Should I Get A Home Inspection Before Buying?

Homebuyers will frequently ask “should I get a home inspection before buying?”  The answer is certainly very specific to the circumstances.  In most cases, I would certainly recommend that a home inspection is done.

 

Waiving a home inspection has financial ramifications. A Home inspection can help prevent a financial disaster. Lets delve into the question "Should I Have A Home Inspection?"

Why Should I get a Home Inspection Before Buying?

Buying a home for many is not something that is done very often.  You take the time to get properly financed for your home purchase, search for homes then finally put in an offer. Ont op of it all, most likely your home purchase will be the biggest investment you ever made.

Now it is time to make sure you understand the condition of the home.

A home inspection will provide you with a fairly extensive overview of the condition of the home.  As the home sits now, as well as near-term maintenance that may need to be performed. All the major systems should be covered by a home inspection such as plumbing, electrical, roof and heating, as well as structural integrity and safety of the home.

You will be given a detailed report to review, usually broken down into categories.

Obviously, if there are immediate structural, system or safety concerns you may want to ask the seller to repair the problem.   For example, a common issue that you may run into is mold on the roof sheathing and rafters.  That is a major safety issue that should be addressed immediately.

On the other hand, you may find the furnace is at the end of its useful life at 20 years old.  Yet it still runs perfectly.  You may not feel like you should ask the seller for a new furnace but it alerts you to the fact you could be replacing a furnace in the next 5 years and you should probably budget for a new one.

Home Inspection Clause in a Contract

The first step is before ever signing a contract make sure you understand the home inspection terms you are agreeing to.  A standard contract to purchase here in Massachusetts will usually be along the lines of the following:

Inspections- The BUYER’S obligations under this agreement are subject to the right to obtain inspection(s) of the Premises or any aspect thereof, including, but not limited to, home, pest, radon, lead paint, septic/sewer, water quality, and water drainage by consultant(s) regularly in the business of conducting said inspections, of BUYER’S own choosing, and at BUYER’S sole cost within  7  days after SELLER’S acceptance of this agreement. If the results are not satisfactory to BUYER, in BUYER’S sole discretion, BUYER shall have the right to give written notice received by the SELLER or SELLER’S agent by 5:00 p.m. on the calendar day after the date set forth above, terminating this agreement. Upon receipt of such notice this agreement shall be void and all monies deposited by the BUYER shall be returned. Failure to provide timely notice of termination shall constitute a waiver. In the event that the BUYER does not exercise the right to have such inspection(s) or to so terminate, the SELLER and the listing broker are each released from claims relating to the condition of the Premises that the BUYER or the BUYER’S consultants could reasonably have discovered.

Basically this home inspection clause really gives you the right to back away for almost any reason as long as you follow the timeline spelled out.

** Please note contracts can differ make sure you understand your Inspection clause before signing a Contract to Purchase**

Should I Ever Give Up My Right To Have A Home Inspection?

The one time you may want to give up your right to a home inspection is when the market is hot and there is stiff competition among buyers. And in the 2021 real estate market, many home buyers are choosing to waive the right to a home inspection.  This makes it hard to compete with buyers who want to do a home inspection.

Waiving your right to a home inspection may significantly strengthen your offer in the seller’s eyes.  You have just removed a huge layer of risk for the sellers by forgoing your right to a home inspection.  And, an offer with a home inspection contingency will be worth less money than one without.

Talk to your agent if you believe you would like to do this.  But, be fully aware of the ramifications.  You will own any problems after the sale.  Giving up your right to a home inspection is not for the faint at heart but it may help get your offer accepted.

Do not ever let an agent talk you into giving up a home inspection if you are uncomfortable in doing so.  Ultimately it is your decision.

While forgoing your home inspection may have negotiation advantages, I highly recommend you think carefully about giving up your right to a home inspection.  A home inspection is your last line of defense in buying a home that is safe, sound and in good working order. 

Alternatives

If you are in a market where many buyers are willing to forego their home inspection, consider some alternatives.

  • A pre-offer home inspection.  Many home inspectors are offering a modified home inspection which is a walk-through with the buyer to alert them of any issues.  This way you can remove your home inspection contingency with confidence.
  • If you feel you absolutely must have an inspection consider a fixed price addendum stating you will not have any recourse if non-cosemetic repairs are in excess of a fixed dollar amount.  This may alleviate some risk for the seller.  But realize it will be hard to compete with buyers completely waiving the home inspection.

YouTube Video- FOX 25 News Reports On Waiving Home Inspections

What  If My Home Inspection Fails?

Home inspections are not a pass or fail.  It is an overview of the condition of a home.  Maybe a home inspection reveals a lot more hidden problems than you were aware of initially.

This is where your real estate agent can help.  They are familiar with homes in this price range in a given community and what should be expected.  This is where some common sense can prevail.

A home priced at $200,000 in a community where the median home price of $425,000 is probably going to have lots of problems.  Condition certainly impacts the price of a home.  Alternatively, a home built 3 years ago should also have very few minor problems at best.

A little common sense and market knowledge should prevail when reviewing your home inspection report.

What Should I Do If I Do Not Like The Results of My Home inspection?

The first thing to do is read your Contract to Purchase.  What are your rights regarding the Contract to Purchase?

Most home inspection clauses will allow you to back away from the deal for almost every reason.

But do you want to back away?  Remember most houses are not perfect.  First, make a list of what you see as a problem.  Then sit down with your buyer’s agent to decide on a course of action.  There are several courses of action you can take.

  1. Completely withdraw from the deal–  If nothing is what you expected and the home does not provide you with a reasonable standard you can withdraw from the contract.
  2. Renegotiate-  Maybe a price reduction in the purchase price can be had to mitigate your out-of-pocket expense in the near future.  This will probably require getting quotes and a little bit more research to be done.  Make sure if you need more time ask for an extension on the home inspection contingency.
  3. Ask for the seller to do repairs- Another option is to ask the seller to do repairs of items you find insufficient. You will still pay the price negotiated but in return you want x,y,z done.

Is The Seller Obligated To do Repairs or Reduce the Price?

No, the seller is not obligated to repair or reduce the price after an unsatisfactory home inspection.  It is all subject to negotiation just like anything else.

This is where it pays to be reasonable with your requests.  Base your requests on what is typical for a house in this price range, the cost of the projected repair and the impact the repair might have on safety and structural integrity.

What is reasonable?  That should be discussed with your real estate agent as there are too many variables to list.  Again, put into perspective what price range you are in and what might be considered reasonable for that range.

Another big factor is are you in a seller’s market vs a buyers market.  In a strong seller’s market, a seller can tell you to step aside they have multiple offers behind you.  It may behoove you to be very reasonable in your requests.  Alternatively in a strong buyers market, shoot for the moon, the seller will just be relieved to sell their home.

How Do I Find A Good Home Inspector?

As you cant tell there is a lot at stake revolving around a good home inspection. It is really your last line of defense in getting a good home, so you want a great home inspector.  How do you find one?

  1. If you are working with a buyers agent worth their salt, they will have a list of preferred vendors.  They can recommend several good inspectors to you.
  2. Ask friends and relatives for referrals of home inspectors.  Nothing is better than a good referral from someone who has direct experience.
  3. Make sure they are a member of ASHI, The American Society of Home Inspectors .
  4. Make sure they have an Errors and Emissions Insurance policy.
  5. Now is not the time to save money and price shop home inspections.  Pick a home inspector based on recommendations not the amount of money they charge.

Lastly, I always prefer an independent home inspector.  One who’s career depends on referrals and his last job.  He gets his business through word of mouth from getting referrals not a huge advertising budget.

Don’t wait for the last minute to find a home inspector.  As soon as you know you are going to buy a home ask your real estate agent if they have specific recommendations for home inspectors as well as solicit friends and family.   Once you put an offer in things move fast and you don’t have a lot of time to research home inspectors.

You have too much at stake to not take your home inspection seriously.

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Should I Get A Home Inspection Before Buying? was written by Kevin Vitali of EXIT Group One Real Estate.  I am a buyer’s agent that has helped 100’s of buyers make the best of their home purchase.  Find out how we can work together to get you the best home possible.  Call 978-360-0422.

Bill Gassett, Hopkington MA REALTOR- How to Select a Home Inspector 

Kyle Hiscock, Rochester NY REALTOR- Top Reasons to Have Hire A Home Inspector 

Teresa Cowart, Richmond Hill GA REALTOR- How to Make the Best of a Bad Home Inspection

Do I Need A Buyer’s Agent When Buying A Home?

Should I use a buyer's agent when buying a home?If you are starting down the path of buying a home the thought might cross your mind….. do I need a buyer’s agent?

The simple answer is no, it is not required you are represented by a buyer’s agent when purchasing a home.

