Archive for the 'Buyer Info' Category
How To Make An Offer On A House Or Condo You’ve found the property you really like, the one that seems just about perfect, the one that feels like home when you open the door. What happens next?
How do I make an offer to buy real estate in Massachusetts?
We’ll want to meet in person, if at all possible, when you’re ready to make an offer. It is possible to put in an offer when you’re out of state or out of the country - using email or fax and phone we’ll be able to fill out the forms. However, if you’re local it’s definitely best to meet in person for about an hour or so – longer if we get to talking at length- or stressing! – about the many details.
You’ll need to bring two things to our meeting – a copy of your lender’s pre-approval and a check. The seller expects to see evidence that you qualify for a mortgage sufficient to purchase the property so a current pre-approval letter needs to be submitted. The offer is accompanied by an initial deposit, also called an earnest money check. In the Cambridge area a $1000 deposit is customary. In a multiple bid situation you may decide to increase that initial deposit. Your check cannot be cashed unless and until your offer is accepted. That $1000 will go towards your down payment on the property.
In Massachusetts, the home buying process has two steps – the initial offer and the Purchase and Sale contract or P & S, typically signed about 10 to 14 days after the initial offer. The P & S is drafted by your attorney and the seller’s attorney. When you sign the P & S you’ll be putting down an additional deposit, typically enough to equal a total deposit of 5% that goes towards your down payment. Sometimes that deposit amount will vary and we can talk about your situation and strategy when we meet.
In Massachusetts the Offer to Purchase real estate is typically a one-page form. Not that you’re going to get off that easy – there are a number of other required forms but the main details can be spelled out on one page. On that main page we’ll specify the amount you’re offering to pay for the home, the amounts of your deposits, the contingencies of the sale, and the dates for the transaction. When we meet we’ll talk about what’s customary, what if anything we know about the seller’s desires, and what works for your schedule and write the offer accordingly.
We’ll decide on a deadline for your offer. In Cambridge it’s customary to ask for a response within 24 hours, or sometimes even more quickly. Again, it’s a strategy and something we’ll talk about when we meet. It’s not uncommon to learn after we submit the offer that the seller needs more time to respond and you can opt to extend the deadline. Customarily the sellers will respond in a timely fashion – so you won’t be on the edge of your seat for too long!
Have more questions? Feel free to email me or call me at 617-504-1737. And if I can help with your real estate search I’d be delighted. My coverage areas include Cambridge, Somerville, Arlington, Belmont, Medford, Watertown and nearby communities. If you’re moving out of the area I can refer you to a great agent who can help you find your next home.
Buying a House or Condo in Cambridge – What to Bring to the Closing The big day is almost here – you’re buying real estate in Cambridge – your first house, a new condo – congratulations!
What Do I Need To Bring To The Closing?
A limber wrist is probably the most important thing to bring to your real estate closing – there’s a reason the closing is often referred to as “passing papers”. Nowadays at a Massachusetts real estate closing there’s a large stack of papers getting passed around the table between buyers, sellers, and attorneys.
Seriously though, here are the things you need to remember to bring with you:
A bank check – also called a certified check or cashier’s check. The check for the amount of money you’re bringing to the closing can’t be a personal check – the bank requires cleared funds. The bank attorney’s office will let you know the amount of the check a day or two before the closing. If the figure for the check still hasn’t been determined sometimes they’ll give you an estimate and either you or the attorney will write a check for the difference at the closing. Typically, you’ll be instructed to have the check made out to yourself and then you’ll sign the check over at the table.
Don’t forget to arrange for access to your funds for the closing. If you need to move money around it’s best to do it well in advance of the day of your sale. You may choose to have your bank wire the money but this too needs to be arranged in advance. The bank attorney’s office will be able to give you wiring instructions.
Photo ID. You are required to present photo identification at the closing – a driver’s license or a passport is what people usually bring. It’s a good idea to have a second form of identification as well since every so often a bank asks for a second form of ID.
