Area Real Estate News & Market Trends

You’ll find my blog to be a wealth of information, covering everything from local market statistics and home values to community happenings. That’s because we care about the community and want to help you find your place in it. Please reach out if you have any questions at all. We’d love to talk with you!

I am always available to discuss an upcoming purchase or sale with you and can be reached at 978-360-0422 -Kevin Vitali

Feb. 6, 2021

What Are Closing Costs?

what are closing costs- surprise!!

Surprises are for birthdays... not real estate closings!!

If you have never bought or sold a house before you may find...

.... as a home buyer you have to pay mortgage closing costs on top of the down payment you already scraped together....

....or you are selling your home and you find that you have closing cost after your real estate commission eating into your net proceeds.

Either way closing costs can be a tough pill to swallow. Calculating closing costs upfront will allow you to budget and be prepared so there are no last-minute surprises, leaving you scrambling around to find more money.

We will be discussing closing costs in Massachusetts.  Realize closing costs can vary slightly from state to state.  Consult with your mortgage officer and agent early and ask specifically what your closing costs will be when you close on a home.

Closing Costs Explained

What are closing costs? Both homebuyers and sellers will incur closing costs during the purchase or sale of a home.

Simply, closing costs are fees for services and expenses that are incurred during the purchase or sale of your home.  Nothing is free! 

Who Pays Closing Costs?

Both buyer and seller have a distinct set of closing costs for the services and expenses of closing on the home.  Typically, in Massachusetts, it is customary for each party to pay their own respective fees.

In some states like New Hampshire, some line-item fees will be split among buyer and seller like tax stamps.

On occasion, a homebuyer may include in their offer to purchase that the sellers pay all or a certain amount of money towards closing costs.  This is a way for a buyer to roll closing costs into their mortgage. But before you can automatically think you can do this, talk to your REALTOR, there are pros and cons of asking a seller to pay their closing costs.

How Much Are Closing Costs?

Closing costs for home buyers are a little more complicated than for home sellers.  And, can widely vary depending on the loan program that they choose.  But closing costs for buyers can run between 2-4% of the home purchase and are on top of any downpayment money.

So for a $400,000 purchase closing costs would typically run from $8000 to $16,0000.

For home sellers closing costs can run between 4% to 9% of the purchase price. On a $400,000 purchase that would have a seller paying anywhere from $2,000 to $6,000 in closing costs on top of their real estate commission. 

What are closing costs? Be prepared for closing

What Are The Closing Costs For Home Buyers?

The list of closing costs for home buyers is many and can vary slightly.  Here I will cover the standard ones that you may see.

Origination Fee

A fee charged by the lender up front and covers all or some of what they get paid to provide the loan. 

Appraisal Fee

Covers the cost of an appraisal of the home you are about to purchase to verify fair market value to a lender.

CPL Fee

The Closing Protection Letter is an indemnification between the Titel Insurance company and the Lender.

Credit Reports

Charges for any credit reports pulled during the mortgage process

Courier Fees

Courier fees cover the cost of sending out your completed loan documents to various parties.

Wire Transfer Fees

Wire transfer fees cover the costs of a lender wiring money to a settlement agent.

Flood Certification

The flood cert is obtained by the lender to see if flood insurance is necessary on the property.

MERS Fees

The MERS Fee is to register your loan with the Mortgage Electronic Registration Service that tracks loans through a database.

Processing Fee

Processing fees cover the cost of processing your documentation during the lending process.

Underwriting Fee

The underwriting fee covers the cost of underwriting evaluating your loan application to see if it fits the guidelines for a particular loan program.

Tax Service Fee

Your tax service fee goes to an agency that tracks your property tax for the mortgage lender.

Prorated Adjustments

Prorated adjustments are prepaid by the seller for property tax, condo fees and etc... You are reimbursing the seller from taking possession forward.

Settlement Fee

Settlement fees are paid to the settlement agent for handling the closing.

Owner's Title Insurance

A title insurance policy that covers title defects on the home you are purchasing for the homeowner.

Lender's Title Insurance

The policy covers the lender in the event there is a title defect.

Pre-paids

Pre-paids are monies paid in advance.  You will pay one year of home insurance in advance as well as daily interest from the day you close to the end of the month.  Unlike everything else, mortgage payments are paying for the prior month.  Your pre-paid interest is funding the month you close.

Escrows

Escrow monies are held in an account.  You are pre-funding several months of city taxes and insurance for the next payment.  The bank always wants you a few months ahead.

Closing Costs For Home Sellers

Real Estate Commission

The agreed-to percentage you agreed to pay your real estate agent to sell your home.

Recording Fees

Recording fees are charged for the cost of recording the various documents at the registry of deeds.  It can include the deed, mortgage, 6d certificates, etc...

MLC

A municipal lien certificate states that as of the date of the closing you owe no money to the town.

Tax Stamps

Tax stamps are a real estate transfer tax of .456% in Massachusetts.  There are also several cities that levy a tax stamp in Massachusetts as well.

Discharge Fee

A discharge fee is paid to your settlement agent to track the discharge of your mortgage.

Courier Fees

Courier fees are to ensure your balance on your mortgage gets to your mortgage company.

Whether you are a home seller or home buyer you want to make sure you have an understanding of closing costs early on in the process so you don't get surprised just prior to closing. Avoid any last-minute surprises just prior to closing by knowing what your closing costs will be.

Your real estate agent or mortgage broker should be providing you with estimated closing costs prior to either listing your house or with-in a few days of submitting a loan application

 

 

 

Jan. 30, 2021

What Is Ahead For The Real Estate Market in Essex County for 2021?