But there is much to consider when you decide to buy a home and choosing what role you want your real estate agent to play in your home purchase is one of them.  If you are a seasoned home buyer with several home purchase under your belt, you may be pretty savvy about purchasing a home.

On the other hand you may be a first time home buyer or you just haven’t bought a house in awhile and may want a buyer’s agent to work on your behalf.

While some buyer’s have the misconception that they will save money or get some inside track when going directly to the listing agent, nothing could be farther from the truth.

I Received A Phone Call From A Distraught Home Buyer Today

What prompted me to right this article, is I received a phone call from a concerned dad and his distraught daughter.  They had found me on the internet. 

The daughter was a first time home buyer and the dad had only purchased one house in his lifetime.  She had a condo under contract and was to close today. 

There was some unresolved issue with mold in the attic.  The daughter was concerned about the magnitude of mold in the attic and was not allowed to bring in a specialist by the listing agent.  Unfortunately, she mishandled it, by not understanding the steps involved and was strong armed by the listing agent.  The listing agent insisted she close or lose a significant amount of  deposit money.

Their lack of knowledge about buying a home first made them ignore critical contingency dates and proper protocols to withdraw or get the seller to rectify the issue.

Meanwhile, the listing agent was threatening close or you wont get your deposit back.

The fortunate thing in talking to them there was some documented correspondence about the mold that they could sink their teeth into. 

I recommended that they call the closing attorney and pass along the chain of correspondence and see what could be worked out with the selling side. 

In the end it worked out alright.  She closed and the cost of the mold issue was split between the buyer and seller.  The buyer was forced to make the compromise or forfeit her deposit money.

The underlying issue is if the home buyer had used a buyer’s agent she would have never been in this position to begin with.  At the end of the day it important to know what you don’t know when it comes to real estate.  But you know who does?  A Buyer’s Agent!!

Do I Need A Buyer’s Agent When Buying A Home?

Now lets look at this question…. do I need a buyer’s agent when buying a home?… one more time.

And the answer should be Yes, what do you have to lose!

There are so many things a buyers agent can provide for you and on top of it, it’s free.  The listing agent pays your commission out of their total commission.  There is no fee passed on to you.

The Myth About Going Directly To The Listing Agent Will Save You Money

In 20 years I have done quite a few transaction where I represent the seller and I have never had a buyer “save” money because they bought directly from me. 

While some agents may give up a percent or maybe two to make a double ended deal work, it is pittance in the amount of money an agent can potentially save you in costly errors…. like the home buyer in the story above.

The other reason a home buyer goes directly to the listing agent is home buyers feel they will get some inside track from the listing agent or they know more about the house. 

But remember the listing agent has a contractual obligation to the seller and must act in the sellers best interest.  They are only going to spin the information that benefits the seller. of course while staying within the law (or hopefully).

For example a common question that home buyers are hoping to get an answer for is why are they moving?  Its a nonsense question.  The listing agent is not going to tell you….

that they are going thru a bitter divorce….

or a spouse died and there is financial trouble….

or the neighbors are horrible…

The listing agent is under no obligation to disclose a sellers circumstances if their circumstances do not effect the property in anyway.  As a matter of fact they have an obligation of providing confidentiality to the seller. 

Any information that a listing agent has, can be obtained by a buyer’s agent.  And, any information that is important that is gained from the seller or listing agent should be independently verified by the buyer and/or their buyers agent. 

What Benefit Does a Buyers Agent Provide?

There are literally hundreds of tasks a buyer’s agent can provide for you but I will break it down into a few major groups.

The first thing you need to know is what do you know about home buying.  The second thing you need to know is, as much as you think you understand home buying, realize there are more aspects of home buying you know nothing about.

Know you don’t know what you don’t know. 

But you know who does?  A buyer’s agent.  A buyer’s agent is immersed in real estate 40+hours a week, day in and day out.  They have the knowledge to advocate and educate you through the home buying process. 

I am not going to go into great deal of detail, but I will touch on a few things here.  A buyer’s agent can:

Educate You– Understanding current market conditions and the home buying process are key to home buying success.

Coordinate The Various Steps and Parties-  There is much to coordinate between parties…. from showings, to contracts and scheduling final closing events.  There are also many parties involved that need to be coordinated between all.

Negotiating on Your Behalf-  As a full time real estate agent, much of any given day revolves around negotiating.  Negotiating and handling listing agents and sellers are a daily part of our business.

Counsel You-  You should never find a buyer’s agent selling you anything.  What a buyer’s agent will do is counsel you.  They will give you options and the pro’s and con’s of each so you may make the decision that is right for you.

Use Their Experience-  Experience matters, find a buyer’s agent that has been in the business at least five years.  They understand the subtleties of different markets, they know how sellers think, they know how to negotiate, etc… Basically they take all their experience of multiple transaction and use it for your benefit.

is a buyer's agent necessary when buying a home

Understanding Your Real Estate Agents Role

Again, I cover understanding real estate agency in another article.  As a matter of fact I have multiple articles on the topic. 

But if I throw out seller’s agent, buyer’s agent, facilitator, dual agent, sub-agent, designated agent and you have no idea what even one of these terms mean, you should be using a buyer’s agent.

Each one of these agencies will play a different role for you in a purchase, some work for you, some work for no one and some work for the seller.  How you interact with each party is vital to a successful home purchase.

So Do I Need A Buyer’s Agent?

Obviously that is a very personal decision whether or not you need a buyer’s agent to purchase a home.

But if you don’t have any or very little experience buying a house, why wouldn’t you use a buyer’s agent?  The listing agent pays your buyers agent commission out of the commission they charge the seller.

For no cost to you a buyer’s agent can work on your behalf to help you save time, money and aggravation. 

Seems like a no brainer to me.

Other Real Estate Resources:

This article, Do I Need A Buyer’s Agent When Buying A Home? was provided by Kevin Vitali of EXIT Group One Real Estate. I have helped 100’s of home buyers and sellers over the years and am confident my experience and skills can make purchasing your next home a pleasant experience. Please feel free to reach me at 978-360-0422 to discuss your upcoming purchase.

Escalation Clause- Win the Bidding War

escalation clause be the winning bidderAn escalation clause can be a great way to structure an offer to be the winning bid in a red hot seller’s market.  When you know buyer competition will be high on a home, it it also means you may be competing with multiple offers .

Here in the Massachusetts Real Estate market we are seeing certain communities or properties that will most likely be in a bidding war with multiple offers with in days of hitting the market.  It can be very frustrating time for home buyers.

What is an escalation clause?

An escalation clause is you offer a certain price and than agree to pay x amount above the next highest acceptable offer up to a certain price, called a cap.  For example you offer $500,000 for a house and you submit your offer with an escalation clause saying you will offer up $2500 over the next highest bid, up to $550,000.

A typical escalation clause will read like this:

 

In the event the seller receives one or more valid offers with terms acceptable to the seller, but which the net proceeds to the seller is equal or greater to the net proceeds of this offer, then the stated purchase price in this offer will automatically generate net proceeds  to the seller equal to  $2500 in excess of highest net proceeds of sale generated by other offers.   The sales price is not to exceed $550,000.  The Seller will provide the Buyer with sufficient documentation to justify the sale price increase.  The buyer understands the escalating clause in this offer may result in multiple escalations and in some cases escalate to the cap.

When To Use An Escalation Clause?

You really only want to use an escalation clause when there is a very high likeliness of being in a multiple offer situation. 

Talk to your buyer’s agent and discuss  the possibility of including an escalation clause.   When a property is new to the market, appears to be priced well and has a ton of buyer activity, there is a good chance it will be in a multiple offer situation.  

Many homes here will have 20, 30 or more groups of people going thru the first open house if it is going to be in a multiple offer situation.

I have been very successful in helping my buyer clients get the home they want by using an escalation clause and beating out the next highest bid by $1000 to $1500.

I Don’t Want To Overpay For A House

Many times home buyers confronted with a multiple offer situation will back away and not submit an offer.  There reasoning is they think overpaying if they offer over full price.

On the other hand, if you want a good home there are plenty of other buyers you need to compete with in many markets right now. It is one thing if you are capped out on what you can afford.  But if you feel you are being forced to overpay, think again.

While of course no one wants to overpay, are you really overpaying? 

Fair market value is really determined by the buyers.  Fair market value is the amount the general buying public is willing to pay for a home in a reasonable amount of time in the open market. 

Well, when you have multiple offers, it goes to show you the desirability of the home to the general buying public.  The buying public has justified the price on a home when multiple buyers are willing to pay over asking.

Home buyers too often get caught up thinking a listing price has all that much to do with value. 

Their thinking is if they get a home for less than the listing price they have secured a “good deal” on a home.  The listing price can have little to do with what the fair value of a home.  Homes can be severely overpriced, slightly overpriced, priced right at market and under priced as well.  

