHFA’s House Price Calculator allows you to plug in the price you paid when you purchased your home, so you can get an estimate on the likely market value of that house today. Other good sources of information include local property taxes sites which contain the most recent sale prices of homes like yours in your neighborhood.

You can also scope out information on properties via public records online or scour lists of recently sold properties on a weekly or monthly basis in local newspapers. Add homes that make sense to your database and you will be able to further zone in on your asking price.

Lastly, it’s a good idea to visit comparable homes for sale during open houses. Checking out your competition will help you determine the right asking price, and it might give you an idea of how you can improve your home so you can get an edge.

Resist the Urge to Overprice

The temptation to overprice is strong. Almost everyone believes their home is the exception and will fetch more than similar houses. But that is rarely, if ever, the case. Buyers today are savvy. Chances are anyone who looks at your house — with or without an agent — has spent time both online and offline scoping out properties. Most buyers and real estate agents will know right away if a property is overpriced.

An over-inflated price means your house will be competing against homes that have more bedrooms and baths, or square footage, or a better location. The buyers who are in the market to purchase your home will be less likely to see it since most buyers are searching lower price points. This is the main reason homes sit on the market for months, with the price usually coming down to where it should have been from day one.

 

A Few Other Things to Keep in Mind:

1. Whoever buys your house will most likely need a mortgage, which means their lender will require an appraisal. If your home doesn’t appraise at or above the agreed upon sale price, the buyer will need to come up with the additional funds to close the gap between the appraised price and the actual sale price. Even then, there is no guarantee the lender will underwrite the loan.

So, even if you find a buyer willing to pay your price, unless they are paying cash they most likely will not be able to complete the sale. This will cost you time and put your plans — and your next home purchase — on hold.

2. If you haven’t already, it might be worthwhile to consider paying for a certified appraisal at this point in time. Without question, an appraiser will provide the most authoritative price opinion. Additionally, if your house is unusual or in a neighborhood that is difficult to value, it might be a good idea to have an appraisal done.

Determining your asking price is a tricky balancing act between maximizing your appeal to buyers and attracting offers that reflect the actual value of your home. Once you’re confident you have your home priced perfectly, however, you’ll have a clearer picture of what you stand to gain and when you should sell your house.

 

 

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Simple Selling Steps: Start to Finish Timeline

If you’re like most, selling your home will be one of the most important financial transactions of your lifetime. Not surprisingly, the process of selling a house typically involves many moving parts and a long list of to-dos – from getting your home sell-ready and setting a competitive price, to negotiating with buyers and navigating the closing process.

ForSaleByOwner can set you up for success with simple how-to guides, all the legal forms you’ll need and recommended local professionals who can help along the way. Plus, our Start to “Sold!” Checklist makes it easy to track your progress and stay on schedule. But before you get started, here’s a rundown of the most common home selling steps so you prepare yourself and hit the ground running.

1.    Start Doing Some Homework

Two months before listing

It’s a good idea to carefully evaluate your finances and how much leverage you have before you jump into the for sale by owner process. For example, how urgently do you need to sell your house? Is a career or job change prompting your relocation? Is your move tied to the school year, medical concerns, or financial pressures? Urgency often plays a role in determining your asking price and what you’ll be willing to accept. If there isn’t pressure to sell, you can wait for the ideal offer and price your house accordingly.

Here are a few other tasks you should complete to help you get prepared.

Get a feel for your local market – You don’t need to dive into market data and crunch the numbers just yet. At this point, just be aware how much homes like yours are selling for. You’ll want to check out home listings regularly and get an estimate on your home value so you have a general idea of what your asking price should be. It’s important to know early on if you’re likely to get the dollar amount you’re hoping for.

Add up transaction costs and remaining equity – You probably won’t need to pay all the closing costs of selling your home because you should be able to get the buyer to cover many of the expenses during negotiations. Still, it’s good to know the specific dollar amounts ahead of time. Research property taxes, transfer taxes, title insurance fees, escrow fees and any other fees that will need to be handled. If you sell by owner, use our Pricing Guide to estimate how much your expenses could be.

Collect key documents – Now’s the time to gather up the paperwork you’ll need so you aren’t scrambling to find them when things get hectic. The most important documents you’ll need are your title, mortgage and insurance.

