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Last updated 2/25/2016. If you have questions please reach out to me at avi@avirealestate.com or (508)-335-1644.

Avi’s Guide for Home Buyers

Congratulations! You’ve decided to buy a new home! I’ve written this guide to help prepare you for the process and answer questions that you may have. The main text provides a high level overview, for when you are just getting started, and as your home buying progresses, click on the to expand the text and learn more.

Phase 1: Preparation

If you’re just getting started, start here. Maybe you’ve been viewing listings online, or even attended some open houses. Your goal in this phase is to learn or review how the home buying process works in Massachusetts and complete some necessary preparation. Being attentive in this phase will help prepare you for the process.

Set expectations on stress

If you feel stressed at some points during this process, it’s important to understand that this is completely normal. A major mortgage, a change in living conditions, and a change in residence are each on the Holmes and Rahe stress scale, which lists the top 43 adult stressors. When you consider that buying a new home often coincides with other major life events, such as changes in your personal relationships or job, it’s no wonder some people feel overwhelmed at times. The good news is that by learning about the process ahead of time, and knowing that I’m here to help you every step of the way, you’ll feel more prepared and better equipped to absolutely rock the home buying process.

Get Pre-approved

An important step is to get pre-approved. It might seem premature at this stage, but it’s not. It's actually a critical step before you start looking.

I’ll be happy to recommend a few respected, local mortgage brokers with whom I’m familiar and feel confident will treat you well, or you are free to identify your own. He or she will ask for a range of documents, such as:

  1. Last two Federal Tax Returns
  2. Last two W2s
  3. Last two paystubs
  4. Last two months of your bank, stock, and retirement accounts. (You only need to provide statements for accounts that will be used in the transaction).
Pre-approval letters are typically good for 60 days, and when your letter expires your lender can easily issue you a new one, since they'll already have most of your information and will just need updated documents. When you get closer to a purchase you can then shop around for the best rate.

Choose your REALTOR®

When choosing an agent, it’s my opinion that you should look for several key traits that will make your experience much better:

  1. Integrity. This one should be non-negotiable. Check if the agent is a REALTOR®, meaning that he/she is a member of the National Association of REALTORS® and has committed to uphold the standards of the association and its code of ethics. Additionally, if there is a conflict between REALTORS®, there is an established arbitration process.
  2. Analytical mindset. When evaluating the market, identifying a property, analyzing its value, and negotiating a purchase, you want an agent who takes an analytical, data-informed approach, and doesn’t just “guestimate.”
  3. Clarity in communications. Whether your preferred mode of communication is face-to-face, email, phone, or text, be sure that you and your agent are able to effectively communicate.
  4. Responsiveness. If an agent takes a long time to respond when he/she is courting you, imagine how much worse it will be once you are already committed.

It can be helpful to check out an agent's reviews online to get a sense of their style. Then you should set a meeting, either in person if you can, or over the phone, in order to make sure you feel comfortable with him or her.

I would be honored to be your agent. To get started, please send me an email or call/text at 508-335-1644. We will meet at a time and location convenient for you to make a plan to meet your goals.

Selling your current home?

If you plan to sell your current home in order to purchase a new one, we need to have an in-depth conversation about it. The good news is that this scenario is not uncommon, and we have ways to do it. It is, however, more complicated, so we should discuss your goals and timeline before strategizing.

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Phase 2: Find a property

Now that you’ve laid the groundwork, it’s time to start looking at listings! If we haven’t already, please set up an hour-long meeting with me. We’ll use this time to review a strategy, identify properties to see, and set up automatic alerts. To arrange a time, please contact me at 508-335-1644 or avi@avirealestate.com.

Schedule some showings!

Once we’ve identified some matching properties, it’s time to visit some together. To start, we should pick 3-5 to visit on the same day. I find that visiting several in the same session helps you to determine what would make a good match.

As a rule of thumb, we need at least one day's notice to arrange showings, and we should budget 20-30 minutes per visit, plus travel time. In a hot market, I find that visiting on a Wednesday-Friday schedule is beneficial because we can visit that week’s new listings prior to their first open houses.

Set up automatic alerts

As we identify the general criteria of your ideal property, I will set up automatic alerts for you so that you stay informed as new listings are added to the market and existing listings come off the market. Your criteria can be broad or very specific, and at a minimum usually include the number of bedrooms and certain neighborhoods or towns. By the way: it’s very common for your criteria to change over time. That’s okay!

The automatic email alerts match listings from the MLS (Multiple Listing Service), which is the single most authoritative and accurate source of listing data. Each morning that you have new matches you’ll receive an email with the new listings that match your criteria. As you receive these listings, you should let me know your thoughts and how to adjust the search criteria.

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Phase 3: From offer to move-in

When you find the right property for you, it’s time to make an offer. Before we get into the details of that, let’s look at a typical timeline as a way to review the major steps involved in Greater Boston.