You very well could pay over asking and still get a good deal on a home.

Is There Any Downsides To An Escalation Clause

While an escalation clause can be a highly effective tool it could come with some downsides.

In rare cases, sellers can’t wrap their heads around an escalation clause and ignore the escalation piece.  They find it too complicated. The good part is that in many parts of the country its become common and a listing agent should be able to explain it well to a seller.

There may be unscrupulous sellers that fake an offer just to get more money.  Always ask to verify a buyer with an offer, copy of the deposit check, pre-approval letter and a copy of the agency disclosure.  Just make sure account numbers are removed.

Lastly, if you are not in a multiple offer situation, it can backfire on you.  You have tipped your hand to what you are willing to pay if there are no other offers on the table.  It compromises your negotiating position.

Be The Winning Bidder On A Home

Be the winning bidder when competing with multiple offersWhile there is never any guarantee that you will be the winning bidder on a home, you can certainly increase your odds.

First you should understand what can happen with multiple offers.  An understanding of what fair market value is also important.  Lastly, you should discuss a negotiating strategy with your buyer’s agent.

Yes…. I said discuss a negotiating strategy.  A good buyer’s agent is well versed in negotiating, but there are several moving parts that need to be assessed by a buyer’s agent.  Of course if you feel the home is desirable among other buyers this is the time to discuss an escalation clause.

An escalation clause is not going to help if you haven’t put forth a clean offer with a stong pre-approval letter.  It is still important to present both to a seller with an escalation clause.

Pull these things together and you can certainly increase your odds of being the winning bidder in a multiple offer situation.

Other resources:

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This article, Escalation Clause- Win the Bidding War, was provided by Kevin Vitali of EXIT Group One Real Estate.  I have helped 100’s of home buyers over the years and am confident my experience and skills can make purchasing your next home a pleasant experience.  Please feel free to reach me at 978-360-0422 to discuss your upcoming purchase.

 

 

 

What Should First Time Home Buyers Know?

what should first time home buyers know?You are thinking you may want to buy a house.  What should first time home buyers know?

Many people buy a house very few times in their life.  Its a big decision and lots of money is involved.  Home buying for anyone can be a stressful process, but can certainly be full of missteps for a first time home buyer.

Buying a home can be complicated on many levels.  First their is the legal side of buying the home.  Then there is actually looking for homes that suit your needs but are also a good purchase financially.  Finally there is a myriad of due diligence and paperwork that needs to be tracked.  Making a mistake can cost you thousands.

What Are Some Things I Need To Know Before Buying My First House?

When your buying your first house you will get out of it what you put into it.  Take the time to do your research and take the proper steps and work with professionals along the way.  Here are some things to consider if you are going to become a first time buyer.

At The First Thought Of Buying Check Your Credit

Have a mortgage lender pull your credit or get your annual free credit report though www.annualcreditreport.com.  Your credit score or FICO affects many things during your home purchase.

Your credit score determines your interest rate on a home mortgage, as well as rates for Private Mortgage Insurance and Homeowners Insurance.  A home buyers credit score also dictates what loan programs are available to you.  Almost every 20 points of credit score has a potential benefit for you.

And as a first time home buyer, you most likely are looking for low money down home loans.  The best loan programs are reserved for buyers with the best credit.  The best loan programs usually means the best interest rates, reduced or no private mortgage insurance and other money saving features.

By pulling your credit early, it allows you to fix any errors on your credit.  Which does happen more than you think!

It also allows you to work on raising your credit score sometimes by making some small adjustments.  Often, just paying down a line of credit a small amount can drastically improve your score.  This year alone, I had one client raise their credit score 111 points in 60 days and another raise theirs by 60 points saving both hundreds of dollars in mortgage payment.

My word of caution is don’t think you can fix your credit on your own.  Consult with someone who knows what they are doing.  Your mortgage lender can be a great resource.  Many of them have a tool called Credit Xpert which identifies and simulates what certain changes will have a positive impact on your credit score.

Buying A Home Is A Commitment

Realize buying a home is a commitment.  You can’t just pick up and leave like you can when you are renting an apartment at the end of a lease.  There are closing costs, real estate commissions and real estate market conditions to consider when selling.  You need enough money to pay off your mortgage.  And, that may take a few years of appreciation before you can break even.

So when buying your first home hopefully your job situation is stable allowing you to continue paying the mortgage into the future.  But are you ready to settle into community, a neighborhood and even a particular home for the intermediate term?

Just because you have the means to buy a home, doesn’t mean you should if you are not ready.  Be ready to make the commitment to set roots and own your own home.

Know The Finances

The very first step is to get pre-approved and know your numbers. Talking to a lender should be one of the very first steps that you take when you make the decision to buy your first home.  Get a mortgage application in with a lender , and provide the preliminary documents like paycheck stubs, W2’s, bank statements etc….

A lender can not talk real numbers and scenarios with you until you do so.

Many first time home buyers will start their journey looking at houses first.  Then they fall in love with a house only to start the mortgage process in a rush.

During the first process, learn what a mortgage will cost you per month, what you will need for your closing costs and the different variables that will affect your mortgage payment. 

You will probably get pre-approved for more than you are comfortable paying.  But at the end of the day you are the one paying the monthly mortgage.  Make sure you are comfortable with the finances before looking at houses.

Have Extra Money Set Aside

When you are buying a home you are constantly thinking about the down payment and closing costs.  But remember to save money for after your purchase. 

If you are buying your first home you will need money for things like lawn mowers, snow blowers, etc…  You also may need money for some unknown repairs.  You are no longer going to pick up the phone and call the landlord when something breaks.  Repairs and maintenance are completely on you.

Buy A Home For The Future Not Just Today

Its easy to think about your housing needs currently and buy a house for your immediate needs.  But, think about your future housing needs as well.  You want to buy a home that could suit your for 5-10 years if necessary. 

Remember life can change quickly, as well as the real estate market has it’s ebbs and tides.  If you buy a home and the real estate market softens you might not be able to get out whole for a few years.  You need your home to have some flexibility.

Buying A Home Is About Compromises

Often a buyer starts the process with expectations and wants, fully expecting they can get everything they ever dreamed of.  But for many, that is not a reality.  Even with high end buyers, buying a home is about making compromises albeit very different than ones that a first time home buyer might make, but still, compromises need to be made.

It is important to get a handle on what is really important to you and where you can make compromises.  This means getting a handle on the inventory in a certain community.

Maybe you will find you want more square footage and you are fine living on a busy road.  Or you find to get a fully remodeled home you need to look at smaller homes rather than bigger homes that need work for the same price.

Remain flexible and adapt as you go through the first time home buying process.

Buy A Good House With Good Bones

It is very easy to get caught up in the new, the shiny and the sparkly.  At the end of the day make sure you aren’t enamored by the glitz and buy a solid house that isn’t going to cost you a considerable amount of money int he near future.

It was nice the owner painted the cabinets and threw down a laminate floor and the installed the cheapest granite they could in the kitchen, but the windows need replacing, the roof is starting to leak and the furnace is on its last leg.

Its impossible to live with a leaking roof and a furnace that doesn’t work and difficult to put up with leaky windows stealing your hard earned cash in extra heating costs.  But you certainly can live with an outdated kitchen indefinitely until the timing is right to do a proper remodel.

Look beyond the cosmetics of a home and concentrate on what is important.

Don’t Chase Unicorns

Once you make the decision to buy, don’t look for homes that don’t exist…. or as I call it chasing unicorns.

While it is one thing to waste some time looking for something that doesn’t exist, its another thing to lose good opportunities that are in front of you that exist here and now. 

In the seller’s market we have been in, property prices are increasing about a half of a percent a month and interest rates are rising.  9 months of looking for a house that doesn’t exist can cost you dramatically.

For example a $300,000 house today could be worth $315,000 in 9 months.Top that off with a 1/4 of a percent interest rate increase and you have lost well over 6-7% in buying power.

Learn where your reality lies early on in the home buying process and focus on what you can get and not searching for what doesn’t.  Once you decide buying is right for you, buy a home in a reasonable amount of time.

Work With A Buyer’s Agent

A buyer’s agent is an agent that works for you, the buyer.  As a first time home buyer, definitely think about working with a buyers agent during your purchase. 

In this day of the internet, anybody can find a home to buy.  So why do you need an agent? 

There is more to buying a home than finding a home on the internet. 

An experienced buyer’s agents role is to guide and counsel.  From making financial decisions, evaluating properties, negotiating on your behalf to more administrative task like keeping track of critical dates, tracking paperwork and money, scheduling and more, a buyer’s agent is with you every step of the way.

So you think the internet is going to answer all your questions? 

