The Boston Real Estate Transaction
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Offer basics
Your buyer agent will advise you and draft the offer with you. Here is an example of the offer to purchase real estate and addendum.
There is a binder (initial deposit), usually a $1,000 check. We will submit that check to the listing brokerage (or if done by fax, a copy of the check) with the offer, which will be placed in an escrow account upon agreement and written execution by both parties.
The offer is really only the first part of a three part process (offer, purchase and sale contract or P&S, and closing). It lays out the very basic terms of the agreement and then gives you some time to do your due diligence.
The offer normally covers price, percentage of the price you will be financing, time frame, and contingencies.
Normally, you will want to have your offer subject to the following contingencies to be satisfied by the time you execute the P&S in a week to 10 days. You can get your deposit back and get out of the transaction if these contingencies are not satisfied:
- Mortgage contingency. This protects you from having to buy the property if your financing falls through. It states the time frame and terms you are allowed in order to get approved. Your buyer agent can advise you with this.
- A satisfactory home inspection. Your buyer agent will have a list of experienced, well regarded home inspectors. The fee is generally about $350-$500. The only agent that can make such recommendations is your buyer agent.
- Inspection and approval of all condominium documents and financials. A Boston real estate attorney will know what problems to look for in these documents. The only real estate agent that can make recommendations for an attorney is your buyer agent. Additionally, you will want to speak with the Trustee and or management company for the association in order to find out if there are any current building problems, upcoming projects, or special assessmants.
- There may be other contingencies depending upon your circumstances.
- Additionally, you will be asked to submit
- The pre approval letter from your bank.
- A mandatory agency disclosure form stating whether your broker is working for you as a buyer's or seller's broker. It is very important that your agent work with you as a buyer agent. You should be signing this disclosure at your first meeting with your agent.
- A signed lead notification form (most properties in Boston are NOT deleaded). This discloses whether the seller has any knowledge of the presence of lead paint in the property. While not required with the offer, it will be required prior to P&S.
Negotiating the offer
Our objective is obviously to get the property for the lowest possible price. The average spread between asking and selling prices in the last quarter in Boston proper has been about 3-6%, depending on neighborhood, etc (see market report).
Obviously some properties go for less, and some still sell above asking price. Right now, buyers seem to hold an edge, but that depends upon the property and the seller's motivation. if the property has been on the market for a couple of months, doesn't show well, isn't located well, isn't priced appropriately, it is a different case than if the property has just entered the market, shows great, is in a great location, is priced properly, and other people are interested in it.
My job is to use all my tools and skills to provide as strong a negotiating position as possible.
I will prepare an analysis of the property value range. I have years of experience to apply to this process. We want to apply appropriate downward pressure and to make a strong case for our offering price. Will we have competition in getting the property, or will the seller be flexible? Some sellers will flex even if it is a good deal, and others won't, even if it is overpriced.
Time frame
The general time frame for the purchase process is usually about six weeks from acceptance to closing. I've done it in as little as two weeks for a cash transaction, and as little as three three to four weeks for a financed transaction. But generally, figure on about 6 weeks for your bank to get everything done. Here's how it works:
Week 1: Offer accepted and signed.
Week 2 (usually 10-14 days in): Purchase and sale contract executed.
Week 6: Closing.
Going to P&S
The contract to buy/sell real estate in Boston Massachusetts is known as a "Purchase and Sale" contract, or "P&S". This is the contract that contains all the provisions relating to your purchase and generally occurs about 10 days after the offer is accepted. During this time, you will do most of your "due diligence": Have your home inspection, get your loan application rolling, and your broker will obtain all the condo docs and financials. Also, you broker will get contact information for building management or trustees n order to find out if there are any current building problems, upcoming projects, or special assessmants. I have great lenders, attorneys, and inspectors whom I've teamed up with in the past, and that my clients have been very happy with.
You will want to have a real estate attorney that is experienced at Boston residential sales working for you.
Do NOT do it yourself.
Really. Don't.