2020 was certainly an interesting real estate market for Essex County Massachusetts.  The year started off with low inventory for home buyers.  Then Covid 19 hit, further drying up housing inventory in the Greater Boston Area.  So what will 2021 bring to the market for real estate in Essex County MA?

Remember real estate markets are highly localized.  But many popular metro real estate markets like Greater Boston which includes Essex County And The Northshore remain hot and will most likely continue to do so for the better part of 2021.

Realtor.com predicts a more normal 2021 real estate market by spring/summer on an overall national level. Check with your local REALTOR to find out what is going on in your local real estate market.

2021 Real Estate Market Update For Essex County

Ok, so inventory is low what does that mean?

Let's look at 2015 which was a balanced year.  The market did not favor either buyers or sellers.

Back in 2015, we had 1785 homes on the market in Essex County Massachusetts. Compared to the same day in 2021 we only have 483 homes for sale. Inventory is at 27% of what it was 6 years ago!

Let's break it down into two different towns in Essex County.

Haverhill MA

The Haverhill MA Real Estate market has 24 single-family, multi-family and condos actively for sale today versus 139 in 2015! 

On average they had accepted an offer in 17 days versus 62 days in 2015.

The past year showed the sold price versus the list price was 102% versus 96% in 2015.

Middleton MA

The Middleton MA Real Estate market has 9 single-family, multi-family and condos actively for sale today versus 33 in 2015! 

On average they had accepted an offer in 35 days versus 63 days in 2015.

The past year showed the sold price versus the list price was 99% versus 96% in 2015.

Unprecedently Low Interest Rates

2021 starts off with some unprecedently low mortgage interest rates. 

Low rates provide for more buying power allowing homebuyers to be approved for more money.  In turn, this can quickly drive up house prices in hot markets.

Greater Boston Housing Shortage

The underlying fact is there is a housing shortage in the general area. The area including Essex County has not created more living units to match the increasing demand.  The shortage of buildable land, the cost of building and overly burdensome zoning laws have all contributed to the shortage of housing.

Rental units are hard to secure due to the high demand.  Competition can be found among renters all trying to secure the same rental unit. Plus, rents are through the roof. 

Buying can be a cheaper alternative as well as helping people feel more secure by owning.

What does this mean?

Essex County Massachusetts real estate market is in an extreme seller's market.  Meaning home sellers are in the driver's seat. 

Sellers know that there is fierce competition among buyers to get a good home.  Yes, home buyers your competing! Haverhill saw numerous houses going 50k over asking!

You will see open houses with 40 or more groups of buyers coming through an open house or a home being slammed with back to back showing all day long.  Many homes are seeing multiple offers within a few days and many selling for way over asking.

What Should Essex County Home Sellers Know?

Essex County home sellers should know it's a great time to sell their house.  Most homes are getting their home under agreement in less than 2 weeks.  You can expect to sell your home for top dollar and in a very short amount of time.

You should expect your home to be flooded with showings and multiple offers within days if you have properly prepared your home for sale and priced it properly.

Rapidly appreciating home prices, inventory shortages and unprecedently low interest rates make 2021 a great time to sell a home.

What Should Essex County Home Buyers Know?

It is tough to navigate the 2021 real estate market as a home buyer.  Understanding what is ahead of you and what to expect will go a long way to prevent frustration. 

The take away for Essex County home buyer is you need to be proactive.  Houses aren't sitting around, get in right away.  Don't hesitate when you find a house you like.  And finally, step up and write a good offer.  You're not going to be the only one making an offer.

Finally, realize the market you are in dictates how to handle home inspection negotiations.  Home sellers can easily say step aside there is another buyer behind you.

Summary

If I was a betting man I would see The Essex County real estate market and the Greater Boston area, in general, will remain much the same through mid-year.  And, most likely see a bit of flattening towards the end of the year.  But I don't think we will see a return to normalcy as many national forecasts predict.

The underlying issue is we don't have enough housing units for the population.

Things that could sway this prediction are foreclosures from Covid19.  If banks rush to foreclose, there could be a glut of inventory flooding the market giving buyers more options. National and State policy to slow the rate of evictions, plus the bank's unwillingness to sit on a bunch ov vacant properties will hopefully create a soft landing.

Other Real Estate Resources:

Buying a condominium usually means becoming a member of an HOA.  What do you need to know about HOA rules? Sharon Paxson cover 8 common things you should know about condo associations.

As we pointed out 2021 may be challenging for home buyers.  Your offers will be competing with other buyers.  Michelle Gibson gives us tips on writing the perfect offer.

With housing inventory being low in 2021, homebuyers still want to find the perfect home.  Vicki Moore gives us some tips on finding the perfect home.

What Is Ahead For The Real Estate Market in Essex County for 2021? is provided by Kevin Vitali a Massachusetts REALTOR.  Kevin is based out of Middleton MA and covers Essex County and Northern Middlesex County

 

 

 

Posted in Market Updates
Jan. 7, 2021

7 Common Questions About HOA's

What is an HOA?

A residential community may have an HOA or Home Owners Association.  The HOA organization is meant to provide a cohesive, unified community. 

Here in New England, we associate condominium complexes with a Home Owners Association. 

But HOA's aren't only reserved for condominium complexes.  In recent years, we have seen neighborhood communities pop up that has a Home Owners Association like Persimmon Woods in Haverhill MA or Seacoast Village in Ipswich.

What Is an HOA?