Buying and selling real estate is dynamic, markets can change on a dime as well as how business is done.  There are many articles on the internet that are old archaic ways of dealing with the various aspects of real estate.  Use an experienced buyer’s agent to guide you through the home buying process.

wha should first time home buyers know?

 

Understand Who Is Working For Who

This goes along with buyer’s agency. 

And, it is where many buyers get into trouble.  They think every agent that talks to them is their agent.  This is not true… at all.  There are buyer’s agents, listing agents, dual agents, designated agents and facilitators and they all have a different legal role in how they interact with you.

But knowing who that agent owes an allegiance too is the tricky part sometimes.  Before you go looking at houses make sure you know what the lawful agency relationships are in your state.

One of the biggest mistakes a buyer can make is buying a home at an open house thinking the agent works for them.  In most circumstances that agent works for the seller.  Their job is to sell the house to you and get the seller the best price and terms often to your detriment.

Would you think you could win a pick up game with a pro basketball player?  Then how could you think you could come out on top against a professional real estate agent that does this day in and day out?

Forget What You Learned About Buying A Home On Reality TV

There is not much reality to the reality home shows.  First I would be surprised if any buyer bought a home after looking at just three homes. More like a minimum of 8-15.  

Unfortunately, many of these shows give a perception that it is so easy to move a wall and remodel, often with budgets that are not a reality here in New England.  Yes, anything can be done but remember it cost’s money!

And, where will that money come from? 

Don’t think spending big money renovating will return huge dollars.  The renovations and big gains that are reported on these shows are unrealistic.  At least in the greater Boston area.

They also leave out all the complexities and pitfalls that come with the process.  And here in Tewksbury MA, a super hot real estate market, what about the buyers who lose 10 offers from underbidding before they get an offer to stick?

There is a massive reality distortion that comes from the reality home shows.  Put aside every preconceived notion you have about home buying from them.

Know What You Don’t Know?

Many first time buyers blissfully go along thinking they can do it on their own.  Not knowing what you don’t know makes it easy.  But what are you missing.  Sometimes your buying mistake is apparent right away but often a homeowner doesn’t realize they made a costly mistake until it comes time to sell. 

So what can go wrong?  Buy a five bedroom home on a 3 bedroom septic…. whoops now when you sell you’ve lost value from losing bedrooms.  Or purchase a 3 family that is legally just a two family.  Or not realizing the condo you bought has a huge special assessment coming for roof repairs. 

These are just 3 very real, examples of things that can go wrong.  If you are going it alone, and you didn’t do your do diligence or ask the right questions, its now your problem and now you own it.

Buying a home is complex on many levels.  Financing, finding the right home, home inspections, closing….  every step of the way can cause you at the very least stress but also money! 

Like I said earlier, anyone can find a home online, but there is so much more to the home buying process. 

Not only hire a good agent to represent you, get a good home inspector, mortgage lender and real estate attorney to round out your home buying team. 

Summary Of What First Time Home Buyers Should Know?

As you can see understanding the process and how they fit together during your purchase is critical to your success.  Educating yourself about the various pieces and working with the right real estate professional will certainly go a long way.

Take the time and find an agent to work with that you are comfortable with.  From there they will generally have recommendations of other real estate professionals that work in a similar fashion.  And guess what, they do this everyday day in and day out…. they know what they are doing. 

Finally realize you are in a process.  Doing things out of turn or skipping steps will only lead to a disaster. 

Happy house hunting!!

Other First Time Home Buying Resources:

What Should First Time Home Buyers Know? was provided by Kevin Vitali of EXIT Group One Real Estate. Kevin Vitali is a Tewksbury MA REALTOR® that services northern Middlesex county as well as Essex county in Massachusetts. Call for your Home Buying Consultation…completely free and no obligation.

 

Make Your Life Easier By Making Your Agent’s Job Easier

make your agent's life easier

 

 

 

 

 

 

 

As a home shopper, there are a few things you can do to make your life easier…and that is to make your agent’s job easier. You two have aligned goals, so it is best to work with each other instead of against each other. I have observed both sides of the transaction enough times to know a few of the items consumers can do to help their REALTOR®. Here is that list.

Be Upfront and Communicative

All good relationships are built on a foundation of good communication. Let your agent know what you want, and what you expect of them. And vice-versa, agents should let them know what they expect of you. If you have concerns, let your agent know! This is like keeping a secret from your significant other, and expecting things to work themselves out. If there are any conflicts, bring them up right away so it can be resolved as quickly as possible.

Be Realistic

It is okay to give an offer lower than the asking price. However, offering $250,000 on a $350,000 listing will not get you very far. If you are looking for a bargain, let your agent know and they will help you find the type of home you want within your budget.

Share on Social Media

You know what will make an agent’s life easier? Referrals! We aren’t asking you to actively seek out new clients for agent, but to share your positive experiences with them. Write a review on Zillow, or tag their Facebook Business page when you announce to your friends you have a new home. A little can go a long way. And you never know who else is currently researching to buy or sell a home on your friends list. They will be quick to jump in with advice to help you, and to give your agent more insight. Marketing for real estate agents can be made easier if happy clients are talking about them online.

Utilize Your Resources

You hired your real estate agent because they are experts in the real estate market. Trust them to be able to answer any questions you might have. With that said, it is also up to you as an informed consumer to do your own research. There are plenty of online resources available, including your agent’s website, to get most of your questions answered. Finding homes for sale in Andover, MA is something you can certainly find on your agent’s website. If you want a home under $250,000 in Andover, MA and there has only been 2 such homes that have sold in 2 years…t hat might be something you should ask your agent about.

Know What You Want

Part of doing your research before hiring an agent is seeing what the housing inventory looks like, and knowing what you want. It is understandable that new information comes up that may sway your decision making, but having a clear idea of what you want in a home before scheduling showings will save both parties a good amount of time and stress.

At the end of the day, your real estate agent wants what is best for you. And you should want what is best for you. They have the experience and training to make the process go as smooth as possible. So, let’s help them out too shall we?

Other Resources:

“Making Your Life Easier By Making Your Agent’s Job Easier” was written by Pacifico Ortiz Luis, the Marketing and Products Coordinator for Zurple, Inc. Zurple is a behavioral lead intelligence software designed to nurture leads, while agents close them.

Get Ready for Your Home Inspection- You Only Have One Shot

Get Ready for your home inspection
Home inspections are your last line of defense when it comes to buying a home. Be prepared for your home inspection and make the most of it.

You have put an offer in on a home that was accepted!! Congratulations.  There is probably no doubt you decided you should have a home inspection on your new home before closing.  Today we will talk about  how to get ready for your home inspection.

Your home inspection is your last line of defense in insuring your home is safe and sound when you move in as well as alerting you to any repairs they may need to be done immediately or in the near future.

I won’t go into depth here but hopefully you have hired a great home inspector.  It will behoove you to know that maybe your buyer’s agent has a great home inspector or you have done your research before finding the perfect home.   Now is not the time to price shop.  Get the best home inspector you can find.

Getting Ready for Your Home Inspection

Scheduling Your Inspection

Like I said before hopefully you already know which home inspector you are going to use.  The minute you get your home under contract, take a minute and review your home inspection contingency. 

Make sure you understand the terms and the deadlines that need to be met.  Missing a deadline could cost you your good faith deposit if you decide not to buy the house because of home inspection issues.

A typical home inspection period will be 5-10 days.  Scheduling early will allow you time to do additional research or bring in other professionals to inspect or give a quote for repairs.  Time is of the essence.

Write Down Areas of Concern and Questions

As you went thru the home were there any areas of concern?  Write them down so you can call them out to the home inspector.  Often when I am working with a buyer and there deficiencies I spotted and they are using one of my trusted inspectors, I discuss with the inspector my concerns ahead of time.

Hopefully you reviewed the Sellers Statement of Property Condition prior to submitting an offer, but whether you did or not this is a good time to see if the seller’s disclosure raises any concerns for you.

Have your concerns and questions ready the day of the inspection.

Understand What a Home Inspection Is and Is Not

Go into your home inspection understanding what it is and is not. 

A general home inspection is an overview of structures and systems in a home as it relates to your safety and health as well as the overall condition and repair.  A home inspector may call out issues that may require immediate attention as well as issues that are a little more intermediate term.

A home inspector cannot tell you what it will cost to repair something or whether you should buy the house or not.  That is a discussion to be had between you and your buyers agent. Ultimately it is your decision as a home buyer.

A home inspection is an overview it is not a test.  A home inspection is not pass or fail.

Also note, a home inspector can only comment and make recommendations on what they can see.  A home inspector will often remind you of that.   The inspection will also be comprehensive and list every little issue that they can find, don’t get overwhelmed.

A home inspectors job is to give you the best overview they can of a house as it sits today as well as what may be expected in the very near future.  They will also cover some basic ongoing maintenance and maybe upgrades you should consider.

