Buyer's Guide

The MLS System and Buyer Representation
As you may know, the Massachusetts real estate industry uses a multiple listing system (MLS). Every property listed for sale is entered by listing agents into a singular database so that information about properties listed for sale can be shared by the real estate agent community and also by the public. Multiple listing is a benefit to buyers, sellers, and agents since it provides comprehensive historical and current information about homes listed for sale which is uniform and available to everyone.

Theoretically every real estate agent in Massachusetts has the ability to sell any property listed for sale whether or not he or she is the listing agent. This means any Metropolitan agent can arrange for you to see any Massachusetts property currently listed for sale in MLS. A property does not have to be listed for sale with our agency for us to arrange for you to see it. When one of our agents arranges for you to view another agent's listing, this is known as co-broking. You can view MLS listings by registering for our MLS searching tool -- MLS Assistant.

Massachusetts law requires real estate agents to clearly disclose in writing to prospective buyers and sellers of real estate, the nature of their relationship with the prospective purchaser or seller of real estate.

As a buyer, it is important for you to understand, that a real estate agent you encounter during your home search is most likely working for the seller of the property you are viewing. Buyers may engage the services of their own real estate agent or buyer representative. Just as sellers have listing agreements with brokers, buyers may enter into a buyer's agency contract in order to ensure that the agent working with them, is in fact, working for them, not the seller.

This is a service we offer at Metropolitan Boston Real Estate, and a path we strongly recommend for buyers. To learn more about Buyer's Agency click here to link to our Buyer Representation page. If you have questions about how to engage the services of a buyer representative, please feel free to call us at 617-425-6300 or send us an e-mail with your contact info and we'll respond promptly.

Why Are You Buying? The Benefits of Home Ownership
One of the best justifications for owning a home, at least for financial reasons, is the tax savings that result from deducting mortgage interest and real estate property taxes. Under the current tax code, mortgage interest on first and second homes is generally deductible as long as these loans total less than $1.1 million. To deduct property taxes and the interest paid on your mortgage, you must itemize deductions rather than take the standard deduction. For many homeowners, the combined deductions for mortgage interest and property taxes easily exceed the standard deduction. As a home buyer, you may also be able to deduct fees charged by the lender and closing costs. Contact a tax advisor for details on how you can take advantage of homeownership tax savings. Other advantages to buying a home include, freedom to live the way you want to. You can customize your home without having to worry about the landlord's rules. You can accumulate home equity. You can borrow against the equity built up in your home to finance necessities such as a college education, vacation, new car, etc. Since the interest on a mortgage is usually low, borrowing money against your home can be very sound. The interest on home equity loans is usually tax deductible, too. Stable monthly payments rather than rent payments which typically increase each year. The principal and interest portion of most mortgage payments remains unchanged for the entire repayment period so you know exactly what you'll need in the way of finances. Home improvements may increase the value of your home and your home improvement costs may be used to reduce your capital gains tax when you sell. Houses typically increase in value over time. (Source: NAR.org)

Do You Have The Money and How is Your Credit?
A number of new, innovative loan programs have been made available, particularly for first-time buyers, which have reduced or zero downpayment requirements. But, even with a "no money down" loan, you will still need cash for earnest money deposits and closing costs. If you have a decent amount of down payment money, you are in a better position as a buyer and as a borrower. Interest rates and other mortgage loan terms are based on risk. The bigger the risk the lender takes in making the loan, the higher the interest rate they charge is. Naturally, the higher percentage of the total purchase price you borrow, the bigger the risk is for the lender. Also, the more money you put down, and the less you borrow, the lower, and more manageable your monthly mortgage payments will be. It is also possible to finance closing costs - in other words borrow a little more so that the closing costs are spread out over the term of the loan.

Perhaps the most important thing you need to look after in getting your financial house in order is your credit. Your credit score will greatly impact your ability to borrow and the rates your will pay. Three credit agencies, Equifax, Transunion, and Experian, monitor the quality of your credit or FICO (credit) scores, and supply this information to mortgage companies. Check with each to confirm your scores. Loans get more difficult in the 550 to 600 range. From 600-680 is decent, but you will pay a premium in your interest rate. Above 680, you should be able to qualify for the best rates available. Ideally you want your scores over 700 and there are ways to improve your credit scores by challenging information on your credit report. This takes time - sometimes as long as 90 days - before you see adjustments to your score, but is really worth doing if you're planning to apply for a mortgage. We recommend checking out www.truecredit.com.