An HOA or Home Owners Association is a group of owners who have a common interest in a community.  The HOA governs and maintains the community. 

As pointed out most people associate an HOA with a condominium complex but it can also be associated with a neighborhood of single-family homes. 

Home Owner Associations usually try to provide a consistent unified look to their community, provide peaceful enjoyment for all and maintain the common areas of the community. 

A Homeowners Association is created by a Declaration of Trust.  The declaration of trust spells out the management of the community, the bylaws, and the rules and regulations. 

Usually, your Homeowners Association is run by an HOA board consisting of elected board members made up of the communities homeowners.  Your board has a vested interest in making your community thrive.  The HOA board runs the daily operation of the community.

The needs of a community can vary greatly, but here are some of the common things a Homeowner Association oversees:

  • Collection of membership fees or dues
  • Maintenance of the community areas
  • Setting and managing budgets and assessments
  • Enacting rules and regulations
  • Enforcing the rules and regulations

7 Common Questions About HOA's

When learning about what an HOA is and understanding what it is like to live in an HOA governed community there are some common questions that will arise.

Is Membership to An HOA Mandatory?

Yes, when you are purchasing a home or condominium, there is a covenant in the deed where you are agreeing to the terms of membership in the HOA.  It is not optional. 

By buying a home in a community governed by an HOA you have also agreed to be a member of the HOA as well as follow all the rules and regulations as well as pay any required fees to the Home Owners Association.

Are HOA's Non-Profit?

By default, most Home Owner Associations are non-profit and are governed by the members in non-paid positions. 

Financially an HOA's purpose is to maintain the community not make a profit. The benefit is maintaining a community and no one person benefits from the HOA.

Do I Have To Pay Fee's To Be A Member Of An HOA?

With membership in an HOA comes fee's and special assessments. Most commonly you will hear people reference condo fees.  Or in a single-family neighborhood, they will be called HOA fees.

These are HOA fees that go towards the management and maintenance of the community. 

Can An HOA Raise Its Fees?

An association can raise its fees as it deems necessary. How and when a board can raise condo fees or impose special assessments is spelled out in the bylaws.  Small increases could just happen larger ones would be voted on.

Remember your fees cover a budget and it costs money to maintain your community.  Costs to maintain a community rise with inflation and so will your condo fees at some point.

Are There Rules To Be Followed?

Being a member of a Home Owners Association also means there are rules to be followed.  The rules and regulations can vary greatly based on the needs of the communities.  Some of the rules can be:

  • How to maintain your property
  • Quiet hours
  • Restriction of commercial vehicles
  • Pet restrictions
  • Parking
  • Use of common areas
  • Etc...

While at times the rules of an HOA may seem cumbersome they are put in place to create cohesiveness to the community as well as to provide peaceful enjoyment for all the members.

And yes, by buying a condo or in a neighborhood governed by an HOA you are automatically agreeing to the rules and they must be followed.

How Is An HOA Governed?

The governing of a Home Owners Association can vary but in general, a Board of Trustees is elected by the general membership to run the day to day operations of the association.  You do have a say in who you elect and how things are run often through a vote on larger issues.

The running of the HOA is spelled out in the Bylaws in the Declaration of Trust that is recorded at the formation of the HOA.  The Declaration of Trust is usually very detailed in how the Board is to run the HOA including how they spend money, how decisions are made and the voting rights of the members.

Can An HOA Enforce Its Rules And Regulations?

For the most part, an HOA can enforce its rules and regulations.  By buying into an HOA governed community you are agreeing to the terms of being a member.

Be aware that violating the terms of membership can include fines and legal actions against you. 

But on the reverse side, if one of your neighbors is violating the rules the HOA is legally obligated to take action as well.  It goes both ways.

what is an hoa and how to live in an hoa community

Living In A Community With A Home Owners Association

Buying a home and living in a community governed by a homeowners association can be a double-edged sword.  It may not be for everyone.

Many things may be taken care of for you in a large community.  Condominium HOA's often provide landscaping, snow removal, exterior maintenance, etc... things you no longer have to worry about.

But realize things are done a certain way, it may not be how you would do it, it may not be in the time frame you would like it done in.  You lose some control.

The first step to living in an HOA run community is to understand what you are getting into before you purchase.  Review the declaration of trust, master deed, bylaws and the rules and regulations.  Have a basic understanding of how the governing of your HOA will work and what rules you are expected to adhere to. 

Do a little research and find out if the members are generally happy and if things are running smoothly.  Homeowner Associations can be undermanaged or overmanaged, neither is a good thing.

Every Home Owners Association can be drastically different.  Don't assume anything.  Review the documents.

If you do become a member of a Homeowners Association, become involved.  At least know what is going on at the meetings and with the budgets.  Better yet consider becoming a board member and being actively involved in the day-to-day operations.

5 Tips For Living In An HOA Community

  • Know the rules of the community.
  • Be a good neighbor and abide by the rules.
  • Know what is going on with the association by reading newsletters and attending meetings.
  • Participate in HOA meetings and consider becoming a board member.
  • Take advantage of what your community has to offer.

At the end of the day, the HOA is meant to provide a cohesive community, provide maintenance of all common areas and provide peaceful enjoyment to all of its residents.  That is generally not a bad thing.  A well-run community adds value to the homes within the community.

At the end of the day, it is a personal decision if you want to buy a home run by a Homeowners Association.

Other Real Estate Resources:

Are you a condominium buyer?  What do you need to know when buying a condo?  Bill Gassett provides tips for condominium buyers. One big tip is to read the documents and know what you are getting into by belonging to an HOA.