Do not put an offer in an a home thinking you can renegotiate after the home inspection.  The home inspection is not for you to renegotiate.  With that said, often a home inspection will trigger renegotiation based on deficiencies you may not have expected in a home.  But in no way should you go into the inspection automatically thinking you will renegotiate.

Get the most out of your home inspection
Getting the most out of your home inspection will help you get the most out of your home purchase,

What You Should Expect Out of a Home

What you expect out of a home can certainly vary from price range to local real estate conditions.   For example your expectations should be much higher out of a new home than something that was built 40 years ago.  Hopefully you will have seen enough homes to get a general sense of a basic condition of the home in your range.

Remember you are buying a used house.  It is just like buying a used car.  You can expect some dings dents and minor repairs.

But at a minimum you should expect the home to be safe, healthy and all systems and structures working properly unless otherwise disclosed or marketed in the listing.

Safe-  An electrical panel corroded from water penetration is a major fire hazard.  A bathroom missing a GFCI outlet is is not a major safety issue and can be easily corrected for short money.

Health-  Black mold covering half of the roof sheathing or high levels of radon are a major health issue.  A small patch of mold on some sheet rock in the basement from a failed water heater is not a major health issue.

Systems/ Structural-  A furnace with a cracked heat exchanger is a major systems issue as well as safety issue. A furnace that is working properly but is deemed to be past its serviceable life is not a major systems issue.

At a bare minimum I tell my client we expect a home to be safe, healthy and in proper working order.  Past that you really need to speak with your buyer’s agent about what should be expected.  There are just too many variables to cover here.

The point of a home inspection is to discover major or costly defects with a home that you did not see when viewing the home.

Two Phrases A Home Inspector Will Use That Drive Home Buyers Crazy

There are two phrases that home inspectors use that can drive home buyers insane thinking the sky is going to come crashing down.  I am going to call them out here:

“It is not to code”  A home inspector will call out items that may not be to today’s building code.  But to be honest, a house shortly after it is built is not to code.  You can’t expect a house built in the 1940’s to meet current codes today.

“It is past it’s useful/serviceable life”  You will hear this often when inspectors talk about furnaces, water heaters or anything with a projected life span.  A HVAC “useful life” is typically 15-25 years depending on the system.  Just because it is past it’s useful does not mean it will not last for many years to come.  The question is…. is it working properly right now?

Neither of these are generally a cause for great concern.  Put these two phrase into context before arriving at your inspection and it will make the inspection easier.

The Home Inspection Itself

Discuss with your agent and inspector how long the inspection will take.  Clear your schedule so you can be present and focused. Turn off your cell phone and maybe it is a good time to get a babysitter for the kids.

Also dress appropriately for the weather and dress to get a little dirty.  You may be poking your head into some dirty areas like an attic or crawl space.  Bring a flashlight and a small notepad.

Before you start, this is a good time to address specific concerns with your home inspector so he has them in the back of his mind as you go thru the home.

Now its time to follow him around.  Pay attention and don’t be afraid to ask any questions.   Your agent should also be present and focused as well.  Often I will ask questions when I am representing a buyer that maybe the buyer should have asked.

The inspector will provide you with a full report within 24 hours of the inspection but it may be a good idea to take notes.  A good home inspector will also give you plenty of maintenance tips that is helpful especially if you never owned a house before.

3 Great Questions to Ask During Your Home Inspection

Most home inspectors are very matter of fact.  The deliver major issues in the same manner as minor ones.  Their job is about stating facts.  Here are some great questions to ask to really get to the bottom of things:

How bad is it, really?  Just because a home inspector points something out doesn’t mean its a major issue.  For example an older home that has settled might have a slight slope in the floor.  That is just settlement issues that come with an older home.  It’s not bad it is just a flaw in many older homes.

Is this a typical problem you see in homes like this?  This is another great question to ask to get to the bottom of the seriousness of an issue.  Just like the sloping floor in the example above his answer will be almost all homes of this age will have some settlement.

Who would I get to fix that?  Another great question to get perspective on an issue.  Often an inspector will look at you and say, I don’t know why you would hire anyone I would just pick up a so and so and pop it in…  If it is a larger issue he will tell you the appropriate professional that is needed.

At The End Of the Inspection

Time for a quick recap.  A home inspector can’t tell you what to ask for in seller repairs or whether you should buy a home or not, but, again if you pose a question a certain way you can certainly get some great insight.  So as your are recapping the home inspections ask the inspector:

If this was your house what issues would you be concerned with that needs to be corrected immediately?

Short term are there any other repairs you would consider and when?

These two questions alone will reveal the importance and priority of the issues in a home.  The home inspector may say nothing needs to be done immediately and I would just monitor and pay attention to these areas.  This will be an indicator that there really isn’t any serious issues. 

If he does call out some issues as major concerns that may be the time to talk to your agent and see if the seller will give a concession or repair the issues.

After You Get Your Home Inspection Report

You will have already gone thru the inspection in your head.  But, go thru the report carefully to see if you forgot anything.  As you go thru the report create a list of areas of major concern to you and a list of short term items you know needs to be done but you will be willing to take on.

When you put your list together think is this a major safety, health or system/structural issue?  If it is a yes, than put it on your list of major home inspection concerns.  If the item is something that is under $50-100 to repair I would just put it on your repair list to do yourself. 

But other repairs you weren’t counting on can be way more costly like replacing 15 feet of sill from insect damage or mold mitigation in the attic.  Both of which could run into the thousands.

Ask your buyer’s agent what if any issues they believe you should have addressed by the home seller.  Hopefully your agent is experienced and have a sense of what a seller may consider repairing or compensating you for.

At this point you may want to either pull in a more specialized inspector to review an issue or gets some quotes for larger repairs so you can make an informed decision.

The more informed you are about an issue the better you can resolve it or have the ammo to get a seller to compensate you or repair for you.

Let the Rubber Hit The Road

After you have done all of this it is time to decide with your buyer’s agent:

are we moving forward with the house as-is?

are we asking the seller for repairs or concessions?

are we walking or maybe even running from this home?

Again the variables of what concessions or repairs you should ask for is too great to write about.  Discuss that with your agent.  You need to take into account whether you are in a buyers or seller market as well as what to expect for the price range you are in for the given area. 

Obviously a buyer’s market you can ask for the moon but in a seller’s market you need to be more careful, you could just lose a house over something quite minor. 

Final Thoughts on How to Get Ready for Your Home Inspection

You have too much at stake when buying a home.  Your last line of defense in buying a relatively problem free home is your home inspection.  Get the best home inspector you can find.  This is certainly not the time to price shop.  the $400-700 spent could save you years of aggravation or tens of thousands of dollars.

Being prepared for you home inspection will allow you to make the most of the inspection and the home you are about to purchase.

Other Home Inspection Resources:

What Can I do to Help Buy A House?

Get Ready For Your Home Inspection is provided by Kevin Vitali of EXIT Group One Real Estate of Tewksbury MA. If you would like to sell your home give me a call at 978-360-0422 and let’s get the process started.

Real Estate Services in the following areas: Northeast Massachusetts, Merrimack Valley, North Shore and Metrowest. Including the following communities and the surrounding area- Amesbury, Andover, Billerica, Burlington, Chelmsford, Dracut, Groveland, Haverhill, Lowell, Melrose, Merrimac, Methuen, Middleton, North Andover, North Reading, Reading, Stoneham, Tewksbury, Tyngsborough, Wakefield, Wilmington, Westford

Will Going Directly to the Listing Agent Save You Money?

Does Dealing Directly With The Listing Agent Save You Money?

Does going directly to the listing agent save me moneySome home buyers think that if they go to an open house or call the listing agent directly on a home they will save money.  The thought is if they deal directly with the listing agent they will receive an edge in negotiations and/or the listing agent will give up part of their commission to make the deal work. So will going directly to the listing agent save you money?

In reality, yes you may have the illusion of saving money upfront on the purchase price but remember you get what you pay for.  Most often what happens is you don’t save money and you are completely unrepresented by an agent.

Here is a recent quote from the Boston Globe on an article about whether using the seller’s agent will save you money….. “It sounds promising, but this thought process could end up costing the buyers much more than it could save them.”

Another quote from Bankrate.com about using the listing agent…”“I’ve heard too many war stories about buyers who think they’ll get a better deal by going directly to the listing agent of the property.  Most often, they do not get a better deal, and they end up not being represented properly in the negotiations.”

What Is A Listing Agent?

A listing agent is under contract to sell the house for the seller.  They have a legal obligation to do the best job they can do to sell the seller’s home.  A listing agent has five fiduciary responsibilities to their seller.

Obedience, Loyalty, Disclosure, Confidentiality , Accountability and Reasonable Care.  The responsibilities due to a seller highlights that what a listing agent does must always be in the best interest of their seller.