Financing
Once your financial house is in order, before you do anything else you should get yourself pre-approved for a mortgage. Mortgage pre-approval is an important time-saving step in the process of acquiring your new home. It will enable you to have a clear understanding of your purchasing power, and ultimately make it easier for your real estate agent to assist you. We have strong, longstanding relationships with a number of Boston area and nationwide mortgage lending institutions. For fast and easy mortgage pre-approval as well as outstanding service, call one or all of our preferred lenders.

The Searching Process
Most buyers begin their search online using an MLS searching tool such as the one we offer here in our site - MLS Assistant. Online searching is great way to start. It will help you get a feel for the market and develop a working knowledge of the areas that are of interest to you. Specifically, it will inform you about current pricing as well as properties currently available for sale.

The advent of the Internet has absolutely changed the rules of house hunting. Today, by the time most buyers are ready to begin their actual in person home search, they have acquired an unprecedented amount of market knowledge, due to the abundance of listing data available online,

The advantages created by the Internet notwithstanding, there is still considerable value added when a good real estate agent enters the picture. At some stage you should absolutely avail yourself to the financial and other advantages of having a good real estate agent assist you with navigating the entire process of finding and acquiring a new home. It makes no sense not to. First of all, it most often costs you nothing. Secondly, a good real estate agent can help you coordinate and centralize your search and keep you focused, saving you valuable time and sparing you from the hassles involved in arranging appointments with numerous listing agents. In a robust market, properties come on and off the market quickly and often. To succeed at finding the right place requires consistent looking in earnest for a condensed period of time. A good agent knows the market and can give you valuable advice about different areas and properties. A good agent is a good navigator who knows how to find places when you don't. A good agent is a sounding board for your own thoughts and ideas and may even have some of his or her own good ideas. A good agent is a good conversationalist who can entertain you while you wait for another agent who is running late. A good agent is a reality check that can prevent you from making a mistake. A good agent can provide a buffer between you and the listing agent on a property who probably doesn't have you interest first in mind. A good agent has been through the process of acquiring homes many times and, once you've selected the home you want, provides invaluable assistance during the offer to purchase, home inspection, purchase and sale contract, and financing processes.

Again we strongly suggest you work with a buyer's agent. Once you choose one that feels right, venture out from the safe, though abstract, confines of the virtual world of online listings and begin your more reality-based home search with the kind of true and valuable help that can only come from a quality real estate agent.

The Real Estate Theory of Buyer's Remorse
There is a directly, though inversely proportional relationship between the number of homes a buyer views in person and the degree to which that buyer will experience buyer's remorse. Though this may seem obvious, it is important to remember that your home search is a journey or a quest of sorts, the objective of which is, not merely to find the right place to live, but to also develop a level of market knowledge and experience sufficient to enable you to make the right choice and avoid regret. To accomplish this, a buyer has to see enough places. What constitutes enough may be a different number for different buyers. But every buyer after seeing some number of properties, has an epiphany of sorts which creates in them the confidence and determination to pull the trigger. The trick is to try to resist pulling the trigger until it feels positively right. That can be a real challenge in a market where properties are flying off the market, where the best priced, highest quality homes often attract multiple offers and there is often considerable market pressure to move quickly. It is quite common, if a real estate agent accurately understands what a buyer is looking for, for a buyer to see the best places on the market in the first scheduled appointment - when the buyer isn't really ready to choose. Sometimes the very first place a buyer sees is just right. If you're lucky it'll still be unsold after you've had the chance to see ten more.

A good way to start your search is to have your agent take you out Open Housing. On most Sundays, listing agents hold open houses in order to market the properties they are trying to sell. It's a great opportunity to quickly see a lot of places and get your footing. There's no pressure to make appointments or be polite if you walk into a place that isn't going to work for you. You can just walk right out as fast as you walked in and move on to the next place. It's also a good way to get to know your agent and make sure there's good chemistry. You might not want an agent who listens to Kenny G all afternoon if you like Coltrane.

Offer to Purchase
Once you find the right home and decide to make an offer, you will need to work with your real estate agent to put together an offer to purchase. In short, the offer to purchase is a contract between a buyer and seller which summarizes the initial agreement between the parties on price and other terms for conveying a property from the seller to the buyer.

There are several areas of the offer to purchase that are likely to require negotiation between the buyer and the seller before agreement can be reached. These include price, financing, terms, date of possession, inclusion or exclusion of repairs and furnishings or equipment. The offer to purchase should also specify a period of time during which the buyer must complete desired inspections and investigations of the property before the buyer is legally bound to complete the purchase. You agent can also prepare contracts on your behalf, and offer a detailed explanation of each of the standard offer's provisions.

