Category Archives: Home Buying

The Right Marketing Mix

I was just reading a report on Real Estate Tech Trends. It contains lots of interesting information but I thought the following graph was particularly important. It shows the different aspects of the Real Estate marketing mix that consumers find the most useful. Top of the list is photos followed closely by detailed property information.

This got me thinking – how does the MA Properties Online approach to online marketing match up to “what buyers like”? Turns out very closely indeed.

Here’s the property website that we produce for all homes we market irrespective of price. The top part of the page shows information on the property including photos, a video based virtual tour and detailed information on the property.

The lower part of the page details information on the property surroundings including interactive maps of public transport, town schools and neighborhood Walk Score Information. In addition, the floor plan, plot plan and any property disclosures finish the detailed property information.

The final piece on the property website is detailed statistical information – this is on the “what buyers want” list as “comps”, experience shows that the comprehensive information we provide gives prospective buyers information on how the real estate market is performing in a range of potential towns and gives then confidence when making an offer on a property.

A wealth of information for over 40 towns (and a lot more information on buying/selling) can be found on our website www.mapropertiesonline.com (or if you’re on your smartphone – mobile.mapropertiesonline.com) and if you have any questions do not hesitate to contact us.

Five Financial Reasons to Buy

Interesting graphic showing the conclusion of a Harvard University study on the benefits of renting verses buying a home. This graphic from the report shows how house prices have tracked average household income, except for the boom years of 2003-2008. After the crash in 2009 prices have corrected and are no inline with average income again.

The complete Harvard University – Joint Center for Housing Studies report can be found here: The Dream Lives On:The Future of Homeownership in America

A wealth of information for over 40 other towns (and a lot more information on buying/selling) can be found on our website http://www.mapropertiesonline.com (or if you’re on your smartphone – mobile.mapropertiesonline.com) and if you have any questions do not hesitate to contact us.

Offer Strategies – Part 2

The highly competitive ‘sellers market’ we saw in the popular towns in 2013 has continued in 2014, and has expanded to those towns where the commute is longer or the school district not as good. So, what does it take to be a successful buyer in today’s highly competitive housing market?

The Offer Price is clearly important but it’s just one factor that, when combined with inspection, appraisal and mortgage conditions, convinces the seller that they a getting a good price and that the transaction will move to closing quickly and smoothly – what economists might describe as minimizing transaction costs.

Let’s look at the various contingency (inspection, mortgage etc) strategies:

Inspection Contingency – the inspection contingency allows a buyer to exit the contract if issues are found during the house inspection. This is a major worry for sellers because buyers agents and buyers know that should a house come back on the market after just a few days, issues were identified at the inspection and they are often reluctant to look at the house again. There are a number of strategies buyers can take to mitigate this issue – they often involve accepting additional risk and so they should be carefully considered, and will differ based on the property condition. It’s therefore important to discuss the various options with your buyers agent or contact the MA Properties Online Team for further clarification.

Mortgage Contingency – the mortgage contingency allows a buyer to exit the contract if they are unable to secure financing for the property purchase. It is possible to waive this contingency – but care is required here. At this point in the process (after Purchase and Sale) the buyer has 5% of the offer price in escrow as a deposit. If, having waived the contingency, a buyer applies but fails to get a mortgage they may lose their deposit. Also, if the house fails to appraise for the offer price and the buyer does not have sufficient funds to makeup any shortfall they may also lose their deposit. It’s therefore important to discuss waiving the mortgage contingency with your buyers agent or contact the MA Properties Online Team.

Home Sale Contingency – if a buyer has to sell their existing home to buy the new home this will be noted in the mortgage pre-approval. Even in this ‘sellers market’ where homes that are priced and marketed well often sell in the first weekend; seller’s are very nervous about accepting offers from buyers who need to sell in order to buy their home. Read the newsletter ‘Timing a Buy and a Sell’ for details on strategies that can minimize this factor and guide you when to sell your existing home.

Letter to the Sellers – often dismissed by buyers as having little effect, they play an important part when price and other terms are equal. Selling a home is not simply an asset transfer, the asset is where major life events took place – children were born and grew up, holidays when families came to visit, and summer parties with friends in the back yard. We all have an attachment to the house we live in and would like others to have the same experiences. This is where the letter to the seller plays a part. Provide information on what you love about the house, your family situation and any other details you think the seller should know. It won’t make the difference if you are thousands off the highest offer, but if you two offers are close then it may make the difference.

Successful offers will have some combination of these different factors based on the buyers specific circumstances, risk acceptance and financial security. The seller’s situation also determines which offer they will accept. For example, a seller who already has an accepted offer on their new home will probably weigh the factors that govern the successful completion of the transaction (the various contingencies) higher than the offer price.