This mean if you are a buyer, the sellers needs will always come before yours…. period. 

Who Does The Listing Agent Represent?

First and foremost when you go directly to the listing agent you are giving up your right to be represented by a buyers agent.  Remember the listing agent is almost always in a legal relationship with the seller. 

What does this mean?  They have a fiduciary responsibility to the seller.  They owe the seller confidentiality, loyalty, obedience and much more.  The sellers needs will always come before yours and at many times to your detriment. 

Also, consider you may not be the only buyer thinking the same thing.  There could be one or more other buyers taking the same approach.  But, you think you may have an inside track. Yet, the listing agent owes no one any loyalty but the seller.

Conflict of Interest for the Listing Agent

Because of the agents legal relationship with the seller there is a conflict of interest created that makes it very difficult for the listing agent not to divulge a home buyers best price, negotiating points, level of interest and more to their seller.  The listing agent is obligated to report anything they know about you, the buyer to the seller.  You have no right to confidentiality.  

Furthermore, the listing agent cannot help or advise you in anyway.  You are completely on your own.  There job is to sell the house for the seller for the best terms and conditions.  Period.

This is a ridiculous question and of course your are going to say no….. but if you were sued by your neighbor would you ask the neighbors attorney to cut you a deal if he represented you as well?  Of course not!  That is actually what you are doing but furthermore a listing agent cannot represent you unless you are in a dual agency situation which is a nightmare in itself!  And, even then a dual agency situation makes the agent more of a facilitator than someone actually representing you.

So Can I Save Money Going Directly To The Listing Agent

The quick answer is maybe. Statistically the results are mixed and more often than not, no.

So the listing agent maybe gives up a few thousand dollars to make the deal work.  But every step of the home buying process is a negotiating point up until the time you close.  Times, dates, extensions, home inspections, repairs, final walk thru’s etc… are all negotiating points during the home buying process. 

Many Listing Agents Will Not Consider Reducing Their Commission

Let me start by saying, recently I double ended two deals as a listing or seller’s agent.  In no way did I represent the buyer.  In both cases the buyer tried to negotiate using the fact that they were not using a buyer’s agent to get a better deal.  My seller’s refused to ask me to reduce my commission because they felt I worked hard for my money. 

A listing contract was already in place with my seller and in no way am I obligated to reduce my commission. 

Secondly, I made a decision along time ago in my career.  I will not give up any of my commission because a buyer or seller thinks they can reach into my pocket.  I also know many of my counterparts that are top notch listing agents will feel the same way.

In both cases my sellers countered and stated their position and the buyers still bought with absolutely no savings. Any buyer with a buyer’s agent could have come along and bought either house for the same money.  Both sellers received exactly what they wanted from the transaction with out me giving up one red cent. 

I had a big pay day, double the commission.  But don’t fool yourself, I earned it.  Just because a buyer is unrepresented doesn’t mean more work is not created for the listing agent.

Furthermore, each buyer stumbled along with the home buying process unrepresented by a buyer’s agent.  Making mistakes along the way.

Inside Information From the Listing Agent

If you go directly to the listing agent to buy a house there is no information you will get that can’t be had from working with a buyer’s agent.  There are just some things a listing agent cannot share with you due to their fiduciary responsibility to the seller.  Like what the seller’s bottom line is…. a listing agent acting with in the law would never share that with you unless they were instructed to by the seller.

There are disclosure laws about the property as well in Massachusetts.  An agent is obligated to disclose any latent adverse condition about the property that will effect it’s value.  This is irregardless of how you are working with them.   That means disclosure information is readily available for everyone.  In many cases most agents require their seller to fill out a Seller’s Statement of Property Condition covering what the sellers knows about the property.

Verify, Verify, Verify

Take what a listing agent and a seller says with a grain of salt.

When I work with a buyer as a buyer’s agent the first thing I tell them is if there is piece of information given to us by a seller or an agent that is important in your buying decision we need to verify it and confirm it.  The experience of a buyer’s agent can really kick in here.

For example, one area in particular is lot lines.  It is funny how an agent or a seller will confirm with definitiveness exactly where a homes lot lines may lie.  But, the only way to be sure of a homes lot lines is with a certified plot plan.  I cannot tell you how many time sellers were wrong about where their lot lines were or did not even check the deed for easements.

You Don’t Know What You Don’t Know

I have said it multiple times before and I will say it again.  For most home buyers who may have never bought before or maybe only once or twice in a lifetime, you don’t even know the questions to ask.  Or, you wont catch the red flags that would make you want to investigate further. 

As an example, most home buyers will not notice a Sentricon system, if they do they think it is part of a sprinkler system.  It is a system placed in the ground to monitor termites.  Most people only install a Sentricon if there has been a problem with termites.  If I see the Sentricon system it certainly begs a bunch of questions to present to the home seller or condo association.

Does Going Directly to the Listing Agent Save Me Money

There is Far More At Stake Than Saving a Few Thousand In Commission

A real estate transaction is a complex legal transaction with many facets to it.  Saving a few thousand dollars in a real estate commission because you went directly to the listing agent is only a very small piece.

As I pointed out earlier every step of the process is a point to be negotiated.  One being home inspections.  A buyer’s agent can recommend home inspectors where a seller’s agent should not.  A home buyer will have many decisions and choices to make that a buyer’s agent can help with.

Put all that aside, as a buyer’s agent there are so many duties and responsibilities that I have or can perform,  too great a list to list here so check out Massachusetts Buyer’s Agent-  What Can I do for you?

Here is an excerpt from a recent testimonial.  The testimonial highlights what a buyer’s agent does.  Not only did we negotiate hard we had a bunch of expensive repairs done that the listing agent insisted would not be done.  This is done thru experience.

He also (in a sellers market mind you) got a sold “as is” seller to fix things that I was sure they wouldn’t. He got the condo association to take care of things I was sure they wouldn’t and he took on tasks I never would have thought of….

Remember what I said earlier… “you don’t know what you don’t know”.  But an experienced buyer’s agent does.  The buyer saved significantly more money by using an experienced buyers agent than they would have saved by the listing agent reducing their commission in half!

Going Directly to the Listing Agent May Create An Illusion of Saving Money

So will you save money if you buy a house directly to the listing agent?  It certainly can create an illusion that you are saving money, but more than likely probably not.

Even the most seasoned investors know the benefit of using a buyer’s agent.  Many of them use a buyer’s agent just to save themselves time with the tasks an agent will perform.  If you do get a listing agent to reduce their commission you will earn every penny and then some of any saved commission.

You need to assess your skill level in buying real estate.  Are you a homeowner that is on your 6th house and have been around the block a few times or are you a first time home buyer. Being in the business I can also tell you how important it is to have your own advocate that is not emotionally charged during the home buying process.  A good agent will know when to pull you back and when to push your forward and will help to keep your thinking and judgment unclouded from emotion.

It all boils down to representation and experience.  Go directly to the listing agent and you will be unrepresented.  You basically on your own.  Do you have the skill set, knowledge and confidence to buy and negotiate and manage the process by yourself? Are you willing to risk deposit monies in escrow because you missed a critical date?

Do you even have the time?  I am often doing much of the leg work while my buyers are busy at work…. tracking timelines, scheduling, working with the mortgage broker, preparing contracts and extensions if need be, etc…

A full time agent spends most of their day negotiating, managing and problem solving all with in the world of real estate.  A buyer’s agent can bring their expertise to your transaction to save you time, aggravation and yes, often even money.  Don’t get pulled into the illusion you can save money by going directly to the listing agent to buy a home.  It certainly can be an alluring illusion!

Other Real Estate Resources:
Don’t go unrepresented as a home buyer, Call me at 978-360-0422 to discuss your upcoming home purchase and how I can help!

This article, Will Going Directly to the Listing Agent Save You Money? is written by Kevin Vitali of EXIT Group One Real Estate.  I have 13 years of experience preparing and listing homes for sale.  One of my services is helping you put a plan in place to prepare your home for sale.   if you are thinking of selling your home give me a call at 978-360-0422 or email me at kevin@kevinvitali.com

Real Estate Services in the following areas: Northeast Massachusetts, Merrimack Valley, North Shore and Metrowest. Including the following communities and the surrounding area- Amesbury, Andover, Billerica, Burlington, Chelmsford, Dracut, Groveland, Haverhill, Lowell, Melrose, Merrimac, Methuen, Middleton, North Andover, North Reading, Reading, Stoneham, Tewksbury, Tyngsborough, Wakefield, Wilmington, Westford

 

Are You Chasing Unicorns? Searching for Homes That Don’t Exist

are you wasting time looking for homes that don't existI have a term for when home buyers waste valuable months searching for homes that don’t exist, but have no clue they are involved in an impossible or near impossible task. 