Purchasing a condo is a little different than a single-family home.  There are additional layers to look into like the HOA management and condo fees and what do those fees cover?  Jeff Nelson provides some great questions to ask when purchasing a condo.

Paul Sian covers some of the pros and cons of buying and owning a condominium.  Much of the exterior maintenance can be taken care of for you, but you also lose some control.  Is condo ownership right for you?

 

What Is An Home Owners Association? was provided by Kevin Vitali a Massachusetts REALTOR with many years of experience helping home buyers and home sellers achieve their housing goals. If you are thinking of buying or selling a home call Kevin at 978-360-0422.

 

 

 

 

 

 

 

Posted in Home Buying
Dec. 8, 2020

Can Buyers and Sellers Talk Tor Each Other Directly?

Should A Home Buyer and Home Seller Speak Directly?

 

Sometimes a home buyer or home seller wonders if they can talk to each other directly. 

So, can buyers and sellers talk to each other directly?

Is a buyer talking directly to a seller of a house ok?

Should a Seller Talk To A Buyer Directly?

Before we delve into this let's talk about REALTOR's or real estate agents and the role that they play in a real estate transaction.

Real Estate Agents Cannot Talk To A Buyer Or Seller If They Are Represented By An Agent

Most buyers are represented by buyer's agents and most sellers are represented by a listing or seller's agent.  Meaning there is a client-level relationship and agents have fiduciary responsibilities to their clients.

It is unethical for a REALTOR to speak to another agent's client directly.

A buyer's agent should not be directing questions directly to a seller who is represented by a listing agent without given permission to do so.

A listing agent should not be speaking directly to a buyer who is represented by a buyer's agent.

The point is the real estate agents are intermediaries that control the flow of information.  Not only do they control the flow of information they know when something should be put in writing.

Can A Buyer And Seller Communicate Directly?

While it is unethical for a REALTOR to speak to another agent's client, there is nothing wrong with a buyer and seller communicating directly. 

They are not held to the same ethical standards.  It is completely ok for a buyer and seller to directly speak to each other.

But just because you can, is it wise?

The Downsides Of A Buyer And Seller Speaking Directly

A buyer or seller may want to speak to the other party because of an unresponsive agent, impatience, to get to know the other party, ect...  But just because you can doesn't mean it's a good idea for either a buyer or seller.

A seller carries a certain amount of liability if they choose to talk to their buyer directly, as we will discuss shortly.

In the almost 20 years I have been in the business, I have had a few buyers and sellers get together behind my back and talk. And, every time it is has turned into a nightmare to unravel.  Why?

People Use Agents To Represent Them For A Reason

Some parties want to use an agent to represent them because they want limited contact with the other party.  Just because you may want to speak to the other party directly doesn't mean they want to speak to you.

Respect the other parties' wishes.  When you are in escrow you have a relationship with the other party and you want to keep it harmonious.  Emotions and tension are high enough!

Expectations

Things are said and promised, a seller promises to do some work, a buyer allows a seller to keep some items in the garage for a few weeks, etc...

But an agent knows the trouble that this can bring that a layman may not understand.

Any promises need to be spelled out in detail.

A vague promise like, I will paint the downstairs will require more specifics.  What color? When is the work to be completed? Who's doing the work?

Or, the buyer allows the seller to keep some items in the garage past the closing.  How long? What area? Who is insuring the items? When will the seller have access to the items?

I bring these two scenarios up as they actually happened to me.  In the end both situations turned into a nightmare and both parties were angry with each other.

Verbal Contracts Are Legal But Not Enforceable

While it is completely legal for a verbal contract to be made between both parties it cannot be enforced in a court of law.

Meaning if you agreed to something and one party defaults you have no recourse.  Any agreements need to be written.  And, beyond that, it needs to be incorporated into the purchase and sales contract or again it may not be enforceable.

If something goes wrong you are out of luck.

A Seller Needs To Be Careful About Fair Housing Laws

Simple, benign statements can get a seller into trouble when it comes to fair housing laws.  Asking if someone is married or has kids could be construed as violating fair housing laws.

While you may have no malintent what so ever, anyone can bring suit against you.  Fair housing suits can be costly to defend and if you lose big fines can be levied.

Never mind pointing out there is another Chinese family that lives down the street or there is a synagogue nearby.

The less a seller knows about their buyers the better.  If you know nothing about your buyer then there can't be any fair housing claim brought against you.  Fair housing laws vary from state to state.  Massachusetts has 16 protected classes and I bet most home sellers don't know who is included in those protected classes.

Sellers Need To Be Careful With Disclosure

Being asked direct questions about the property is certainly something a buyer's or buyer's agent will try to do.  But how you answer the questions is what can get you in trouble.

One particular question often asked is about property lines.  A seller will always tell you exactly where their lot lines are, but when you ask them if they have a survey they say no. 

The only way to know where your lot lines are is to have the property surveyed and marked.

A seller could say to the best of their knowledge from the previous seller, the lot lines are xyz but the buyer should verify with the town or registry of deeds.

Improper disclosure is one of the leading causes of lawsuits between buyers and sellers. It is important the seller answers questions very carefully.  Matter of fact statements can be what get you in trouble.

 

Avoid He Said She Said

My clients do not realize this, but I leave a trail of communication between myself, clients and other parties so there can be very little left to be misconstrued.  If I have an important conversation during a transaction, it is documented. 

