Buying a Home or Condo in Boston

"Joe not only helped us find the right home, but he was a trusted adviser and friend along the entire process through closing. Joe was a great analytical resource when it came to valuation and experienced in the nuances of the Boston market trends. He was able to help manage us through the negotiating and closing process including being a patient sounding board on a laundry list of questions. We were able to see dozens of places and Joe helped manage our expectations, scrutinize properties, and plan for the remaining process.

Joe helped us find the perfect home that satisfied our unique (and tough to satisfy) preferences."

Chris H, Somerville

Buyer's Transaction guide

 

 

Boston real estate transaction basics

 

I. MORTGAGE PRE-APPROVAL/PROOF OF FUNDS

Unless you are paying cash, it is vital to get pre-approved at the beginning of the process in order to understand how much home you can actually afford. You do not want to be surprised later on in the process.

• If you are financing your purchase, all sellers will want to see a pre-approval before he or she signs your offer. This market moves quickly and you need to be prepared to submit the pre-approval with your offer.
• If you are purchasing with cash (not financing), you will need to provide "proof of funds" as credentials, so that the seller can see that you are capable of performing. This is often in the form of a bank statement (you can black out the account number or other sensitive info).
• I can provide you with a short list of trusted lenders with competitive rates who are very experienced in this market and are appropriate for your needs.

 

 

II. WORKING TOGETHER

Over 30+ years, I have successfully helped hundreds of buyers attain their real estate goals.

• As your buyer agent, I have several fiduciary obligations to you and only you, among which are loyalty, disclosure, confidentiality, and reasonable care. If you go directly to the listing agent, they owe those duties to the seller, not you.
  Why work with me as your Buyer Representative?
• At our first meeting, we will discuss how we will work together, what your wants and needs are, and we will assemble an action plan for efficiently choosing and viewing properties. We will discuss your property and timing needs. 
•  Locate appropriate properties through MLS and through off-market brokerage connections.
•  Work in the your best interest and preserve your confidential information.
•  Maintain regular communication throughout the term of the agreement.
•  Schedule and attend scheduled showings of properties.
•  Provide professional advice and guidance gained through 30+ years of expertise.
•  Refer you to professionals such as lenders, attorneys, home inspectors, etc.
•  Assist you in determining the market value of properties of interest. as well as any potential issues as we winnow down the properties you are interested in as we prepare to make an offer. I will work with you on the proper terms for an offer, and how we can best succeed in procuring the property of your choice for you at the best possible price and terms. Prior to making an offer, I will provide an analysis to determine market value range. 
•  Advise you on potential problems of particular properties..
• Negotiate price, terms and conditions of the offer, home inspection, and other issues, if
  applicable.
• Solving potential problems durig the transaction and navigating you to a successful closing.
   

 

 

• The Commonwealth of MA requires by law that I present you with the Massachusetts Mandatory Licensee Relationship Disclosure. At our first meeting (either physical or electronic) where we discuss particular properties, This is NOT A CONTRACT. It does not obligate you to me. It's purpose is to make you aware of the fiduciary relationship I have with you.
• We are now legally required to have you sign a contract prior to showing you any properties. Here is the Buyer Representation Contract. Here is information about the contract. In the beginning, we can "date" for a short period of time to see if the relationship is suitable, but we legally need to have a contract. 

 

 

III. ELEMENTS OF THE OFFER TO PURCHASE REAL ESTATE

In Massachusetts, the offer to purchase real estate is really only the first part of a three part process: 

• The offer to purchase lays out the very basic terms of the agreement.

  • Price and deposits.
  • Timeline
  • Contingencies such as financing, home inspection, etc.
• Purchase and Sale contract, also known as the P&S, before which we will do all your due diligence.
• Closing, or passing of title.

As your buyer agent, I will advise you and draft the offer with you. I have had decades of experience writing it and presenting it, in addition to constructing the best strategy to get it accepted. If you are unrepresented, the seller agent is prohibited by law from giving you any advice whatsoever. 

• You are at a major disadvantage if you do not have a buyer agent. The seller is represented by an experienced Boston real estate agent and you should be, too.