2.    Look at Your Home Like a Buyer Would

Two months before listing

Nobody wants to buy your postponed projects. To get the best – and most – offers, tour your home with a critical eye. You may want to get an outspoken friend to give you an honest opinion of how your house looks to an outsider. Here’s how to approach the various flaws you may encounter as you evaluate your home.

Take care of cosmetic problems. These are issues that can be fixed or neutralized quickly at minimal cost. Grimy walls should be painted. Torn carpeting should be replaced. Small repairs, such as torn window screens and crooked light fixtures, should all be completed.

Consider making upgrades. Sure, you’ve lived with that gold-tone refrigerator for four decades, and it may still have ten more useful years…maybe. But why would a buyer pay top price for a kitchen with an ancient refrigerator? Evaluate the condition of appliances, plumbing, electrical, heating, air conditioning, roof and structural elements of your house. When you repair or replace iffy systems, you remove a reason for people to reject your house.

Structural elements will typically need to be addressed no matter what. However, keep in mind most renovations will not earn back more than what you pay to make them. You’ll need to determine if there are issues that might send home buyers running for the hills, and if there are, make those so your home doesn’t sit on the market for months.

Be aware of what you can’t fix. The location of your house is something you can’t change. The same can be said for your neighbors, the school district, noise and traffic patterns, and other factors. Be honest about these unchangeable traits. Will most buyers be turned off by certain aspects of your home? If so, you’ll have to price and market your house accordingly.

Some unfixable problems (such as seepage in the basement) must be disclosed to buyers, per state law. You can provide ease of mind to buyers through a home warranty, which covers the cost of repair or replacement for some major house systems.

3.    Establish the Price

One month before listing

Now’s the time to research your housing market and figure out your asking price. Establishing a simple baseline for the price can be simpler in a rising market: just add the cost of home improvements to the most recent purchase price and calculate the average rate of appreciation. When market conditions are uneven, foreclosures, short sales and bank-owned real estate can drag down the value of neighboring properties by as much as 30%, further complicating your estimate.

Here are the essential steps to establishing a fair market value for your house:

Check the sale price of recently sold properties. Hopefully you’ve been keeping an eye on home prices and listings online for a while. At this point, take your research a step further. Look at the prices of all the homes in your neighborhood by searching through local property records, which are open to the public.

Get an appraisal. The most in-depth and authoritative valuation of your home will be done by on-site by an appraiser who is familiar with your neighborhood. The appraisal will compare the condition of your house to others recently sold, adding value for unique features (like a fireplace) and deducting for features you don’t have, or for the worn condition of the house. An appraisal can cost around $500, but it can help you prioritize spending for repairs, replacements and upgrades. It will also validate your asking price to potential buyers and provide some leverage during negotiations.

Crunch the numbers to name your price. It’s worth it to gather as much data as possible before setting your asking price. Seeing the full range of estimates, sale prices, homes sold and market trends lets you see the picture. However, it’s also easy to get overwhelmed by all the numbers and get a little indecisive. Our blog on how to determine your asking price will walk you through the pricing process so can make sense of the data and arrive at the right number.

If you’re still having trouble, you’re in the right place to get all the help you need.

4.    Get Your Home Sell-Ready

One month to two weeks before listing

Prepping your home for buyers is one of the most important steps to selling a house. The goal is to make your home as attractive as possible while spending as little as possible. Unless your yard is an overgrown jungle, or your interior hasn’t been updated since the 70s, you can manage this by doing some house cleaning and staging to highlight your home’s best features.

Declutter and clean. Clearing out the debris of everyday life will help sellers see the actual house. You might want to rent a storage unit for out-of-season clothes, decorations, memorabilia, sporting equipment, furniture and other goods that come between a house hunter and the house itself. Once you clear things out, freshen up your suddenly-spacious house. Consider having the carpet and windows professionally cleaned and adding a fresh coat of paint if any rooms haven’t had one applied in quite some time.

Use some staging techniques. Staging is the art of creating a welcoming environment that helps buyers envision their life in your home. Chances are you can stage using accessories and furniture you already have, though you may want to add a rug, some throw pillows or artwork to brighten a room and call attention to its best features. Be sure to group accessories by color, shape or texture to avoid a choppy or disorganized look.

