Measuring Structure and room count
It is important to understand when it comes to measuring a property, there is no one size fits all method employed by appraisers, real estate agents, lender or government units. To varying degrees, guidelines define Gross Living Area (GLA).
Fannie Mae, HUD/FHA guidelines do not include basements/below grade, unfinished areas and garages in the Gross Living Area.
Appraisers measure the exterior of each floor to the inch.
Fannie Mae/Freddie Mac form appraisal report, used by conventional lenders as well as FHA/VA, describes the house by the total room count, the number of bedrooms, and the number of bathrooms it contains.
In general, a room count is a kitchen, bedroom, a living room, a dining room, a family room, an office, study or den. There are always restrictions as to what guidelines are used. Real estate agents need to measure structures and room counts correctly in order to raise the standard of professionalism and improve the consumer confidence.
Qualifying The Seller
When meeting the potential client for the first time, the agent shall spend time gathering information on the sellers needs and motivation. The seller should understand the process involved in selling, marketing, and setting a range for listing their property. The agent should gather data on the community so that the agent can target any potential buyers.
Asking questions about the property amenities allows the agent to point out the benefits of the property. When asking the seller questions, wait and listen to the seller’s answer to avoid any misunderstanding. Remember, buying and selling a house is probably the biggest investment in someone’s life. Providing what is expected in the sale of real estate allows the seller to have a positive experience and a successful transaction.
Pricing the Property
While it is the responsibility of the broker to advise and assist, it is the seller who must determine the listing price for the property. Because the average seller does not have the skills needed to determine a market-based listing price, brokers must be prepared to offer their knowledge and expertise.
Brokers can help sellers determine a listing price for the property by using a comparative market analysis (CMA). A CMA analyzes properties similar to the subject property in size, location, and amenities. It is distinctly different from an appraisal report offered by a licensed appraiser that is based only on an analysis of properties that have actually sold.
The CMA is based on :
Sold prices represent what buyers have been willing to pay for similar properties in the neighborhood. Very often, the expired listing prices are those prices that buyers have not been willing to pay for a property similar to the subject property.
Market Value
Market value is the most probable price a property would bring in an arms-length transaction under normal conditions on the open market.
Current asking prices of current, similar properties on the market indicate the trend: asking prices lower than the “solds” indicate a slow or declining market. An optimistic market is indicated when the asking prices are higher than the “solds.”
Although a CMA is not viewed as a formal appraisal, the broker uses many of the appraiser’s methods and techniques in arriving at a reasonable value range.
The figure sought in both CMAs and appraisals is the property’s market value. Market value is the most probable price a property would bring in an arms-length transaction under normal conditions on the open market. A CMA estimates market value as likely to fall within a range of values (e.g., $335,000 to $340,000).
While it is the property owner’s privilege to set whatever listing price he chooses, a broker should consider rejecting any listing in which the price is substantially exaggerated or severely out of line with the indications of the CMA or appraisal. These tools provide the best indications of what a buyer will likely pay for the property. An unrealistic listing price will make it difficult for the broker to properly market the seller’s property within the agreed-upon listing period. FurtherÂmore, a buyer may have difficulty obtaining financing because the property did not appraise for the sale price.
Information Needed for Listing Agreements
Once the broker and the owner agree on a listing price, the broker must obtain specific, detailed information about the property. Obtaining as many facts as possible ensures that most contingencies can be anticipated. This is particularly important when the listing will be shared with other licensees through an MLS, and the other licensees must rely on the information taken by the listing broker.