Furthermore, I will clarify the discussion in an email to make sure there are absolutely no misunderstandings.  An email is dated, IP addresses can be tracked and if there is a misunderstanding the other party has an opportunity to clarify with a response.

If something is important enough I will make sure the attorneys draft an addendum to the purchase and sale memorializing any promises between parties.

Have Your Agent Present

It is best if you keep the flow of communication between a home buyer and home seller through the agents representing their prospective clients.

If after reading this article buyers and sellers still want to get together, have each party's agent available. 

This way things can be reeled in and clarified if it gets off track.  And if important issues are discussed, it can be recapped in an email to all parties or if something is agreed to an addendum be added to the purchase contract.

While on the surface it may seem to be a good idea for buyers and sellers to speak directly with each other, it really may not be in your best interest.  There is too much at stake and things can go horribly wrong. 

Sellers, while it is not good for either party to talk directly, remember you have a greater risk.

While on the surface when you see an agent cringing when buyers and sellers talk directly, there is actually good reason behind it. Keep communications between agents to avoid any issues.

Other Real Estate Resources:

Do you know who your agent is working for?  It actually can be more complicated than you think.  Bill Gassett points out the first conversation you should have with every agent is understanding how they are working with you.

What does a client level relationship bring to a real estate transaction?  Paul Sian discusses what it means to have a real estate agent to represent you.

Sellers sometimes think they may try to sell their house on their own.  Sharon Paxson delves into why you may want to hire a listing agent.

Can Buyers and Sellers Talk Tor Each Other Directly? was written by Kevin Vitali, a Massachusetts Real Estate veteran of almost 20 years.  If you are thinking of buying or selling a home call Kevin at 978-360-0422

 

 

Nov. 19, 2020

23 First-Time Home Buying Tips That Matter!

23 First Time Home Buying Tips

Buying a home as a first-time homebuyer is a big deal.  There is so much you need to know as a first-time homebuyer to have a successful home purchase.

Like anything in life, the more you put into buying your first home the more you will get out of it.

Today we will discuss some first-time home buying tips and advice that will set you on the path to successfully buy your first home.

The first-time home buying tips will be broken down into:

  • Preparing to Buy
  • Financial
  • Viewing Homes
  • Making an Offer
  • Closing on a Home

 

Tips to Prepare To Buy

A have been a buyers agent helping first-time homebuyers in Massachusetts for almost 20 years.  Often I will see buyers struggling on their own in frustration because they have not taken the time to understand the various aspects of buying a home.

#1 Deciding That Buying Your First Home Is Right For You

The decision to buy your first home should not be taken lightly.  Buying your first home just because all of your friends are, doesn't mean you should.

Double-check your motivations.  Are you ready to plant roots in a community? Are your job and income stable? Can you comfortably afford to buy a home? Is owning a home a lifestyle you want to live right now?

Don't get saddled with a home you don't want. you could create a bad financial situation or just be unhappy.

#2 Start Preparing To Buy Your First Home Early

For most buyers, the thought of buying a home is in their head months or even a year or more before they jump into buying a home.  Start preparing early to get a handle on the home buying process, the market, your finances and to set realistic expectations.

There are many things you can get in place prior to ever looking at homes that you can do at a leisurely pace rather than having to do it at the last minute in a panicked frenzied.

You can get a handle on the market by watching homes online, you can organize your finances, work on improving your credit and take the time to find the right professionals to help along the way.

#3 Get Your Hands On Your Credit Report

Get your hands on your credit report right away.  It is not unusual for there to be mistakes that are dragging your credit down.  You can get a free annual credit report on your own or by getting approved early by a mortgage officer.

Don't let last-minute problems with your credit hold you up.  If you are in the fray of buying you aren't going to have time to correct some issues and you may end up with a less than desirable mortgage program.

#4 Know There Will Be Things You Don't Know And Your Need Help

Real Estate Agents and Mortgage Professionals are immersed in their professions daily. One big mistake is first-time homebuyers don't know what they don't know!!

But these real estate professionals do.  Find the right professionals to help you along your journey they can make all the difference in the world for you. Line up the right agent and mortgage officer before looking at homes. 

Start assembling your home buying team now! Talk to real estate agents and mortgage brokers.

#4 Take the Time To Understand Agency

In Massachusetts and many other states, an agent can work with you in many different capacities.  It can actually be darn right confusing.  The only real estate agent that works on your behalf is a buyer's agent.

A buyer's agent has a fiduciary responsibility to work in a manner that promotes your best interest. 

For example, a listing agent, who is the agent with the sign in the ground has a fiduciary responsibility to the seller and not the buyer.  A listing agent can help you buy their seller's home, but at every twist and turn, they have a legal obligation to benefit their seller and not you!!

When push comes to shove, you will be thrown under the bus.  Take the time to understand real estate agency and what capacity different agents have in their dealings with you.

#5 Understand The Type of Real Estate Market You Will Be In

Often a first-time buyer will enter the real estate market with certain perceptions from friends and family buying in the past.  But real estate markets can change on a dime.  You need to understand how the real estate market is performing right now, not two years ago when your sister bought a house.

The type of real estate market you are in will play a heavy role in how you look for homes and how you structure and negotiate and offer.  In a seller's market, which we are in right now in November 2020, inventory is low and buyers are competing for good homes.  Versus, November 2010 where it was a buyer's market and sellers were competing for buyers attention!

#6 No Question Is Stupid

Once you start working with a buyer's agent and mortgage professional, don't be afraid to ask questions.  There are no stupid questions.  If it is on your mind ask. 

You aren't buying a $200 TV here, you are spending $100's of thousands of dollars.

