Real Life Example

A brother and sister were looking for a house to buy together in Honolulu a few years ago.

Circumstances: They wanted a place with a room for their mother as well as for the brother and his wife to live.

The house: They found a good candidate near the university, tucked away with a few other small homes in an area surrounded by mid-rise apartment buildings.

The dilemma: Their agent (and, later, the bank’s appraiser) had a difficult time finding comparable properties. Even though the housing market in Hawaii was jumping, none of the other small, older homes in the neighborhood had been sold recently, and no others were being offered for sale. However, the siblings had been house-hunting for several weeks and believed the asking price was fair.

Solution: The bank’s appraiser had to search for sales in other neighborhoods of about the same age and to make a number of allowances in order to place a value on the house. As it happened, the final appraised value was quite satisfactory to the bank.

Critical Elements.

The elements most critical to an accurate comparison are:

Area or location. Although the ideal comps will be right in the same neighborhood as the house you’re interested in, it may be necessary to go farther afield, to a generally similar neighborhood, with homes that were built at about the same time. The more familiar you are with the characteristics that distinguish one neighborhood from another – and the more familiar with the state of the housing market in these areas – the better you’ll be able to judge whether the comрs are truly fair comparisons.

Amenities. Does your target house have a pool? A great view? An extra, or “bonus” room, such as an in-law or guest suite over the garage?

Size. The number of rooms, the total square footage of the house, the size of the garage, and the size of the lot all make a difference in finding good comps.

Age of the house. Generally appraisers like to compare homes of similar age, since they will usually have similar amenities. (Of course, a house built in 1950 and completely remodeled in 1999 is not strictly comparable to a house built in 1950 but never геmоdеlеd).

Sometimes unknown or unexpected circumstances can skew prices:

If a home sale was the result of a divorce or death, for example, the seller(s) might have accepted a lower price just to get the deal over with. If the sale price of a comp looks unusually low (or high), see if you or your agent can find out more about it.

Factors well beyond your control – actions by the Federal Reserve Board, national and international events (elections, wars, oil prices) – can cause housing prices to rise or fall significantly in a matter of weeks.

What’s worth to you?

If you’re working with an agent, you may find yourself experiencing sоmе pressure: “Yes, it’s priced a little higher than you were looking for, but it’s got [pick one: an extra bedroom, a really great backyard, a family room, a pool].”

Amenities such as new wall-to-wall carpet or a swimming pool might be a real selling point for some buyers. If you’re not one of them, you need to make this clear to your agent.

For one thing, you’ll establish that you’re serious about your budget. It will also help the agent negotiate for you later. If the seller can find another buyer who appreciates those features, more power to him.

Also, be sure to compare the listing description to what you see. Is everything there that was promised? Question anything that’s not clear. Sometimes a listing will say something like, “square footage doesn’t match tax records.” What does that mean, exactly? Is there an addition that was made without permits, for example? That might be okay for now, but how will that affect the re-sale value of the home?

Ex. 1 Give Russian equivalents:

to place value on smth; to be relative to other homes; to create one’s own estimate; to be worth smth; recent sales of homes; a sales price from a year ago; what is going on right now; lots of comps to choose from; apartment buildings; though the housing market was jumping; critical elements; a generally similar neighborhood; at the same time; to be able to judge; your target house; unexpected circumstances can skew prices; to cause housing prices to rise or fall significantly; an extra bedroom; to be serious about smth; to affect the re-sale value of the home.

Ex.2 Give English equivalents:

cправедливая (разумная) цена; дать свою собственную оценку; дома, подобные тем, что вы ищете; прошлогодняя цена продажи (домов); ситуация в данный момент; дом с некоторыми особенностями конструкции; владельцы небольших домов; выставлять на продажу; запрашиваемая цена; место расположения; состояние рынка жилья; великолепный вид (из окна); иметь значение; полностью реконструированный дом; непредвиденные обстоятельства; испытывать некоторое давление со стороны агента; без разрешения.

Ex.3 Answer the following questions:

1.What two important factors should be considered in valuing a home?

2.What can help you to create your own estimate of a home?

3.Where can you get information about recent sales of homes that are comparable to what you are looking for?

4.Why won’t some lenders accept comps older than three months?

5.In what way does market activity determine finding accurate comps?

6.Dwell on the real life example given in the text.

7.What are the most critical elements of an accurate comparison?

8.What can sometimes skew prices of homes?

9.What things should you keep in mind working with an agent?