I call searching for homes that don’t exist “chasing unicorns”. 

Just like the mythical creature that doesn’t exist neither does some home buyer’s dream homes.  Usually because of budget constraints.

Home buyer’s that don’t have a handle on existing markets conditions and the available inventory will waste months or even longer, while getting more and more frustrated looking for that home that just won’t turn up in their home searches.

To quantify what I am saying it’s not that these home don’t usually exist, they just don’t exist in the price range or community the buyer is looking in.

Example of Home Buyers Chasing A Unicorn

Home Buyer 1 and 2

This year I have had two home buyers looking for 2 Bedroom and 2 full bath condominiums in Andover MA under $230,000.  This home does not exist for these home buyers. 

The Massachusetts MLS data shows us that in the past two years not one unit sold that had 2 bedrooms and 2 full baths.  So you have to ask yourself what is going to change that will make one of these condo’s show up in the next few months.

Home Buyer 3

Another couple were very specific they wanted new construction single family homes in upscale towns like Andover, Lexington, Sudbury, Reading, North Reading and North Andover for under $525,000.

Again reviewing the past data shows us that in the past two years not one new construction has sold for $570,000 or under.   As a matter of fact, the average new construction sold for $939,000 in these communities.  

The cost of new construction is a matter of practicality.  Land cost alone will dictate the cost of a home you can build.

What is Chasing that Unicorn Costing you?

It is certainly alright to want want you want.  No one can begrudge you that.  But it is another thing to hopefully chase a home that doesn’t exist.  It  can end up costing your time and tons of money.

Chasing Unicorns Can Cost You Time

When a home buyer gets the urge to buy there is usually a reason prompting the purchase.  It can be an expanding family, a job change, a necessary relocation, etc….  Whatever the reason they usually want the purchase done in a certain time period to meet a specific goal.

I often run into frustrated home buyers have spent months and sometimes as much as 6 months or a year looking for that perfect home that they will never find.  Some will tell me they will wait until what they want shows up (good luck).  Meanwhile they miss the market. 

Others make the necessary adjustments to get a home they like.

Chasing Unicorns Can Cost You Money

Annual Appreciation of Homes

While no one has a crystal ball where the real estate market is headed, the real estate market over the past 100 years has increased at an average of 3.1% annually.  On its way up it will have its peaks and valley some years it is up and some it is down.

Lets look at a real statistic I pulled this morning. 

The Chelmsford MA Condominium market is up 9.7% from the same time last year.  The median sale price of a condominium was $233,000 last year, while this year it is $258,500. From June 2015 to June 2016 the data showed condos up approx. 6.6%. 

As an update condos now in 2022 have been appreciating at a rate of almost 10% year over year!

What does that mean?  The same condo selling for $258,500 today will sell for just under $280,000 next year at this same time (8.2% increase if you average the 2 years increases).  If you waited one year you would have to save $21,500 in addition to your original down payment just to stay even.

Potential Interest Rate Increases

Waiting can cost you in interest rate increases as well.  Currently interest rates are still historically low.  But there has been a lot of the talk of the Federal Reserve raising interest rates.  Current rates are around 4% for a 30 year fixed but historically average interest rates run closer to 7%.

Take the 258,500 condo from above.  Just a 1/4% in interest rate is an additional $38 a month in mortgage payment.

Combine that with appreciation of the condo to $280,000 in one year now you are talking an additional $143 a month in mortgage payment which translates into an additional $1,716 a year.

Can You Afford to Wait to Buy

So can you afford to wait to buy?  Maybe or maybe that extra $143/mo is enough to knock you out of qualifying for a home mortgage if your numbers are tight. 

In the early 2000’s I saw buyers sit back saying they would wait until home prices were cheaper meanwhile prices ran up for another 5 years or so, pricing those buyers right out of the market.  When the market did turn it did not necessarily bring prices as low as what they could have bought in the early 2000’s.

searching for homes that don't exist

Understanding Expectations vs. Reality

Understanding where your expectations vs reality lie is the solution to prevent wasting valuable time searching for that home that doesn’t exist.  Doing so is quite simple.

Past history will give you a very good idea of what is the reality of what you are looking for actually popping up.  How do you do that?

I always pull up past history from the Multiple Listing Service as a buyer’s agent to show my buyer clients where their search falls in the realm of reality.  If, for say, you tell me you want a 2 bedroom 2 full bath condo in Andover and the past sold history shows that no such condo has sold in the past year or two, chances are slim to none that you will find such a home. 

Even if one or two properties show up that may fit your criteria that is still going to be a tough road.  There is no saying you will actually like the two houses that show up on the radar.  Typically I am looking for 5-10 homes showing up in the past history to suit a buyer’s needs.

What Do I Do When The Home I Want Doesn’t Exist?

First, if you find yourself in this situation, I have to say your not unlike many home buyers who want more than they can afford.  It is just human nature. 

But, the question is can you get past your stubbornness and make the compromises you need to make to get a home you enjoy.  You need to adjust your expectations to the reality of what is out there in the existing housing inventory.

There are several adjustment you can make.

Up Your Price Range-  Increasing your price range may get what you want.  Like the condo buyers in Andover its not that 2 bed 2 full bath condos don’t exist.  They do.  Just not in that price range in that community. 

One solution is increase your price range until you see potential homes that will work for you.

Look in Other Areas-  Maybe you don’t want to give up on your two full baths and you do not have the ability to increase your budget. 

The solution is to widen your search and include other lesser priced towns. 

Most likely there are other towns that you may be able to find a home that meets your criteria.  In the case of the buyers who wanted new construction, I pulled a list of towns that would work and they ended up buying a home in a short period of time after languishing and getting frustrated for monthslooking for their ideal home that didn’t exist. 

But by adjusting the areas they were looking in they found exactly what they wanted.

Lighten Up On Your Criteria-  Loosening up on your criteria may give you more options.  In the case of the Andover condo buyers, there are plenty of 2 bedroom condos available just none with two baths.  One mistake home buyer’s make is being two specific on criteria and they can miss properties that just miss the mark that will actually work out just fine.

I always tell buyers to keep their criteria very loose and then manually cull out the properties they don’t like. I do this for two reasons. 

First there may be something that is exactly what you first wanted that suits your needs.  A prime example will be someone who wants 1 acre of land. 

If you set your criteria to one acre you could miss a perfectly acceptable home with .80 acres.  The difference is probably negligible.

Second is once you start getting past bedroom and bathroom counts, things like square footage, central ac, pool other criteria might not be properly filled in by an agent.  So you could miss exactly what you were looking for, by turning away houses that could work.

Consider a Condominium-  Buyers that are in a lower price range for single family homes who want a property in great shape might want to consider a condominium.  They can get everything they want but it may be in a condo complex.  Condominiums, because they are sharing systems, walls, land, decks, etc… are inherently cheaper to build.

Combination –  Maybe you need to do a combination of all some or all of the suggestions to find a house that is right for you.  I have been helping home buyers for over 15 years and I can tell you that just about every home buyer makes compromises.  It doesn’t matter if your spending 1.5mil or 220k everybody makes compromises.

Use A Savvy Buyer’s Agent To Purchase A Home

An experienced buyer’s agent will help you understand where your reality lies.  When I have a buyer struggling with their wants and desires versus their budget, I present past sales history.

Simply, I look back a year and see if any homes that sold would suit their needs.  If there was one or two, or worse yet, none that appeared in the search the possibility of someing coming up in the next 6 months is slim to none.

Remember prices rise and in some cases quickly. You can get priced right out of the market in a seller’s market.

Final Thoughts

Much of the frustration of searching for a house that doens’t exist can be avoided!  There are two things to remember when buying a home.

The first is “knowledge is power”.  For a real estate agent to know that these homes just doesn’t exist is a no brainer.  Between experience in a market and having the data they need at their finger tips, they have the knowledge to know that maybe what you want doesn’t exist or be may be near impossible to find.

The second point to remember is most home buyers don’t realize “they don’t know what you don’t know”.  There is so much to know when buying a home and home buyer cant know it all.  Buying a home has so many facets and for most home buyers it is not something they do very often.   Really, why would they even know what they need to know?

The good news is there are real estate agent’s that will work with you to purchase a home.  part of their job is to educate you about what is going on in the market and manage the process for you.  You don’t have to go it alone.

Other Resources for Home Buyers:

Are You Chasing Unicorns? Searching for Homes That Don’t Exist, was provided by Kevin Vitali of EXIT Group One Real Estate of Tewksbury MA. If you would like to sell or buy a home, give me a call at 978-360-0422 and let’s get the process started.