Here is an example of the offer to purchase real estate and addendum from the Greater Boston Real Estate Board.

INITIAL DEPOSIT (BINDER)

There is a binder (initial deposit), usually a check for between $1,000 and $5,000 for more expensive properties.This will be given to the listing agent when your offer is accepted and will be placed in an escrow account upon agreement and written execution by both parties.

OFFERING PRICE

Our objective is obviously to get the property for the lowest possible price and best possible terms. We've entered a period of low inventory (see market report), which can be a challenging situation for buyers, but that depends upon the property, the competition (if any), the seller's motivation, and especially the time on market. 

My job is to use all my tools and skills to provide as strong a negotiating position as possible.

I will assist you in determining 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.

Contingencies, or the lack thereof, are often influential in what price the seller will accept. For instance, a cash transaction might be more favorable to the seller. Or a lack of a home inspection contingency (which I do not encourage). See below for a discussion of these. 

THE PURCHASING TIMELINE

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, but generally, figure on about 6 weeks for your lender to get everything done. If it is a cash transaction, the timeline could be a week or two. Here's how it works:

• Week 1: Offer accepted and signed.
• Week 2-3: (usually 10-14 days in): Purchase and sale contract executed.
• Week 5: Mortgage committment due.
• Week 6: Closing.

OFFER CONTINGENCIES

Offer 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 about10 days. You can get your deposit back and get out of the transaction if these contingencies are not satisfied:

• A satisfactory home inspection. I have a list of experienced, well regarded home inspectors.The listing agent is prohibited from making recommendations.The fee is generally about $500 depending upon the size of the property. In case there are inspection problems, we generally put a dollar amount of repairs as a cap in the offer. That enables us to terminate the transaction or to re-negotiate. Recently, many buyers in competitive bid situations have waived their right to an inspection in order to make their offer more attractive. I cannot in good faith recommend this. Sometimes, just putting in a higher cap amount will suffice in these situations, but it's hard to know.
• Inspection and approval of all condominium documents and financials (if a condo...). A local real estate attorney will know what problems to look for in these documents ("condo docs"). As your buyer agent, I can make recommendations for an attorney. Once again, the seller agent is prohibited from doing so.
• Septic and well water inspections for properties who are not on municipal systems.
• Additionally, you or I as your buyer-agent will want to make every effort 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. The financials should include line items for all common area costs such as water and sewer, master insurance, contributions to reserve, etc.
• Mortgage contingency (if the purchase will be financed). This contingency is actually usually set to expire about three weeks after you execute the purchase and sale contract . 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.
• There may be other contingencies depending upon your circumstances.

ADDITIONAL OFFER DOCUMENTATION

• The pre approval letter from your bank if you are financing your purchase.
• Proof of funds. This can take the form of a bank statement (account numbers and other sensitive info blacked out). Sometimes, a letter from a bank officer is acceptable.
• A mandatory agency disclosure form form stating whether your broker is working for you as a buyer's or seller's broker. The only time an agent will be a seller's broker is if they are the listing agent on a particular property and you do not have your own buyer agent. The seller is the client of the listing agent and that agent owes all of their fiduciary duties and loyalties to the seller.  It is very important that you have buyer agent representation. You should be signing this disclosure at your first meeting with your agent.
• A signed lead notification form (most properties in Boston are NOT de-leaded) if the property was constructed before 1978. This includes gut-renovated structures. 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. Tht having been said, the lead status is something you definitely want to know about prior to making an offer.

 

 

Get in touch! Boston R.E. market report Buyer's Transaction ProcessEndorsements

 

 

IV. OFFER TO PURCHASE ACCEPTED!

• Hire a real estate attorney that is experienced at Boston residential sales working for you. We do not use escrow or title companies here.
• Do NOT act as your own attorney. Do NOT hire your cousin Steve who is criminal attorney. Do NOT hire Uncle Dave, who is a New York attorney. They do things differently there.
• I have recommendations for known and trusted real estate attorneys that I have worked with many times. This attorney will negotiate the terms of the P&S contract with the seller’s attorney, and along with me, will work to resolve any inspection or other issues. In addition, If you are purchasing a condo, your attorney will review the condominium documents and financials to make sure that the association is on sound legal and financial footing.
• Hire a home inspector. It is vital to hire a licensed home inspector to go through your new home in order to find any serious defects. I have a short list of experienced, well-regarded home inspectors who are thorough and who know how to explain any problems.
• Get your loan application rolling. You will need to have a fully executed purchase and sale agreement in order to make full application, but use this time to start submitting your paperwork.