Often a buyer will say this may be a stupid question.... but when they ask it is a very valid question.  A real estate transaction has many facets some with legal and financial ramifications.  It's your life, ask the questions no matter how silly you think it is.

 

Tips For First-time Home Buying

Financial Tips When Buying Your First Home

The financial aspect of buying and owning a home is one of the more complicated pieces of the buying process.  Get a handle on the financial aspect early so you are making good decisions, have a full understanding of the costs and aren't running around like a mad man at the last minute.

#7 Get-Pre-approved

Your mortgage pre-approval is critical.  Get pre-approved before looking at houses.  First, no seller will take you seriously without a good pre-approval and an understanding of your financial ability to buy a home.

Secondly, without a good pre-approval, you can't have a full understanding of your finances.  If a mortgage professional takes the time to properly pre-approve you, it is only then you can have a full understanding of what your mortgage will cost you and what the closing costs are associated with buying a home

Waiting to talk to a mortgage officer when you are trying to get a home under contract is a mistake.  You are in a hurry and you often end up in a less than desirable mortgage program.

#8 Have An Understanding Of The Costs Associated With Being a First-time Homebuyer

Of course, you know you need a downpayment.  But don't forget about the closing costs which can run another 2-4% of the purchase price of a home.

But beyond closing on the home, there are other costs to homeownership you should be aware of.  There are taxes, insurance and home maintenance, utility bills that may include water and sewer.  Talk to family and friends as well as your @realtor to get a full understanding of what costs are associated with buying and owning a home.

Don't put yourself in a position where every cent you make goes towards owning a house.  You want to live a life after closing on a home.

#9 Work On Improving Your Credit

In the previous section of first-time homebuyer tips on preparing early, we suggested pulling your credit.  But while you are in the pre-buying stage and looking at homes there often may be improvements to your credit that can make a difference

First dispute any mistakes.  Work with your mortgage officer.  He may make some suggestions that could raise your credit score.  Approximately, every 20 points in credit score can impact your interest rate and mortgage programs available to you.  A difference between a 673 credit score and a 680 credit score could be significant for you as a homebuyer.

Often a buyer can improve their credit by a few to 20 points in a short period of time.  I have also had a buyer increase their credit score by 112 points in less than 45 days!! 

#10 Shopping For Your First Mortgage

Many consumers are under the impression that shopping for a mortgage means trying to get the best interest rate.  But there is more to it than that.  Of course, you want the best interest rate possible.

But for many first-time homebuyers, they are putting down a minimal downpayment.  It is also important to discuss mortgage programs and the advantages for you. 

The subtleties in mortgage programs can mean the difference between qualifying for a mortgage or not.  Or, if put in the wrong program, it can costs you hundreds of dollars in your mortgage payment a month.

#11 A Word On Interest Rates

As I mentioned getting pre-approved early is important.  Often I run into home buyers that have been out in the market place making assumptions based on advertised interest rates. They have avoided talking to a mortgage professional and are basing their budgets on the teaser rates often advertised by banks.

Read the fine print!!

The teaser rates are just that... they are based on putting down 20-40%, having a credit score of 720 or more and buying a single-family home.  Often the criteria for the teaser rate is unattainable for many home buyers. 

Tips On Looking At Homes

Once you have taken the steps to prepare yourself to buy and have taken to understand the financial commitment, it is time to seriously look at homes. Here are some first-time home buying tips for when you actually shopping for homes.

#12 Look Towards The Long Term

When buying a new home, think 5-7 years out.  If you aren't planning on owning a home for 5-7 years maybe you shouldn't buy. 

There is a substantial cost of selling your home.  Real estate markets usually rise but in the short term markets have their highs and lows.  5-7 years will usually allow you to weather those ebbs and flows in the real estate market.

Don't just think of your needs now.  Make sure your home will suit you and your family for its future housing needs.

#13 Don't Get Caught Into the Glitz and Glam Of A Home

Everyone loves shiny and new.  But shiny and new is only good when the underlying quality of the home is good and the workmanship is of professional quality. 

You can live with an outdated kitchen and bath, but issues like a leaking roof, insect damage, a failing heating system or electrical system can't be ignored.  Plus they are all costly repairs sometimes running into tens of thousands of dollars.

Pay attention to the basics first to make sure you are buying a solid home.  Don't get stuck buying a pig with lipstick!! 

#14 Cheap Is Not Always Good

Like most things in life, you get what you pay for.  This includes real estate.  Houses are priced a certain way for a reason. 

If you are buying a home that needs work, make sure you can financially handle the work as well as being capable of completing the work.  Sometimes it is prudent to spend more money on your upfront purchase on a house that is updated and in good shape than it is to buy a fixer-upper that will cost more in the end to own.

#15 Pay Attention To More Than Just The House

When you are buying your first home you are also buying into a neighborhood and community.  Pay attention to the neighborhood as you approach a home for your showing.  Is this an area you can see yourself living in?  Is it quiet, does it have nearby amenities?

Do a little research and make sure the community itself offers you what you need.  Good school systems often top the list of what home buyers want out of a community. 

For example, you may have a 2-year old that isn't in school now but in several years the school system may be important to you. This also ties in with buying for the long term.  Your community needs to serve you for the future as well as now.

#16 View The Houses In Person

There is only so much an online listing can tell you.  But to truly get a sense of a home you need to visit it in person.  Whether your agent schedules a personal showing, go to an open house or even do a quick driveby, it is important to get your feet on the ground.