To view a standard form offer to purchase real estate, please call one of our agents if you would like someone to walk you through each section step by step. You may also want to visit www.realtor.org where you can find a complete step-by-step instructional on the offer to purchase.

Home Inspections
Concerning Home Inspections, Rule One is definitely have a home inspection. Even if you are purchasing a brand new construction home, assume there is no such thing as a perfect house. It may be perfect for you. But there are many important things about a house which cannot be detected or understood in a simple walk-through or typical showing. A home inspection is a critical aspect of the process of buying your home. What a home inspector unearths about the house you think you want, may change your mind about buying the house or the price you're willing to pay.

A home inspection contingency is standard in your offer to purchase and protects you from being compelled to proceed with the purchase of a home if the home inspection results are sufficiently unsatisfactory. This contingency gives a buyer the right to revoke his or her offer based on the results of the home inspection for a specified period of time and that period should allow sufficient time to schedule the inspection and properly evaluate the results. Home inspectors will rate every aspect of the home including the electrical, plumbing, and heating and air conditioning systems, the structural condition of the foundation and the roof, as well the performance of home appliances. A good home inspector will also provide you with helpful hints on how to make repairs and maintain every aspect of the home. A home inspection is intended to be and should be a great learning experience for you. Make sure you are there and observe everything the inspector does and listen carefully to his comments and suggestions. At the end of the inspection, the inspector will provide you with a written report.

In Massachusetts, seller's agents are not allowed to recommend home inspectors. A buyer representative, however, is allowed to do so, since he or she works for the buyer. You may also find a qualified reputable home inspector by referral from a friend or neighbor, or online at www.ma-home-inspector-directory.com

Purchase and Sale Contract

Real estate agents in some parts of Massachusetts and in other states actually draft purchase and sale agreements. At Metropolitan, our philosophy is very clear on this point. When you need help with a purchase and sale agreement, it is in your best interest to utilize the services of a lawyer. We are not lawyers. Therefore, we don't draft purchase and sale agreements.

We have worked successfully with 2 preferred law firms which specialize in real estate legal work. Their contact information is as follows:

Sampson Law Offices, PC d/b/a The Real Estate Attorneys
Russell E. Sampson, Jr., Esq.
90 Quincy Shore Drive
Quincy, MA 02171
Telephone: 617-792-7182

Baron & Trifilo
45 Fairfield Street
Boston, MA 02115
Telephone: 617-266-9060

Summer & Summers
224 Clarendon Street, 5th Floor
Boston, MA 02116
Telephone: 617-536-3630

Both firms have consistently done outstanding P&S and closing work for our customers and clients. At Baron & Trifilo ask for Catherine Trifilo, Jennifer Stathakis, or Cary LeBlanc - all excellent attorneys. At Summers & Summers, ask for Steven Ceprano, Eugene Summers, or Anthony Summers.

Loan Commitment
Whether a mortgage lender ultimately approves your loan is the lynch pin of your home purchase. This approval is also known as loan commitment. Both the offer to purchase and purchase and sale contract include a mortgage contingency which simply states that if despite your best efforts, you cannot obtain financing by a certain date (mortgage commitment date) your deposit must refunded to you in full and you are out of the deal. The lender's decision is based not only on your financial ability but also depends on the value of the property you are buying. That value is determined by a licensed appraiser assigned by the lender. For more detailed information about financing contact one of our preferred lenders.

Title Search & Title Insurance
Remember, unless you paid cash for house, your mortgage lender usually has a bigger investment in your home than you do. The lender has usually put up most of the money. The lender is also issued a mortgage deed which entitles the lender to take ownership of the property if you don't repay the loan as agreed. So in essence, you and the bank are partners in the purchase of your home. That is why the lender won't give you a mortgage unless you have title insurance. The bank wants to be sure and so do you, that you actually own your home once you have purchased it.

Each time the home you purchase has been sold, the title is legally transferred from a seller to a new buyer. This is called a chain of title. As a condition of loan approval, the attorney for the lender or "closing attorney" conducts a title search to make sure there are no "claims", "defects" or "clouds" on the title, for instance, someone who believes they own your house. However since modern record-keeping practices only go back so far, it's difficult to trace the complete history of the title on the house. Once the search is completed, the closing attorney arranges for a title insurance policy which protects you and the bank against possible claims on the title. Title insurance also protects you from any losses experienced as the result of claims on the ownership of your real estate.