Want to know how the Real Estate Market is doing in Your area? Real Estate Services in the following areas: Northeast Massachusetts, Merrimack Valley, North Shore and Metrowest. Including the following communities and the surrounding area- Amesbury, Andover, Billerica, Burlington, Chelmsford, Dracut, Groveland, Haverhill, Lowell, Melrose, Merrimac, Methuen, Middleton, North Andover, North Reading, Reading, Stoneham, Tewksbury, Tyngsborough, Wakefield, Wilmington, Westford

 

8 Tips for Home Buyers to Navigate A Red Hot Seller’s Market

8 tips for home buyers to navigate a red hot sellers marketYou have probably heard that in many segments of the real estate market in Massachusetts it is a hot sellers market.  As a home buyer navigating a hot sellers market can sure be frustrating. This article will help home buyers identify and navigate a red hot seller’s market.

Define A Seller’s Market

I have written other articles on understanding real estate markets.  But let’s quickly define a sellers market. 

A sellers market is when the amount of inventory on the market will be absorbed by the market in less than 5-7 months which is defined as a neutral market.   A 5-7% absorption would be considered a neutral market.

Currently in many markets we are experiencing an absorption rate of 2-3 months.  Consult with your real estate agent to see what you should expect for current real estate market conditions.

The quicker the inventory is being absorbed the stronger the market.

The Downside of a Seller’s Market for Home Buyer’s

Let’s take a look at what some of the challenges that are created for home buyers in a seller’s market. 

Inventory Shortage-

A hot seller’s market could see inventory that is well below normal.  There are less houses for home buyers to choose from.  For example the Tewksbury Real Estate Market for condominiums traditionally runs 18-30 condos on the market where the past year we have been seeing inventory from 5-10 units at any one time.

There are just less homes for home buyers to choose from.  There are more homes than home buyers.

Buyer Competition-

Because  there are more home buyers available than homes, it creates strong competition among buyers. Other home buyers probably want what you want….. a home in a good location, affordable and in good shape.  Good homes are coming off the market in a matter of days with many selling for over asking price.

Because buyer’s are fighting over homes you will see many homes that have multiple offers submitted immediately upon hitting the market.

Very Low Market Times

With a lack of inventory and high buyer demand for good houses they come on and off the market very quickly.  Many homes will go under agreement in under 7 days with the average being under 30 days.  We have not seen market times likes this in ages!

8 Tip for home buyers to navigate a red hot seller's market

8 Tips for Home Buyers to Navigate A Red Hot Seller’s Market

Be Prepared-

In a hot seller’s market you don’t have time to waste.  Before even looking at homes get a mortgage pre-approval.  A seller won’t wait for you to get a pre-approval because there is probably a line of buyers behind you that are prepared and ready to go. 

If you are a first time home buyer, or a buyer that hasn’t bought in awhile, review all the contracts and paperwork prior to even writing an offer.  You do not have time to delay when the right house comes around.

Understand the Real Estate Market You Are In

Understand the real estate market you are dealing with.  Markets vary from town to town or even different parts of town.  Even with in the same town different price range react differently to the market.   When you take the time to understand the market you are in, it will give you in idea of how to react and what is a head of you.

This is on huge mistake buyers make.  They take months to learn the hard way where the market is at while every month that goes by the market is increasing in price plus interest rates could rise.

Have the Proper Home Search Tools

Contact a local agent and get set up so you can search for homes that meet your criteria.  My own home search updates every 15 minutes directly from the Massachusetts Multiple Listing Service.  This is critical.  A buyer can go into a saved search through out the day and see if any new homes have come on since they last logged in.

Make sure you sign up for daily email alerts.  Homes matching your criteria that are new to the market will be sent to your email.  The email alerts will become your best friend in a sellers market. The emails notify you of any new properties daily. Put a plan in place and learn how to to fully utilize your home search tools.

****** Tip Zillow and Trulia are not the tool for this!!  It can take up to three day for a new property to show up on these sites.  Often the property will already be sold by the time they show up Trulia and Zillow.

Time is of the Essence-

Don’t expect to see a property pop up online on Monday and think it will be around when you schedule a showing for next Saturday or plan to attend the open house on Sunday.  If you are serious about buying a home you must get into the property immediately.

The really good properties are swarmed by home buyers immediately.

React quickly when you see a house you like.  You may not have a day or two to think about it, because most likely it will be gone!

Be Flexible in Your Search Criteria-

Because inventory is less than half of what it normally is be flexible in your search criteria.  Expand your criteria to include secondary towns.  Also don’t be so stringent on home specs like bathroom count or acreage. 

Look at all the homes that might meet your base criteria and don’t automatically discount homes that don’t look perfect on paper.  For example you might put in two full baths but maybe 1.5 will do.  Or you may want a half acre of land but something less may suit you just fine.  Be open and flexible.

Look at Homes In a Lower Price Range-

If your top number is $400,000 and you find every home is going over asking in that price range think about lowering your upper end price range. 

Don’t ignore the 400k homes but really start looking at $350,000 to $375,000 to give you room to go over asking. 

Step Up and Make a Good Offer-

A hot sellers market is not the time to negotiate hard with a contract filled with contingencies and low ball offers.  You will be competing with other offers and buyers.  Show the seller you are serious by submitting strong offers. 

Take the time and understand what can happen with multiple offers… at the end of the day the seller can pretty much handle them any way they want.

Change Your Negotiating Mindset

When you are in a balanced or a buyers market it is not unusual to negotiate for the best price you can.  You have time and don’t usually have the pressure of other home buyer’s breathing down your neck.  It is just you and the seller negotiating. 

In a seller’s market you need to change your mindset.  You need to negotiate to get the home you want!  Not only is it you and the seller negotiating you now have other home buyers in the mix.  I have had up to 18 offers on one of my listings.

At the end of the day what is the difference of $10,000.  Say a home is priced at $300,000 you offer $295,000 just because you have to try and get a discount.  But $305,000 would ensure you got the house.  $10,000 translates into only $50 a month in mortgage payment.

You Won’t Win Them All-

Go into buying a home in a hot seller’s market realizing you will probably be in a multiple offer situation and you won’t win all the time.  It is not unusual for home buyers to make offers on multiple homes before they have one accepted.

If you don’t try you certainly won’t get it.

Final Thoughts on Buying a Home in a Seller’s Market

Buying a home is stressful under normal circumstances.  Trying to buy a home in a hot seller’s market is enough to drive anyone batty. 

Being prepared and having knowledge will go a long way for you as well as understanding that time is of the essence when buying in a seller’s market.  Also, realize you don’t have to go it alone.  There are a ton of competent buyers agents that can help you navigate the a hot sellers market.

Other Real Estate Resources for Buying in a Sellers Market:

Excerpt From a Recent Home Buyer Testimonial

We had a very specific goal and did not want to buy over a certain amount. Kevin just said, ok lets do this! He never once pressured me to buy at full pre-approved amount, which we firmly did not want to do.

He also (in a sellers market mind you) got a sold “as is” seller to fix things that I was sure they wouldn’t. He got the condo association to take care of things I was sure they wouldn’t and he took on tasks I never would have thought of.

8 Tips for Home Buyers to Navigate A Red Hot Seller’s Market, was provided by Kevin Vitali of EXIT Group One Real Estate of Tewksbury MA. If you would like to sell or buy a home, give me a call at 978-360-0422 and let’s get the process started.

Want to know how the Real Estate Market is doing in Your area? Real Estate Services in the following areas: Northeast Massachusetts, Merrimack Valley, North Shore and Metrowest. Including the following communities and the surrounding area- Amesbury, Andover, Billerica, Burlington, Chelmsford, Dracut, Groveland, Haverhill, Lowell, Melrose, Merrimac, Methuen, Middleton, North Andover, North Reading, Reading, Stoneham, Tewksbury, Tyngsborough, Wakefield, Wilmington, Westford

CONTACT ME

Kevin Vitali- Massachusetts Realtor Serving Essex County and Northern Middlesex County Massachusetts

KEVIN VITALI

978-360-0422
kevin@kevinvitali.com

Kevin Vitali- Massachusetts REALTOR EXIT Realty Beatrice Associates
191 S. Main Street
Middleton, MA 01949
cell phone: (978) 360-0422
office phone: (781) 929-1010

My Office

Massachusetts Real Estate

 

Real Estate Services in the following areas:
Northeast Massachusetts, Merrimack Valley, North Shore and Metrowest including the following communities and the surrounding area including
Amesbury, Andover, Billerica, Burlington, Chelmsford, Dracut. Georgetown, Groveland, Haverhill, Lawrence, Littleton, Lowell, Melrose, Merrimac, Methuen, Middleton, Newbury, Newburyport, North Andover, North Reading, Reading, Salisbury, Stoneham, Tewksbury, Tyngsborough, Wakefield, West Newbury, Westford

Disclaimer

No information on this website is to be construed as legal advice.  The information is either generalized or state-specific. If you are seeking information for legal purposes please consult an attorney.