If you have any interest in a home at all don't discount it because of what you do or do not see online.  Check it out.  Especially if inventory is tight and you are struggling to find a home.

#17 Be Realistic

Every homebuyer starts out with certain wants and needs.  But wanting or needing something does no mean you are going to find it.  Your wants and needs may exceed your budget.  Hopefully, you have spent some time looking at houses in your price range and have a realistic idea of what is available in your budget.

For example, many homebuyers in my market will want to purchase a single-family in the desirable town of North Andover.  Say your budget is $350k.  6 houses sold under $350k in the past year.  You may say, great!  But when you are buying in the bottom 10% of a market you will find the home to be severely challenged by condition, layout, location or appeal.  That translates to one new house coming on the market every two months.

Contrast that with a buyer that has a budget of $550k and 67 homes have sold in the same time period for about 6 new houses coming on the market a month.  Or Haverhill having sold 138 homes under 350kin the same time period.

Make sure what you want actually exists or you will waste valuable time looking for that one unicorn.  Remember in a seller's market house can rise at a rate of .5 t0 1% a month pricing you out of the market.

#18 Be Flexible And Adjust

Being successful in finding your new home requires you to be flexible and adjust.  If you are not finding what you want in 12-15 homes it may be time to adjust your wants and needs.  Look a little to the right and left of what you think you want.  Following is an excerpt from something one of my first-time homebuyers wrote and it sums it up nicely.

 

"I remember day one going in with a list of our “must-haves” and our “deal breakers”. I could not tell you what was on those lists, because well, I made about 50 lists. Lists are helpful, to some extent. The lists do change, those must-haves become maybes, and those maybes become deal breakers. Keeping an open mind and looking at the bigger picture was important. I remember giving Kevin 5 towns we wanted to stay within. Funny, we are not in any of those towns"

I can tell you what my buyer client went through is pretty typical.

Tips For Writing an Offer and Closing On Your New Home

You have taken the time to prepare to buy your first home, you have spent months looking and you have put a house you are ready to negotiate and offer.  Here is some advice for first-time homebuyers while they are in escrow.

#19 Know Your Numbers

Before putting in an offer know your mortgage numbers and be comfortable with it. Don't get caught with any financial surprises. 

Also, know the market and what a house is worth.  Have your agent run a CMA to give you a range of fair market value. Lowballing an offer usually leads to disappointment. 

Talk about negotiating strategies that are effective for current market conditions with your agent.  Negotiate to get the house you want and don't lose it over a few dollars.

#19 Keep Your Offer Clean

Avoid complicating offers with a ton of contingencies and requests.  Focus on getting a fair price and go for it.  Asking for furniture, lawn equipment or asking for contingencies outside the standard mortgage and inspection contingencies just muddle the negotiations.

#20 Take Your Home Inspection Seriously

Your home inspection is your last line of defense. In competitive markets, buyers may give up their rights to a home inspection but don't.

Make the most of your home inspection.  Understand what it includes and doesn't include.  Show up and ask and be prepared to ask questions.

Work with your buyer's agent and hire a great home inspection and review any issues with your agent.  You should expect a home to be safe sound and all systems functioning unless otherwise specified.

Tips For Closing On Your New Home

A typical closing is between 30-60 days after submitting an offer.  Here is some advice for first-time homebuyers that will make your time in escrow move smoothly.

#21 Time Moves Quick

Be prepared to act quickly.  The bank will be requiring a lot of documents and want them quickly.  It is a hurry up and wait game that can be frustrating.

Know what the bank is going to expect from you and be prepared to deliver in a timely manner.  Don't you be the reason why your closing is delayed.

#22 Keep Your Credit Status Quo

While waiting to close on your home keep your credit profile exactly as is.  Don't make any changes.  Avoid changing jobs, don't buy a boat or a car, don't close credit cards and don't open new ones.

In your excitement to own a new home, you might be tempted to open up a Home Depot credit card or one at Jordan's furniture.  This is actually a common home-buying mistake.  But wait until after the closing before making changes to your credit.  A new card could impact your ability to qualify for your mortgage.

And, as a last-minute tip banks will pull your credit and verify your job, once again just prior to closing.

#23 Don't Skip Your Final Walkthrough

Your final walk-through is one of the final steps of the home buying process. It is your final chance to make sure the home you are about to purchase is in the same condition as you viewed it, there is no new damage to the house and that all the systems are functioning properly.

Once you close on your home, you are agreeing you are buying the house as-is and will have very little recourse after you move in.  Don't skip your final walkthrough and make sure you go through the home thoroughly

Advice for first-time home buyers

Final Advice For First-Time Homebuyers

There are so many other first-time home buyer tips I could pass along but I pulled out many of the more important pieces of buying your first home.

Get an advanced understanding of each step and rely on your professionals.  A good mortgage professional, real estate agent and attorney are worth their weight in gold.

They know what you don't know and it is automatic to them.  They are immersed in real estate every day.

Be prepared to buy your first home and enjoy this exciting time.

23 First-Time Home Buying Tips That Matter! was written by Kevin Vitali- Your Massachusetts REALTOR.  If you are looking to buy a home, I would love to partner with you to help you make the most out of your first home purchase.  Call me at 978-360-0422 let's chat!

 

 

 

 

 

 

 

 

Posted in Home Buying
Oct. 28, 2020

Whats My Home Worth? Finding Your Home's Value

What's My Home Worth

 

It is not unusual for a homeowner to want to know what is “my home worth?”

The reasons can be varied…. Planning on selling, refinancing, just curious, etc….