This is the second post in the series Offer Strategies – Part 1 covered offer prices and appraisals.

The details of this post came from The following newsletter How to Make your Offer Successful in a Competitive Situation (or if you’re on your smartphone – How to Make your Offer Successful in a Competitive Situation)

The MA Properties Online team produce a newsletter on a monthly basis on topic of interest to both buyers and sellers – to see a complete list visit www.mapropertiesonline.com (or if you’re on your smartphone – mobile.mapropertiesonline.com) and look under the Newsletters tab.

If you have a real estate topic that you think needs more explanation please email me at Marcus Collins and we’ll look into writing a newsletter on the topic in the very near future.

The MA Properties Online tagline is “A Data Driven approach to real estate” and so for information on over 40 towns (and a lot more information on buying/selling) look at our website www.mapropertiesonline.com (or if you’re on your smartphone – mobile.mapropertiesonline.com) and if you have any questions do not hesitate to contact us on (617) 997 9145, or email at Dani.Fleming@MAPropertiesOnline.com.

Offer Strategies – Part 1

The highly competitive ‘sellers market’ we saw in the popular towns in 2013 has continued in 2014, and has expanded to those towns where the commute is longer or the school district not as good. So, what does it take to be a successful buyer in today’s highly competitive housing market?

The Offer Price is clearly important but it’s just one factor that, when combined with inspection, appraisal and mortgage conditions, convinces the seller that they a getting a good price and that the transaction will move to closing quickly and smoothly – what economists might describe as minimizing transaction costs.

In this and subsequent posts we’ll look at the various factors:

Offer Price – a strong offer price ‘gets you in the game’. A home is the single largest asset of most sellers. Move-up sellers need the money to buy their next home; move-down seller’s will use the appreciation to sustain their lifestyle, perhaps in retirement. So, buyers should look closely at what relevant properties are selling for and for those recently sold how long they stayed on the market (if they sold in the first weekend it’s probable that they sold for over asking). We track this list/sold ratio on our website www.MAPropertiesOnline.com for over 40 towns – contact us if you would like more information on this and other real estate statistics. As an example this is the list/sold ratio for Arlington – one of the most popular towns with first-time and move-up buyers.

Escalation Clause – an escalation clause is where buyers state they will increase their offer price should other offers exceed theirs. The clause states the price increment and the maximum offer price. Two things are important – escalate from a ‘strong’ offer price, and make the offer increment large enough to make the sellers see the value in accepting your offer over the next highest.

Offer Deposit – $1,000 is the traditional amount put down at offer time. From the sellers perspective, a buyer can ‘walk away’ at any time prior to Purchase and Sale and only forfeit $1,000. Buyers should consider increasing their offer deposit to make the offer more competitive.

Appraisal Value – before a bank will lend against a property it requires a property appraisal to determine how much it will lend on the property. The mortgage appraisal process involves comparing the property against comparable properties in the same area to determine the appraised value of the home. In today’s market this can be a concern for sellers when the offer price is higher than the listing price, and there are fewer comparable homes and prices are rising. If the appraiser appraises the home for less than the offer price then the bank will lend on the appraised value, not the offer price. When this occurs the buyer will have to find the additional funds or exit the contract (at the mortgage contingency). If finances allow, buyers should consider adding a clause to the offer stating that they will fund any shortfall should the property not appraise for the offer price. The following graphic shows the number of transactions that have an appraisal problem and likely outcome for homes where the offer price exceeds the appraised value.

In the next post we’ll look at contingency (inspection and mortgage) strategies.

The details of this post came from The following newsletter How to Make your Offer Successful in a Competitive Situation (or if you’re on your smartphone – How to Make your Offer Successful in a Competitive Situation)

The MA Properties Online team produce a newsletter on a monthly basis on topic of interest to both buyers and sellers – to see a complete list visit www.mapropertiesonline.com (or if you’re on your smartphone – mobile.mapropertiesonline.com) and look under the Newsletters tab.

If you have a real estate topic that you think needs more explanation please email me at Marcus Collins and we’ll look into writing a newsletter on the topic in the very near future.

The MA Properties Online tagline is “A Data Driven approach to real estate” and so for information on over 40 towns (and a lot more information on buying/selling) look at our website www.mapropertiesonline.com (or if you’re on your smartphone – mobile.mapropertiesonline.com) and if you have any questions do not hesitate to contact us on (617) 997 9145, or email at Dani.Fleming@MAPropertiesOnline.com.

Should Buyers Delay Until 2015

Given the lack of available inventory and lots of buyers in the market, buying in today’s market can be tough. But does it make sense to postpone your home search until next year? The MA PropertiesOnline Team recommends NOT TO WAIT here’s why.