Your checkbook. It’s not uncommon for a personal check to be needed for some miscellaneous expense or recalculation. Nowadays more and more people don’t carry a checkbook but you should be sure to pop one in your bag just in case.
An hour or two at the table and you’ll be the happy owners of a new house or condo. Congratulations!
Buying A House Or Condo In Cambridge – What To Bring To The Closing by Elizabeth Bolton, a Cambridge real estate agent at Coldwell Banker, 171 Huron Avenue, Cambridge MA.
Parking your car can be enough of a challenge in Cambridge. Finding the equivalent of three adjacent parking spaces for your moving truck can be close to impossible.
With just a bit of planning you can reserve a space – a really big space! – with a Moving Van Permit from Cambridge’s Traffic, Parking & Transportation Department.
Moving Van Permits:
- Application must be submitted six business days in advance
- Cost is $25 for a truck up to 49 feet or $50 for 50 ft+ per day
- If the reserved space includes metered spaces there’s an additional $10 per parking meter fee
The Traffic and Parking Department will post signs reserving your space for the allotted time. A bit of advice – be generous with your time expectations – a move always seems to take much longer than you anticipate.
Click here for info about the Cambridge moving van permit and an application. Be sure to disable popups before clicking on the link for the application.
I can say from personal experience that this was the best money I spent for my move to Cambridge.
It’s often easy to get confused about how Cambridge real estate is valued – assessment, appraisal, and asking price – what’s the difference and what do these terms and numbers mean? Assessment vs appraisal – asking price or market value – what’s it all about?
The assessment is the value placed on the home by the City’s assessors. Your property tax bill is based on your assessment. This leads to an odd dynamic – as a Cambridge homeowner you want your assessment to be as low as possible in order to pay less in taxes. But as a homeseller or a buyer of Cambridge real estate you usually feel better if the assessment is higher. For buyers, that’s often because they’re confusing the assessment with the appraised value or market value – which are often very different.
The City of Cambridge uses a very convoluted method to determine appraisals which I won’t attempt to describe here. I once watched a televised City Council meeting during which the City Assessor tried to explain to the City Councilors how Cambridge assessments are calculated. It was a looooong presentation that made me feel a lot better about not being able to summarize the methodology in a sentence or two.
The assessment often varies widely from the market value of a Cambridge property and usually that should not be a matter of concern. For some time a Cambridge house that was priced closed to its assessment was the rare exception. Then the City reassessed properties and in many cases the new assessments were far higher than the property’s value on the real estate market. There doesn’t appear to be a discernible relationship between current assessments and current real estate values.
While assessments can sometimes be of interest when comparing a number of properties in on area, in general the assessment shouldn’t be the number you focus on when you’re looking at Cambridge real estate.
The Asking Price
The asking price or market price for Cambridge real estate should be based on recent sales activity for comparable properties. When a real estate agent works with a seller to put a property on the market for sale, the agent prepares a comparative market analysis to determine the market value of the home. Sometimes there haven’t been comparable homes listed for sale recently. The realtor will use his or her knowledge of the marketplace to determine a suggested value for the property. Ultimately, the seller, with advice from the agent, decides on an asking price. The response from buyers will determine whether that is the “right price” or if the home’s value in the marketplace is lower or higher.
There’s one more number or value that needs to be determined before the sale is closed. After a buyer has an accepted offer on a property and has applied for a mortgage, the lender will have an appraisal done on the home. The appraiser will compare the property to similar properties that have sold recently – usually within the last six months. The appraisal will be submitted to the lender and as the buyer you’ll usually be able to get a copy of the appraisal by your closing date.
Assessment = City’s value for property tax purposes
Appraisal = Value for bank for lending purposes
Asking price = Seller’s price that buyers will decide is either too high, too low, or just right
Elizabeth Bolton is a Cambridge real estate agent at Coldwell Banker on Huron Avenue. Contact Liz if you have more questions about buying or selling real estate in Cambridge Massachusetts or nearby.