 

 

V. THE PURCHASE AND SALE CONTRACT

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" in order to satisfy the contingencies in your offer:

• Have your home inspection as well as any other inspections that need to be done. The home inspection usually costs between $500-$1,000 depending on the type and size of property.
• Get your loan application rolling
• If a condo, I and/or your attorney will obtain all the condo docs and financials and ascertain the financial condition of the HOA association. I will get contact information for building management or trustees in order to find out if there are any current building problems, upcoming projects, or special assessments.
• The appraisal is usually done during this period of time if your transaction is being financed through a mortgage.

Your attorney will:

• Examine all the association documents and financials (if a condo), and work with the seller's attorney. They will know what to be concerned about and what won't be a problem. They will be able to (hopefully) resolve all the issues that arise in concert with me.
• Negotiate the terms of the P&S with the seller's attorney. Along with me (and this is where all the fun comes in) they will work to solve any issues that arise due to home inspection, condo docs, or other matters. They will review it with you and address any points of concern. If there are 
• Once acceptable, you will sign it and provide an additional deposit to be placed into escrow. This deposit is usually 5% of the purchase price (minus the initial deposit you made with the offer). Provide the signed P&S to your lender immediately.
• Run a title search to make sure that there are no encumbrances, clouds, or liens on the title to the property. Co-ordinate with the lender.
• Co-ordinate with the lender.
• Act as the settlement agent and coordinate the closing with buyer, seller, and lender. This includes preparing the settlement statement (HUD) and detailing all monies.
• Coordinating the dispersal of all funds at the closing.

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.

 

 

VI. FUNDING YOUR MORTGAGE

• The most important part of the post P&S period of time is getting your mortgage ready to be funded. You should be staying in close touch with your lender in order to provide any requested documentation in a timely manner.
• We need to get a clean mortgage commitment in a timely manner. That means by the date stipulated in your offer. I will work with your attorney and lender on staying on top of this. Generally, the required date is three weeks after P&S, but not always.
• Also: Make arrangements to procure homeowners insurance. I can assist you with information regarding the type and extent of insurance you need.

 

 

VI. FINAL REAL ESTATE PURCHASE DETAILS

• Your attorney will generally also work as the closing attorney. He or she will co-ordinate the scheduling as well as the necessary documents and monies.
• You and I will walk through the property prior to closing in order to determine that the home has been left in the condition that was stipulated in the Purchase and Sale contract. If not, the issue will be handled at the closing table with your attorney.

 

 

VI. CLOSE ON YOUR NEW HOME!

 

 

TYPICAL CLOSING COSTS.

For a more detailed discussion of closing costs, click here

• Registry of deeds recording fees: $475+-
• Title exam: $250+-
• Rundown Fee:$50+-
• Title insurance (owner's equity portion optional  optional): $3,650-$4,000+- Based upon sale price of $1m
• Obtain MLC: $25-$50+-
• Obtain plot plan (single family): $175+-
• *Mortgage origination fee: $1,200+-
• *Appraisals and reviews: $400-$1500+-
• *Credit report: $30-$100+-
• *Flood certificate: $5.00+-
• *2 month properrty tax impound: $1,800+-
• *Prepaid interest: Varies upon closing date
• Pro-rata balance of quarterly taxes: varies
• Pro-rata balance of monthly condo fee: Varies
• Buyer attorney fee: $600-$1,500+-
• Decl. of homestead prep by buyer attorney: $65-$150+-
• Wire/courier: $50-$150+-*

*Starred line items only apply if your purchase is being financed