The primary reason to delay is that you think next year (2015) will be better. Better means some combination of:

  1. More sellers
  2. Less buyers
  3. Lower prices
  4. Lower mortgage rates (cheaper to buy)

Will we see more sellers in 2015?

Every Realtor in Greater Boston hopes so and there are a large number of potential sellers (who either become buyers of more expensive homes or who downsize). Many are delaying because they think they do not have sufficient equity in their current home. Prices have risen steadily in many towns over the last few years and so even people who bought in 2005/2007 now have significant equity. Here’s some examples:

Its not universally the case though

So, we will see more seller’s entering the market but it may take a few more years for the level to rise to the point where we have a balanced market (which is defined as approx 6 months home supply). As the Newton data shows we’re still not at this balanced state.

Will we see less buyers in 2015?

Every report we read says that there are a large number of (so called) millennial’s that are either looking to get out of renting (because as we know there is no appreciation or tax breaks in renting as there is in home ownership) or are looking to move up from the 2-bed condo they bought taking advantage of low prices, low mortgage rates and government tax breaks back in 2009.

Will prices be lower (or at least not materially higher) in 2015?

The graphs above show that prices have been increasing for many years in the stronger markets but also now in the less strong markets. In some markets the rate of increase is arguably not sustainable but overall nationally we are still 16% lower than the highs in 2006/7. So, we (and analysts who track the national trends) do not see a decrease in prices any time soon. The graph below shows a range of opinion on cumulative price increase over the next 4 years.

Will mortgage rates be lower in 2015?

This graphic shows that mortgage rates are anticipated to rise in 2015.

For more information on mortgage rates see the following blog post Mortgage Rate Projects

With the anticipated increase in prices what does this mean to the potential mortgage repayments?

In conclusion it looks like …

  • We will see more sellers
  • We will continue to see an increasing number of buyers entering the market
  • Prices will continue to increase as demand (buyers) exceeds supply (sellers)
  • Mortgage rates will rise

Should you therefore delay? We would argue No, continue to look and the right house in the right location and at the right price may be there.

The MA Properties Online Team know its not just about buying a house its about buying the RIGHT house. Our focus on information (through real estate statistics and information on the buying process) and working closely with buyers to understand their needs and wants means that buyers who work with our team make the right choices.

For information on over 40 towns (and a lot more information on buying/selling) can be found on our website www.mapropertiesonline.com (or if you’re on your smartphone – mobile.mapropertiesonline.com) and if you have any questions do not hesitate to contact us.

Buyer Strategies – use the Listing Agent?

A number of buyers are being told “by somebody by the water-cooler” that to get an offer accepted in today’s competitive market the best approach is to not use a buyer’s agent but rather to go directly with the listing agent. This got the MA Properties Online Team thinking – is going with the Listing Agent a successful buyer strategy?

The answer is NO.

Skeptics will say – well of course a Realtor is going to say that, so here’s the analysis …

We looked at the 2013 transactions in Lexington – that’s 383 transactions. Of these 193 were competitive (we define that as a situation where the sale price was larger than the list price and the time between being listed and getting an accepted offer was low). In this competitive situation, in only 18 transactions did the listing agent write the successful offer. Overall in less than 5% of the transactions (18 out of 383) did the buyers use the listing agent when it mattered.

So, when your told “by somebody by the water-cooler” use the listing agent – ask them for the figures to backup this claim.

For a detailed explanation of the role and benefits of using a buyer’s agent see the newsletter The Benefits of using a Buyers Agent (or if you’re on your smartphone – The Benefits of using a Buyers Agent)

The MA Properties Online team produce a newsletter on a monthly basis on topic of interest to both buyers and sellers – to see a complete list visit www.mapropertiesonline.com (or if you’re on your smartphone – mobile.mapropertiesonline.com) and look under the Newsletters tab.

The MA Properties Online Team know its not just about buying a house its about buying the RIGHT house. Our focus on information (through real estate statistics and information on the buying process) and working closely with buyers to understand their needs and wants means that buyers who work with our team make the right choices.

For information on over 40 towns (and a lot more information on buying/selling) can be found on our website www.mapropertiesonline.com (or if you’re on your smartphone – mobile.mapropertiesonline.com) and if you have any questions do not hesitate to contact us.

Benefits of Buying vs. Renting

Are you wondering whether you should buy or continue renting? Given where we are now with interest rates and where they are headed (see recent blog post Mortgage Rate Projections, if you were sitting on the fence about whether now is the right time to buy, then you should consider that it is cheaper to buy than to rent in all of the 100 largest metro markets.