To make a room seem larger, you may want to reposition couches and chairs away from the walls into little clusters, making traffic lanes in each room obvious. This will create a more spacious, user-friendly feel at first glance. Home lighting is also important to the appeal of each room. HGTV recommends 100 watts for each 50 square feet to create a warm and welcoming setting.

Spruce up your yards. While a professional landscaping company can make a home’s exterior truly sparkle, you probably don’t need to make that kind of investment. Consider applying some fresh mulch to garden beds, doing some pruning and adding a few flats of annuals for color. In most cases, that’s enough to add some instant curb appeal without breaking the bank.

5.    List and Market Your Home

One week before listing

Once you’ve priced and prettied up your home, it’s time to start showing it off to potential buyers. Get ready by assembling all the materials you’ll need for your listing and marketing efforts. This can include: photos (professionally shot, if you can swing it), pricing documentation, room measurements, yard signs, flyers and handouts to give buyers at showings.

After you have everything you need, it’s time to stir up some great offers and get your home sold!

Put your home listing online. If you’re selling on your own, ForSaleByOwner.com will help you reach seven times more visitors than any other “by owner” site. To list your home through multiple listing services (MLSs), you’ll need the help of a licensed real estate agent. However you choose to sell your home, the team at ForSaleByOwner can help you post your listing to create maximum visibility.

Use print advertising – seriously! Don’t dismiss newspapers. Readership may be down across the country, but many people looking for a home will seek them out everywhere. You can usually run a nice-sized ad for very little money – plus you can target it exclusively to buyers in your area. You can also reach out to a few brokers about buying a mailing list to reach buyers via direct mail. This can be a simple, affordable and effective method for drawing interest from serious buyers. For more print marketing tips and plenty of how-to-articles, check out the ForSaleByOwner.com Seller’s Guide.

Arrange some open houses. As long as your home is in an accessible location, it’s a good idea to hold an open house so buyers can get up close and personal. Get the word out through your social networks like Facebook, Twitter and community groups. Advertise it on Craigslist. Post flyers at supermarkets. As some selling your home on your own, it’s okay to be present as buyers tour the home but try to keep your distance. Most buyers don’t like to feel watched or pressured. Also, be sure to create property description flyers and leave them where buyers can grab one on their way in.

However much help you need with any or all of these tasks, ForSaleByOwner.com has you covered.

6.    Negotiate and Accept an Offer

In real estate, negotiation happens through counteroffers. After a buyer submits an offer, you have the opportunity to accept, decline, or, as should happen in most cases, respond with your counteroffer. The best way to make sure you get what you need is to know what you need first. List out your must-haves, nice-to-haves, and not-that-important-to-haves. This will make it easier to know when to stand firm and when to compromise. Beyond that, be willing to make concessions on points that aren’t as important to you. The goal is to meet a buyer in the middle so both of you walk away happy.

Here’s an overview of what to focus on as you review an offer and how to make your counteroffer:

Consider more than the price. Your eyes will probably fixate on the dollar amount being offered first. This is typically the number that both buyer and seller are most concerned with. However, it’s not necessarily the most important. As a seller, the most important number is your net gain from the deal. Whether it’s through closing costs, taxes or any other expense, a buyer can make a more profitable offer than another buyer even if the price comes in lower. So, pay close attention to what a buyer is offering to pay for before you come to any conclusions.

Look outside the numbers. There are plenty of factors to consider beyond price. If you need to move out right away or need some time to find your new home, being able to set the closing date is a big benefit. This is something you can determine through the occupancy portion of a contract. You’ll also want to pay close attention to any contingencies included. A buyer’s offer could be contingent on them selling their current home, getting financing, being able to move in within a certain amount of time and getting an inspection. There more contingencies an offer has, the less dependable it is.

Aim for a win-win agreement. As you make counteroffers to get more of what matters to you, be sure to offer concessions to keep things fair. Does a buyer want the pool table in your basement? Throw it in as an inclusion. Creating a give-and-take dynamic makes both parties eager to cooperate and reach an agreement.