Congratulations! Your offer on a home was accepted and you’re probably wondering what happens next.
Perhaps you’ve been searching for real estate for weeks, maybe months. Finally you’ve found the perfect house or condo, decided to make the leap, written an offer, perhaps gone through a round or two of negotiations, and finally come to terms - the seller said yes. The offer to purchase was signed, you’re on your way. Now you’ve got several things to take care of right off.
In Massachusetts, the home buying process has two main steps – the initial offer and the purchase and sale contract. The purchase and sale contract is typically scheduled to be signed about ten to fourteen days after the date of your offer. During that period you’ll need to:
- Schedule an inspection and get back to the seller with concerns if any. The deadline for your inspection response will be in your offer. It’s typically about one week after the date of your offer on the home.
- Engage a real estate attorney to represent you during your purchase. Massachusetts is a state where almost all buyers and sellers work with an attorney during the home buying or selling process. Your attorney and the seller’s attorney will work to draft the purchase and sales contract which is a more fully fleshed out agreement between you and the seller.
- Apply for mortgage financing. Your offer will spell out the deadline for filing a mortgage application, usually no later than the purchase and sale date. Nowadays the banks are not processing applications as quickly as they have in the past so it is a very good idea to get this process started sooner rather than later.
- When you sign the purchase and sale agreement you’ll need to provide an additional deposit – typically enough to equal 5% of the purchase price of the home you’re buying.
There’s a lot to do in the first couple of weeks after you’ve found your dream home. Once these hectic days are past you’ll have less to do – or more time to pack I guess!
Elizabeth Bolton is a real estate agent in Cambridge Massachusetts and author of My Offer Was Accepted – What Happens Next?
What sort of unanticipated expenses might you encounter when buying a house or condo in Massachusetts?
You’ve been saving for years, you’ve carefully budgeted the money you need to buy a condo or your first house, you think you have a handle on the costs – and then an unanticipated expense hits you at the last minute. Ouch! What are some of the miscellaneous costs of buying a house or condominium in Massachusetts?
Insurance for Home Buyers
Insurance- When you buy a house the bank will require proof – an insurance binder – that you’ve paid for a year’s homeowner’s insurance coverage. Most likely the bank will set up your monthly mortgage payment to include money towards future insurance payments. This money is held in escrow by the bank which typically collects money towards your property taxes as well. Even though you’ve just paid for a year’s coverage the bank will also collect several months worth of that monthly escrow amount.
Condominium associations are covered by master insurance. As a condo unit owner you will be responsible for a portion of that coverage which is typically budgeted and paid for with your condo dues . If you’re buying a new condo it is not uncommon for you to be required to reimburse the developer for insurance payments he has made in advance. For example, if the developer paid for a full year’s coverage you would be required to pay your unit’s portion of that bill.
Master insurance for condos typically covers the building “from the studs out” and condo owners are encouraged to get an additional policy to cover the contents and finishes of their unit. Until recently that coverage was not required as a condition of your mortgage but due to changes in lending guidelines, it is now a requirement to get a mortgage. The coverage is called HO-6 insurance and lenders and others involved in the home buying process are just getting a handle on what’s required. Lenders are requiring coverage equal to 20% of the appraised value of your condo and you would then get additional coverage for your possessions, etc. Your attorney, lender and insurance company can provide guidance.
Title Insurance is an unexpected expense that buyers often don’t find out about until quite late in the process since it is usually paid for at the closing. As a buyer you assume all costs incurred by the bank making your loan. You will pay for title insurance to protect the bank – that’s not optional. Title insurance coverage to protect you is optional however.
