Category: f17-econ491

Lesson 3: Residential Real Estate Valuation

Review:

  • Mortgage 101
  • Attendance

Presentation:

  • Comparable Sales (aka “comps”)
    • Find similar properties recently sold (typically 3)
      • location, size, construction style/materials, etc
    • Calculate price per square foot
    • Apply price per square foot to your property
    • Adjust for key valuation drivers
      • Identify key value differences (e.g., 2-car garage, solar panels, swimming pool, etc), if any
      • Estimate valuation difference and +/- value
  • Determining Property Values (YouTube video)
  • Estimate value of a property listed for sale
    • run through a few examples
    • Zillow, County Assessor, MLS

Assignment:

  • Identify 3+ comparable sales (sold recently) for your property
  • Estimate property valuation based on your 3 comps
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Lesson 2: Mortgage 101

Review:

  • How to Buy Real Estate
  • Attendance
  • Properties identified

Presentation:

  • Historical Mortgage Rates
  • Mortgage 101 – 5-part video series at realtor.com
    • Basics
    • Rates
    • Credit Rating
    • Down Payment
    • Closing Process
  • Mortgage Types
    • Fixed vs ARM
    • 10, 15, 20, 30 – which amortization?
    • 1, 3, 5, 7, 10 – which initial time period (before rate adjustment)?

Assignment:

  • Calculate monthly mortgage payments for your selected Pueblo County property
  • What do you think your selected property is worth?
  • Is the asking price fair?
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Lesson 1: How to Buy Real Estate

Review:

  • Syllabus
  • Why Real Estate
  • Attendance

Presentation:

  • Buying a Home
    • Save $$ for a down payment
      • Need 20% unless you qualify for special programs (e.g. VA or first time buyer)
      • FHA loans can allow you to purchase a home with as little as 3.5% down
      • Build credit…but don’t get too hung up on credit scores
    • Learn about mortgage loan options
      • Fixed rate
      • ARM
      • Amortization schedule
      • PMI = private mortgage insurance
    • Get Pre-Approved for a loan
      • Mortgage brokers
      • Banks
      • Credit Unions
    • Find an agent
      • Buyer vs Seller agency
      • Conflicts of interest
      • FSBO
    • Search for homes in your budget
      • Property Types
        • Single Family (SF) home
        • Condo, Townhouse – don’t forget HOA fees
        • Duplex, Triplex, Fourplex
      • Search
        • MLS = multiple listing service
        • Zillow, Trulia
        • Realtor.com
        • Local agencies
    • Make an offer
      • Begin Negotiation
      • Beware emotional attachment – be prepared to walk away
    • Enter into a contract to purchase real estate (Under Contract)
      • Disclosures
      • Terms
      • Personal Property
      • Pay Earnest Money
    • Conduct due diligence
      • Inspection
      • Appraisal
    • Secure a home loan, lock in mortgage terms
    • Arrange property hazard insurance coverage
    • Confirm final closing costs
      • Title Insurance
      • Property Taxes
      • Loan origination fees
      • Other fees or negotiated terms
    • Prepare to wire or obtain certified funds for the purchase and payment of closing costs
      • Wire funds to Escrow (Title Company)
    • Schedule the Closing (usually takes place at a Title Company)
    • Close the deal (aka sign your life away) and take possession of the property
    • Start making mortgage payments and budgeting for maintenance expenses
  • How to calculate costs
    • Down payment – 20%
      • If under 20% you will have to pay PMI or take out a 2nd mortgage
    • Principal and Interest payments – Loan Calculator
    • Property Taxes – Pueblo County Records
    • Hazard Insurance
      • Obtain quotes from insurers
      • For a rough ballpark estimate use 0.35% of purchase price (price * 0.0035)

Assignment:

  • Search for and identify one (1) property currently listed For Sale in Pueblo County
    • The property should be one you might actually consider buying as an investment or residence
    • Note asking price and use for for calculations
    • Calculate down payment
    • Calculate monthly principal and interest payments
    • Look up property taxes
    • Estimate hazard insurance
    • Estimate total monthly mortgage payment
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Intro to Real Estate

Presentation:

Why Real Estate?

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