7.    Complete Paperwork and Close

6-8 weeks before closing

In most cases, accepting an offer and signing a purchase agreement is a huge relief. It signals the end of the prepping, marketing and negotiating phases, which, during the for sale by owner process, can be quite demanding. But as soon as all those tasks end, another list of to-dos begins. Here’s a typical list of to-dos that closely follow a purchase agreement:

  • Cooperate with the buyer’s home inspector
  • Cooperate with the buyer’s appraiser (as determined by the mortgage lender)
  • Provide buyer and buyer’s agent, lawyer, and other professionals with legal documents
  • Contact your lender to start mortgage payoff process
  • Make your own arrangements to move

Once those matters are handled, the next step is preparing for closing day. You’ll need to gather much of the necessary paperwork yourself if you’re selling on your own. Here’s a rundown of the forms you should expect to complete when you meet with the buyer at your closing:
•    Disclosures as required by your state and municipalities
•    Property records, building permits and receipts for the appraiser
•    Property records for the title insurer
•    Insurance documents
•    Mortgage, loan and lien documents
•    Related legal documents for financial and estate planning

Many of these documents can be purchased through the DIY Real Estate Forms and Guides page on ForSaleByOwner.com. You’ll also find definitions, forms explanations and general information about the process of selling a house included.

The steps to selling a house almost always take considerable time, attention and energy. The good news is that when you sell by owner, you’ll save thousands in commission costs and become even more prepared the next time you sell a home.

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Becoming Three: How to Create Household Harmony as Parents with a New Baby

Everything changes when the baby comes. The joy of becoming three is something no parent can truly prepare for. That doesn’t mean you shouldn’t prepare for when the baby arrives.

To achieve true household harmony you need to start getting ready. From making room for your brand-new baby and his or her things to finding calm during a tantrum now is the time to prepare.

Here’s what you can do to instill a little serenity as you transition to life as a family.

Create a Separate Nursery
Most new parents question whether they should share a room with the baby. Room sharing can be beneficial for the first few months, especially for feeding and resolving fussiness in the middle of the night, but there are downsides. Sharing a room with your baby can cause them to develop bad sleeping habits, especially if you’re waking up at every sound to settle or feed them.

Eventually you’re going to need a separate nursery so you and baby can get the sleep you need. Creating the perfect nursery takes work, but it’s well worth it days, weeks or months after the baby comes.

Make Extra Storage for Baby Gear
An added benefit of having a separate nursery is that there’s a place to store the baby gear. In addition to a crib you’ll have the stroller, furniture, car seat, clothes and toys and it all needs to go somewhere.

If you’re living in a small home or apartment, you’ll need to get creative with your storage solutions.

  • Use a wall mount for bicycles to store your stroller
  • Find furniture that folds and flips
  • Use wicker baskets and suitcases to store what you’re not using
  • Securely stack cabinets to the ceiling to make room

Taking Care of Baby (and You)
Between changing, feeding, playing and putting your child down it’s easy to forget about your needs. Make sure you’re taking care of yourself while caring for baby.

  • Shower – Getting in a shower might seem almost impossible as a new mom. You don’t want to leave your baby and he or she cries as soon as your foot hits the tile. Bring the bouncy seat into the bathroom, add a clear shower curtain if you don’t have a walk-in shower and get scrubbing. Your baby and your partner will thank you for it.
  • Media – In the few minutes that you’ll have alone you’ll want to be ready. The last thing you want is to lose your precious alone time to channel surfing. Find some of your favorite books, shows, or music to help relax you during the downtime. When the next tantrum, changing or feeding comes you’ll thank yourself for it.
  • Meditation – Meditation is a great way to reduce stress and anxiety as well as aid in sleep and decrease the risk of postpartum depression. If you’re not in the habit of meditating already, try it during pregnancy. All it takes is to sit in a comfortable chair and focus attention on your breath for a few minutes. You can even try doing it with your baby instead of trying to find time to do it alone.
  • Postnatal Yoga – If you’re suffering from headaches, back pain or fatigue then postnatal yoga may be able to help you relax and treat your aches and pains. Some yoga positions can even help babies get through colic, upset stomachs and bouts of crying.
  • Connect with Your Partner – Sleep deprivation, work and hectic schedules can lead new parents to feel disconnected. Take at least twenty or thirty minutes each day to connect with your loved one. Talk about things outside of work and the baby. Spend it cuddled up on the couch or before bed.
  • If you’re struggling to find serenity as three, it might be time to find a bigger home. Luckily, ForSaleByOwner has everything you need to sell your starter home and save. With tools, guides and services to help you price, prepare and market your home to millions of buyers, ForSaleByOwner makes it easy to sell and find household harmony. List your home for sale with ForSaleByOwner.