    Day...
  1. Craft an Offer to Purchase with your agent.
  2. Negotiate price & terms, and come to an agreement. Your offer is accepted and your initial deposit of $500-$1000 is deposited in an escrow account.
  3. The licensed home inspector that you’ve hired performs the Home Inspection and gives you the results.
  4. The Purchase & Sale agreement is finalized between the seller’s attorney and your attorney. You make an additional deposit, typically enough to bring your total deposit to 5% of the purchase price.
  5. (Typically 2 days after P&S): Loan application submitted, appraisal ordered, title exam ordered. You must officially apply for your mortgage by this date in order to be protected by the mortgage contingency in the event you are declined for a loan.
  6. Bank Appraisal – your lender sends an appraiser to determine an estimate of the property’s value and produces an appraisal by now.
  7. Prior to the closing, the seller’s agent should coordinate the Smoke and Carbon Monoxide Detector Inspection with the local fire department. This is required in order to close.
  8. Your mortgage contingency expires. Your loan commitment should be issued.
  9. (Approximately 6 weeks after the offer). In the morning, perform the Final Walk-Through to make sure the property is vacated and without any new damage. Then you are ready for the Closing. You pay the remainder of your down payment and closing costs, as agreed with your lender. As soon as the transaction is recorded at the Registry of Deeds you will be able to move in. Congratulations!

Anatomy of the Offer to Purchase

In this area, the Offer to Purchase is typically completed by the buyer’s agent with the buyer (i.e. not by an attorney). When you think of an offer, you may think of the price first, but the truth is that there are a number of items to specify, which together make up your offer and will affect the seller’s perception of your offer.

Determining an offer price and terms

When determining an offer price, it’s important to consider the broader market conditions, comparable properties recently sold and for sale, and the individual property’s history, as well as your own goals.

i. Market conditions

A “seller’s market” means that there are more buyers than sellers, resulting in limited inventory of homes for sale. In this situation, it’s common to see properties sell quickly after being listed, and the final sale price will often be higher than the list price. Sometimes there are even bidding wars. Aggressive buyers may try to make their offers more attractive to the seller by being flexible on other terms, for example by eliminating the mortgage and home inspection contingencies.

A “buyer’s market” is the opposite, in which there are many homes for sale and the market will exert downward pressure on prices. In this situation, it’s common to see the average Days on Market (how long a property has been listed for sale) to be high, sometimes months long, and for the final sale prices to be lower than the list prices. Aggressive sellers may try to make their property more attractive to buyers by, for example, paying for a portion of closing costs, offering home warranties, or being flexible on closing dates.

ii. Comparable properties

Ultimately, a property is worth what someone is willing to pay for it. By examining records for recently sold and listed properties that are similar to the target property we can estimate that current market value.

In order to select an appropriate sample, the first step is to define a set of criteria to identify similar properties and the time frame. We want the criteria to be relatively narrow while still providing enough results to make a comparison feasible. For example, we might define the search set as all 3-bedroom, 1.5 bathroom condos sold in the past 3 months, in the same town and within a 0.4 miles radius of the target property. If that search returned only two matches, then we would adjust the criteria by, for example, including 4-bedroom houses, looking back 6 months, or increasing the search radius.

Next, we examine the results and make adjustments. For example, if one property sold for more money, but it was larger, had a private roof deck, or had a more updated kitchen, we want to make a note of that, and will adjust its value in our estimate.

In addition to looking at comparable sold properties, we also look at listings for homes currently for sale, under agreement, and expired. No single comparable should inform the estimate, since any one could be an outlier. Combining all this information, we select the properties that seem most informative to the target property and use them to triangulate the current market value.

iii. Property history

Of course, in any type of market, an individual property may be over or under priced. Even in a seller’s market, if a home is overpriced by too much, it will likely languish on the market for some time.

Days on market: If a property has been on the market for many days, the seller will often be more likely to consider a lower offer. On the other hand, if the property has just recently been listed the seller may want to hold out for something better.

Previous mortgage: Another consideration is how much the current owner owes on the property, which you can often estimate from the public records. When the owners have a large mortgage remaining, they may be more reluctant to sell at a discount.

iv. Your goals

As a buyer, your challenge is to like a property enough to make an offer, but not fall in love so much that you can’t walk away if the price or terms aren’t right.

If your goal is for a fair price and terms, you should consider all the above information and make an offer close to what the numbers justify. In your offer, it can sometimes help to include a personal cover letter where you introduce yourself, say that your goal is to pay what you can both agree is a fair price, and include the research justifying your terms and price. That way it frames the ensuing negotiation around what is fair rather than just haggling over a number.

The other terms beyond the price can often be just as important for the seller when considering an offer. For example, if the property is vacant, the seller may value a quicker close, and if the seller is choosing between two similar offers, the one that is sooner will win. Likewise, a larger down payment can assure the seller that your financing is less likely to fall through.

If you’re goal is to get a deal and you have patience, one strategy is to target properties with higher Days on Market, make aggressive, low offers, and keep your expectations of acceptance on any given property low. You may have to make offers on many properties until you find a seller willing to accept your terms. This strategy is, of course, more difficult in a seller’s market where you often won’t find any “deals.”

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Who wrote this guide?

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Avi Kaufman is a REALTOR® with Century 21 Premier Group, serving Boston, Brookline, Cambridge, Newton, and surrounding communities. He holds a BA from Brandeis University, an MBA from MIT Sloan, and is a US Army veteran with service in Iraq. Email him at Avi@AviRealEstate.com.