Your attorney will examine all the documents, and work with the seller's attorney. He/she will know what to be concerned about and what won't be a problem. She/he will be able to (hopefully) resolve all the issues that arise in concert with me. Be aware that there will be an additional deposit at P&S ranging from 5% to 20% depending on the provisions of your offer.
You will also want to make sure that your mortgage application is rolling by now. I have several lenders that I have worked with many times and have high confidence in.
Getting ready for closing
The most important part of the post P&S time period is getting your mortgage ready to be funded. We should be staying in close touch with your lender to make sure that if there are any potential problems, they are taken care of immediately. In the current mortgage climate, you and your agent need to be proactive in making sure that your lender is staying on top of the process. Don’t be surprised by potential pitfalls. I can't tell you how many times I've had to react quickly to solve pre-closing problems. Be ready with any documentation your lender may ask for.
The importance of the mortgage contingency date is difficult to overstate. This is the date after which you cannot withdraw from the transaction due to your inability to obtain a mortgage- at least not without losing your deposits.
If, after this date, your lender refuses to provide you with funding for your purchase, you are in severe danger of losing your entire deposit. The best way to protect yourself is by getting a solid letter of commitment from the lender prior to this date. I will help to resolve any issues that come up. You wouldn't believe some of the issues that come up and I'll be there to help. Experience matters.
You should make arrangements to procure homeowners insurance. I can provide you with information regarding the type and extent of insurance you need, as well as preferred vendors for that insurance
Schedule a final walk-thru with your buyer agent.
Your attorney will arrange final details with you regarding the closing
Closing costs
One important part of your financial planning should be getting a handle on how much you will have to bring to closing. You already know that you're going to have to bring the remainder of your down payment (if any) after the deposits. But there are certain fees and escrows associated with the mortgage and the deed.
Here's a basic rundown (this is general info, yours may vary):
ATTORNEY: $600-$1000
BANK ATTORNEY: $500-$850 (Many times, your attorney can double as the bank attorney).
APPRAISAL FEE: $350-$450
FLOOD CERTIFICTION: $20-$35
TAX SERVICE FEE: $20-$90
LENDER'S FEE: $500-$600+- (Depends on your deal)
FLOOD LIFE OF LOAN: $20-$30 (Admittedly, I have no idea what this is)
TITLE INSURANCE: $1,500-$2,500
REC'DING FEE (DEED): $125
REC'DING FEE (MORT): $175
REC'DING FEE (RELEASE): $750 (If you have a prior mortgage being paid off)
COURIER, WIRE CHARGES:$50-100
HOMESTEAD RECORDING: $75 (Not required, but a good idea)
MUNIC. LIEN CERT: $65+-
Additionally (sigh....), you may be required to escrow 2-3 months of city taxes. If you are moving into a new condo association, you may have to pony up 2 months of condo fees to go to the reserve fund. There may be some prepaid interest if you are closing in the middle of the month. And if you are paying points, you may be bringing that money to closing.
You can see that if you're doing a cash transaction, the closing costs are much less.
This is one of the reasons you shop around for a mortgage. It's not just about the rate. I have several lenders I've worked with and have high confidence in, so please get in touch so we can get you into a new home that you love and can afford.
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Testimonials
If you are considering purchasing property in Boston, Joe Wolvek would be my first recommendation. I owned income property in rural portions of Massachusetts for 20+ years when I came to Joe Wolvek looking to exchange my rural properties with condos in Boston. At first it seemed like an impossible task to find the properties in Boston that would be good values however in working with Joe, I benefited from his in-depth knowledge of each Boston neighborhood. He took the time to educate me on market and neighborhood trends and understood my desire for a sound investment. In the end, I could not be happier with the Boston properties I purchased and owe Joe many thanks for all he did to help me make well informed decisions. I would strongly recommend Joe to anyone considering purchasing property in Boston.”
Top qualities: Personable, Expert, High Integrity
John Gargas
Hired Joe as a Real Estate Agent in 2006, and hired Joe more than once
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