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Creative Ways to Save for Your Dream Home

You know what it looks like. You know the size of the master suite, which appliances fill the kitchen, and how the deck looks on a summer morning. It’s your dream home and it’s out there waiting for you.

Instead of tolerating that awkward closet, mornings sharing the sink with your partner and a bedroom too small for your newborn, start saving for the home of your dreams. With some dedication and planning you can have your dream home. Here’s how to make it happen.

1. Pay Off Your Debts
It can be hard to save for your dream home when your money’s going to interest on credit cards or monthly car payments. Clear out as much debt as you can before you start saving. If you have a partner and can get by with only one car, it might be worth boosting your down payment by selling your car.

2. Track it with an App
Personal finance apps are great for tracking where your money goes and showing you where you can cut the fat. Apps like Mint, Wally, and HomeBudget are free or low cost and can make saving simple.

3. Get Rid of Grey Charges
Grey charges are those things you see on your bank or credit card statement each month and say, “What was that for, again?” Those small subscriptions and renewals take small bites out of your finances each month sometimes adding up to hundreds of dollars over the year. That money could be going to your dream home. Go through your monthly fees and eliminate those grey charges.

4. Make Your Meals
How much do you spend every day on lunch? How about dinner? Are you eating out most nights of the week? You can cut down on your spending by packing your lunch and cooking dinner at home. Going to the grocery store once instead of multiple times a week will help you budget your food spending.

5. Put a Pin in It
Sure a spice container that automatically measures and dispenses your spices is clever, but is it better than finally having your own sink for your morning routine? Start a Pinterest board for the things you want and wait 30 days to buy them. If after a month you really can’t live without it then buy it. Most likely that spice carousel won’t seem like such a necessity.

6. Go Old School in a New Way
When was the last time you went to a library? For a few bucks you can borrow movies, books, music and more. You don’t have to give up your Spotify or Netflix subscriptions, but with libraries offering lots of digital content as well as hard copies you might find you don’t need them as much as you thought. Especially when it can save you a few hundred dollars a year.

7. Protect Yourself
Web browsers and apps like Apple Pay and Google Wallet remember your credit card information and make it easy to spend. Put a layer of security around your purchases by clearing your cookies and deleting your apps. When you have to take the time to pull out your card and enter your information you might rethink what you buy.

8. Find Discount Deals
Online retailers offer special deals to companies like Groupon or BeFrugal and they’re a great way to save without actually having to clip coupons.

9. Go “By Owner”
Home sellers save an average of $14,000 on their home sale using ForSaleByOwner. With interactive tools and guides, marketing exposure to millions of buyers and services that help you photograph and price your home, selling isn’t just easier than trying to share the shower, it’s easier than you think. List your home for sale on ForSaleByOwner.

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Newly Pregnant? Why You Should Start a 529 College Savings Plan

Being newly pregnant is an exciting time with a lot to do. It’s easy to overlook financial planning when you’re choosing a physician and planning your announcement, but those first few months are perfect for looking ahead. Before the showers, baby-proofing and endless doctor visits kick in, use these simple steps to start a 529 college savings account for your baby.

What is a 529 College Savings Plan?
A 529 college savings plan allows parents to save for tuition and other educational expenses. It uses a method that’s more like a 401(k) than a savings account. In most cases the plan is provided by a state or educational institution and managed by an investment firm. Contributions are invested in mutual funds in one of the following ways:

  1. An age-based option that adjusts your mix of assets so that they becomes less risky the closer your child is to college age
  2. A static option that maintains the same asset mix throughout the lifetime of the plan

Although contributions to a 529 college savings plan aren’t tax deductible, the plan offers numerous tax benefits. The most important benefit is that the income from your investment isn’t subject to federal tax or, in some cases, state tax.