One reason is the increase we’ve seen in rents:

Its not just the rising cost to rent – there are benefits to home ownership:

Mortgage Tax Deduction Benefits

  • Mortgage deduction: The tax code allows homeowners to deduct the mortgage interest from their tax obligations. For many people this is a huge deduction, since interest payments can be the largest component of your mortgage payment in the early years of owning a home.
  • Some closing cost deductions: The first year you buy your home, you are able to claim the points (also called origination fees) on your loan, no matter whether they are paid by you or the seller. And because origination fees of 1 percent or more are common, the savings are considerable.
  • Property tax is deductible: Real estate property taxes paid on your primary residence and a vacation home are fully deductible for income tax purposes.

Capital Gains Exclusion

If you buy a home to live in as your primary residence for more than two years then you will qualify. When you sell, you can keep profits up to $250,000 if you are single, or $500,000 if you are married, and not owe any capital gains taxes. Now, it may sound ridiculous that your house could be worth more than when you purchased it after these past several years of falling house prices. However, if you purchased your home anytime prior to 2003, chances are it has appreciated in value.

Average home prices have now exceeded their pre-crash prices.

Conclusion

First Time home buyers should get off the fence, and quickly!

For more information on over 40 other towns (and a lot more information on buying/selling) can be found on our website www.mapropertiesonline.com (or if you’re on your smartphone – mobile.mapropertiesonline.com) and if you have any questions do not hesitate to contact us.

First Time Homebuyer Profile

According to NAR (National Association of Realtors) this is the profile of the First Time Homebuyer. Does this match you or your friends?

If you are a first time homebuyer or you’ve done it before but are just unclear of the process when buying a home the MA Properties Online team have prepared a FREE comprehensive Buyer’s and Seller’s Guides that provide a wealth of information about the home buying and selling process. Each guide takes you through each step of the process providing details on what you can expect as you move through the process to owning or selling your home. A page where you can request your FREE copies can be found on our website Free buying and selling guide

For more information on over 40 other towns (and a lot more information on buying/selling) can be found on our website www.mapropertiesonline.com (or if you’re on your smartphone – mobile.mapropertiesonline.com) and if you have any questions do not hesitate to contact us.

Closing Costs and How to Calculate Them

How much and what are closing costs are questions many buyers have because they are an additional cost that they must budget for at closing. In a recently published newsletter the MA Properties Online team set about explaining what closing costs are and provided a mechanism for you to determine what these costs will be.

The newsletter explains the major closing costs:

  • Prepaid Items and Interest,
  • Insurance,
  • Escrow Accounts,
  • Lenders Fees,
  • Third-Party Fees, and
  • Government Taxes and Fees.

It then goes on to explain a simple 6 steps process to calculate your closing costs:

  1. Add up all the charges associated with the mortgage and paid to the lender (use the good faith estimate provide by the lender as the basis for this).
  2. Add up the charges for third-party services where the lender decides on the company who will perform this service (for example appraisal fees – the lender will decide which appraisal company will perform this service).
  3. Shop around for third-party services where the lender has not decided on the company who will perform the service (for example survey fees – talk to the lender to determine which services fall into this category).
  4. Add up the charges for the services where the costs are well known (for example county recording fees, transfer taxes, and property taxes – normally payable by the seller, property taxes – ask your real estate professional or town tax department for this value).
  5. Shop around for homeowner insurance quotes – all the major insurance companies have calculators providing free quotes on their websites.
  6. Add-up all of the above – and cross-check the costs when you receive the HUD-1 sheet from your attorney just before closing.

The full newsletter can be found at An Explanation of Closing Costs and and How to Calculate Them (or if you’re on your smartphone – An Explanation of Closing Costs and and How to Calculate Them)

The MA Properties Online team produce a newsletter on a monthly basis on topic of interest to both buyers and sellers – to see a complete list visit www.mapropertiesonline.com (or if you’re on your smartphone – mobile.mapropertiesonline.com) and look under the Newsletters tab.

If you have a real estate topic that you think needs more explanation please email me at Marcus Collins and we’ll look into writing a newsletter on the topic in the very near future.

How to Win a Bidding War

Multiple offer and bidding wars were a common occurrence in 2013 especially in the the towns with high demand. The following graph shows the list/sold price ration for Arlington. As you can see its over 100% for the majority of the year showing that multiple offers are being received which in turn drives up the price (above the list price).

Boston magazine recently outlined strategies to win in such a bidding war – its categorized for different buyers:

  • First-Time Buyer
  • Moving-Up
  • Growing Family
  • Power Couple
  • Empty Nesters

Find the details here: How to Win a Bidding War