When I bought my first house I wasn’t spending any money that I absolutely didn’t have to and chose not to get title insurance. In the years that followed, however, I repeatedly read real estate attorneys’ newspaper columns that advised homeowners “if you had title insurance you would be ok” in response to some question about a problem (or disaster!) they were having with their house. I’ve made sure to purchase title insurance ever since. Like much insurance it’s coverage you may never have to use but sure will want to have if some problem comes up – documents that were misfiled, problems with what’s deeded to you and what isn’t – the problems that title insurance covers are varied and unexpected and often come up years down the road when you’re trying to sell your home to move to a new place. Title insurance will help to address those unexpected problems.
Contribution to Reserves
If you’re buying a new condominium in Massachusetts most condominium associations will require you to contribute two months of condo fees to the condo association’s reserve account. This means that the new condo association will have a balance in the bank to deal with any issues that come up.
If the house or condo that you’re buying is heated by oil you’ll be required to reimburse the owner for the oil in the tank. Shortly before the closing, the seller will get a statement from the oil company that gives the value of the oil in the tank.
Better to know what to expect so the unanticipated expenses when buying a house or condo in Massachusetts don’t trip you up at the last minute.
Last night I came across something in a book that suggested blog posts should be short. Mine usually aren’t but it seems this one probably will be.
Are There Foreclosures in Cambridge?
Not so many as it turns out. Here and there we notice one or two foreclosures listed for sale by the banks but they typically sell fairly quickly. There were also a couple in the big auctions that were held in Boston.
With a quick scan of all the Cambridge real estate listed for sale in the MLS I found only one bank owned condominium currently on the market. It’s a six room three-bedroom condo on Windsor Street, midway between Inman Square and East Cambridge. It sold in 2006 for $390,000 and is currently listed, post-foreclosure, for $238,900.
There haven’t been many foreclosures in Cambridge or in Arlington, Watertown or Belmont. There are more foreclosures and short sales in Somerville and Medford, however, so stay tuned for a longer post!
I read some survey results this afternoon that indicated over half of prospective first time home buyers didn’t know about the $8000 credit. Time to write a blog post!
The 2009 first time home buyer credit is limited to 10% of the home’s purchase price up to a maximum of $8,000. We don’t have any real estate in Cambridge or Somerville available for less than $80,000 so buyers who qualify for the credit will be eligible for the full amount (with restrictions by income as explained below).
Who Is Eligible For the First Time Home Buyer Credit?
- First time home buyers who purchase a principal residence between January 1, 2009 and November 30, 2009.
- The purchase date is defined as the date the closing occurs and title transfers to the buyer
Who Qualifies As a First Time Home Buyer?
- The definition of a first time home buyer eligible to receive the credit is a buyer who has not owned a principal residence during the three years preceding the purchase.
- Both spouses’ homeownership history is considered when determining eligibility. If either spouse has owned a home in the last three years neither will be eligible for the credit.
- If the homebuyers are not married the credit may be allocated to a qualifying partner even if other partner[s] do not qualify.
- Ownership of vacation or rental property not used as a principal residence does not disqualify a buyer.
What Kind of Property Qualifies for the Credit?
- A condominium, single family house, co-op, mobile home, or houseboat (!) used as a principal residence
- The home must be in the United States
- Vacation properties and rental properties are not eligible
What Are the Income Limits for the Tax Credit?
- Buyers with modified adjusted gross income (MAGI) of up to $75,000 for a single first time home buyer and $150,000 for a married couple filing a joint return are eligible for the full credit.
- The credit is reduced proportionally for MAGI between $75,000 and $95,000 for single buyers and between $150,000 and $170,000 for married buyers filing jointly.
- Single buyers with a MAGI over $95,000 and married buyers with a MAGI over $170,000 are not eligible for the credit.
Does the 2009 Credit Need to Be Repaid?
Unlike the credit available to buyers in 2008, the 2009 credit does not need to be repaid unless the home is sold before three years have passed.
Please consult your accountant or tax preparer for more information. The National Association of Realtors website has a number of articles and links about the 2009 first time home buyer credit.