Almost all 50 states offer at least one option for a 529 plan. Many states offer 529 plans to non-residents, allowing parents, grandparents or students to find a plan that’s best for them regardless of where they live. These plans can be used at most accredited colleges, graduate schools, trade schools and professional schools across all 50 states.

How Much You’ll Need to Save (and How to Do It)
According to the private nonprofit College Board, costs for tuition and fees during the 2015-2016 school year ranged between an average of $32,405 for a private institution and $9,410 for in-state tuition at public colleges. In 2030, tuition is expected to cost between $92,869 and $130,428 per year for a private university and between $41,228 and $57,609 for in-state public college.

That’s a lot of money, but you don’t have to save $30,000 a year for your child to go to college two decades from now. If you can save at least one-third of expected college costs you’ll significantly reduce debt for you and your child.

The website SavingForCollege.com has a helpful tool to calculate college costs. For example, if your child attends a college that currently costs $22,000 a year (roughly the average cost of tuition between private and public colleges both in and out of state) you would only have to contribute $186 a month to save one-third of your expected costs.

The key is treating this savings plan just like any other bill and contributing to it regularly.

The Real Cost of a 529 Savings Plan
529 college savings plans can be a great investment, but they aren’t free. Depending on the plan you purchase there are a number of fees you may have to pay, including broker commissions on some state-sold plans.

Make sure that whatever plan you choose, you’re aware of any hidden fees including wire transfer fees, administrative fees for out of state residents and application fees among others.

Which 529 Plan Should I Choose?
Finding a 529 plan that’s right for you means doing your research. The best place to start is with those named the best 529 plans. The investment research firm Morningstar gave Gold ratings to four plans including the T. Rowe Price College Savings Plan issued by Alaska, Maryland College Investment Plan, the Vanguard 529 College Savings Plan issued by Nevada and the Utah Educational Savings Plan.

And the best way to get a head start on a savings account for your baby is using the money you’ll save selling your home with ForSaleByOwner. Home sellers save an average of $14,000 in agent commissions with ForSaleByOwner. And with interactive tools and guides, 24/7 support, and our Home Selling Guarantee, selling your home isn’t just easier than saving for college; it’s easier than you think.

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How to Calculate Average Rate of Appreciation

Before you buy a home or sell a home, it’s always a smart idea to calculate the rate of appreciation first. Real estate appreciation may sound complicated, but it’s not. Think the rate of appreciation as how the value of a home increases with time.

For buyers, this is especially useful in determining what a property might be worth in the future. If you’re able to calculate that number, you’ll know whether or not you’re making a smart investment.

If you’re selling a home, knowing how to calculate the average rate of appreciation can give you a great baseline for determining your asking price.

What You Need to Calculate Your Real Estate Appreciation Rate

To calculate the rate of appreciation on your home, all you need is:

  • The price you purchased your home for
  • The current value of your home
  • How many years it has been since your purchase
  • The ability to calculate exponents on your calculator

1st Step

The first thing you’ll do is divide the current value of your home by the price you purchased your home for. Let’s say you bought your home for $200,000 and it’s now worth $250,000. Your equation will look like this:

Example: 250,000 ÷ 200,000 = 1.25

2nd Step

You’ll now raise the result you received in the first step by the 1/nth where n is the number of years it has been since your purchase. For example, if you purchased your home 10 years ago, then this would be your equation:

Example: 1.25 with the exponent 1/10 (or .10) = 1.0225651825635729

3rd Step

Now you’ll subtract 1 from the result you received in the second step.

Example: 1.0225651825635729 – 1 = 0.0225651825635729

4th Step

Now you’ll multiply the answer from the third step by 100 to find the average annual rate of appreciation.

Example: 0.0225651825635729 X 100 = 2.25 percent

That’s it!

Things to Keep in Mind

Following the steps above will give you a good idea on what your home’s real estate appreciation rate might be, but keep in mind that this is just an estimate. No one can predict the future state of the real estate market. However, calculating an estimate will give you a good idea and can help you set the right price if you’re looking to sell.

If you have any questions or need help, check out our packages for home sellers. We’re always happy to help.

 

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