But whatever the reason you are seeking the value of your home, you want to know with a degree of certainty what your home's value might be.

Where Do You Get Your Home's Value?

You have several options to get the value of your home all with a varying degree of accuracy.  Some other ways of getting your home's value can be instantaneous. Unfortunately quick does not always go hand in hand with accuracy.

The Zillow Zestimate

The Zestimate by Zillow is one very common way to get a quick idea of what your home may be worth.  Zillow Zestimate’s is one of many AVM’s or Automated Value Model, that will return the value of your home by plugging in a street address.  The process takes only a few minutes to use Zillow to estimate the value of your home.

Almost every national real estate site offers a value model to determine a price for your home.  These sites include Realtor.com, Redfin, Zillow’s Zestimate and more.  Today many individual real estate agents or brokerage websites offer some form of getting an automated value for your home.  My AVM is powered by Black Knight which is used in the mortgage industry to double-check appraisal values and is considered fairly accurate.

Whats Is An AVM or Automated Value Model?

Automated Value Models. Like the Zestimate, use an algorithm to calculate the potential home value.  The AVM use sales history, tax information and property characteristics to formulate what a home is worth. 

How Accurate Is The Zestimate And Other AVM’s?

AVM’s can certainly give you an idea of what a home might be worth with a wide degree of accuracy.  A few years ago I did a comparison of all the homes sold in Tewksbury MA and ran the Zestimate model to determine the accuracy of the Zestimate.

The takeaway was that overall there was a 17% spread on the accuracy.  Overall all it was 6.2% short on property values.  Not bad, it gets you in the ballpark, but it also left on average $22,000.  Who wants to do that?!!

On another note a ran a home I just sold 2 years ago and the value between a bunch of AVM.s was less than +/- 3% of what I had estimated the sales price of the home to be.

Find Your Home's Value Instantaneously with Home Value Estimator!!

What Makes The Difference?

The AVM lacks any ability to make determinations as far as the value of a location, particular neighborhood, age, condition and other data points that are more subjective.  AVM’s work strictly off statistical data. 

The more homogeneous the house for a particular community, the more accurate the AVM will be.  There will be areas of the country where AVM’s can be more accurate than others.  But here in New England, we have such a swing in the age and variety of housing to get an accurate Zestimate most of the time.

 

The More Accurate Way To Determine Your Homes Value

Comparative Market Analysis or CMA

If you need a more accurate value for your home, you should have a REALTOR® prepare a Comparative Market Analysis or (CMA). 

A REALTOR® will select comparable homes to compile a Compartive Market Analysis for you.  Ideally, they select homes that have recently sold of similar age, condition and style and are located in the same neighborhood as the subject property.

Since no two properties are the same, a REALTOR® may have to make slight adjustments based on the criteria of the home.  

Usually, 3-5 properties will be used and then averaged for an accurate value of a home.

Where the AVM falls short compared to a CMA is on the adjustments.  The computer algorithm of an AVM can’t make the dissertation between two houses in the same neighborhood, one being on a cul de sac and the other being on a busy corner.  Or one home bing completely remodeled and the other being original. 

You get the idea, you need an experienced professional to make those subjective adjustments to get an accurate value of a home that a computer just can’t make.

Appraisal

An appraisal is another way to get an accurate home value.  When creating an appraisal the appraiser will use similar techniques to a REALTOR® preparing a CMA under strict guidelines.  The big difference is an appraiser is certifying the information to be accurate and guidelines for appraising the property have been met.

An appraisal is a route to go when you have multiple people involved in a sale like an estate, there is court involvement like divorce and of course a property must be appraised when bank financing is involved.

Summary

There are several ways to get a projected market value for your home.  There is a time and place to use each method.

An AVM is good if you are just curious, thinking of refinancing or if you are many months away from listing your home.  It gets you in the ballpark.

If you are ready to list your home, then a CMA is the way to go. 

An appraisal is good if you need the certified value for court or in some cases if a REALTOR® is having a difficult time comping a property.

Any route you go remember your home's value is only good for that snippet in time.  Prices fluctuate and a few months can make a big difference in value.

Other Home Pricing Resources

Jeff Nelson provides some excellent advice on pricing your home to sell.  His advice is to not rely on the Zillow Zestimate but to get a CMA to get an accurate value of your home.

Home improvements don’t always add value to a home.  Sharon Paxson provides 10 home improvements that may detract from the value of your home.

Whats My Home Worth? Finding Your Home's Value, is provided by Kevin Vitali a Massachusetts Real Estate Agent. If you are looking to buy or sell a home call Kevin at 978-360-0422.

Posted in Selling A Home
July 31, 2017

Curious About Local Real Estate?

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Curious about local real estate? So are we! Every month we review trends in our real estate market and consider the number of homes on the market in each price tier, the amount of time particular homes have been listed for sale, specific neighborhood trends, the median price and square footage of each home sold and so much more. We’d love to invite you to do the same!

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You can sign up here to receive your own market report, delivered as often as you like! It contains current information on pending, active and just sold properties so you can see actual homes in your neighborhood. You can review your area on a larger scale, as well, by refining your search to include properties across the city or county. As you notice price and size trends, please contact us for clarification or to have any questions answered.

We can definitely fill you in on details that are not listed on the report and help you determine the best home for you. If you are wondering if now is the time to sell, please try out our INSTANT home value tool. You’ll get an estimate on the value of your property in today’s market. Either way, we hope to hear from you soon as you get to know our neighborhoods and local real estate market better.

Posted in Market Updates