Homeowner's Insurance
For reasons mentioned above, remember your mortgage lender usually has a bigger investment in your home than you do. Therefore if something happens to your house, the lender has a lot to lose too and will require you to have a homeowners insurance policy on the property that covers the replacement cost of the property. During the process of acquiring your property, at some stage your mortgage company will request either proof of coverage or an insurance binder, or compel you to have a new policy written to replace the previous one held by the seller.

In cases of condominium purchases, the condominium association maintains what is known as a master insurance policy on the entire property which covers all condo owners for any common expenses incurred in case of fire or other accident. Your mortgage company will request proof of this policy as a condition of loan approval. This policy does not necessarily cover individual units. If you purchase a condo, you may also want to obtain separate homeowner's insurance, specifically contents insurance to cover you for theft or other loss concerning your condo unit itself or personal property in it.

Title 5 Certification for Private Water & Sewer Infrastructure
If you are looking for a home or apartment within or just outside Boston's city limits, your home will have city or town water and sewer service. You have to get pretty far outside of Boston before you run into communities not served by public water and sewer services. But, if you are looking in such a community, know that your mortgage lender will also require official local government certification of the private water source and sanitary sewer infrastructure on your property. In Massachusetts this is known as Title 5 Certification. If the home you want to buy is located within a defined flood plain, the lender may also require a flood insurance policy.

Certificate of Occupancy
If you purchase a new construction home, your lender, as a condition of approval, will also require what is known as a Certificate of Occupancy, usually issued by the city or town in which the property is located. The builder will obtain the certificate from the appropriate authority.

Final Walk Through
About 24 hours prior to your closing, you and your real estate agent should take one last look at the house you are buying to ensure the seller is delivering the property to you as agreed. For instance, if the seller has agreed to deliver the property vacant and in broom-clean condition, the house should be empty and clean. If the seller has agreed to make certain repairs, you should make sure those repairs have been made. If the seller has promised to convey all appliances, make sure all the appliances are there. That goes ditto for any lighting fixtures, window treatments, etc.

Closing on Your Home
Closing is the last step to actual ownership of your new home. Even though you have a signed purchase contract and your loan request has been approved, you have no rights to the property, including access, until legal title to the property is transferred to you and the loan is closed. At closing, you will sign the mortgage loan documents and pay your closing costs, the seller will execute the deed to the property, and the closing agent will record the necessary instruments to give you legal ownership of the property. Closing costs vary widely depending on your new home's price tag, location and other factors. Overall, you can expect to pay between 1 and 3 percent of the sales price. As soon as you receive your commitment letter from your lender, you should confirm the actual date of loan closing and review your HUD Settlement Statement to make sure there aren't any fees you didn't anticipate or shouldn't have to pay. Metropolitan House Buying Checklist

One of the most important things you can do is to make a checklist as you search for, find and buy a home. By keeping on top of your game-plan at all times you will greatly increase your chances of success. Bookmark this page and refer to the following checklist frequently. Follow the links, print out this checklist and let it increase your house buying effectiveness.

1. Getting Started -- Get Informed & Figure Out What You Want
Sign up for an MLS search tool. Try MLS Assistant. Use it to browse and determine what types of houses interest you. Decide whether you want a single family, townhouse, condominium or investment property. Get a working knowledge of the market and the home buying process. Learn how to compare homes, understand pricing in the areas in which you would like to live. Know the offer to purchase process. Understand home inspections. Learn the purchase and sale contract process. Get informed about financing. All of that is available in this web site in our home buyer guide. If you just want a lecture call us. Our agents will oblige. Also, there are well over 150 pages of information available in the National Association of Realtor web site alone (www.realtor.org). Realtor.org also features countless links to additional data as well. Numerous guides are available on specific subjects. Their bookstore has additional recommended reading. You can't know too much about the home buying process. This is something you'll only do a few times in your life. If you have question about a real estate term or its definition? check out the Metropolitan Glossary of Real Estate Terms.

2. Get Your Finances Together
Know all three of your credit (FICO) scores. There a dozens of places where you can get it online. We like www.truecredit.com. Acquaint yourself with the mortgage process. Begin the preliminary application process by getting pre-approved by a mortgage lender. Your Metropolitan agent will need your mortgage pre-approval. When you find a home, you will need to present it to the seller along with your offer. Get the rest of your personal financial situation as soon as possible.

3. Find a Good Agent
According the NAR, "It is important to do this before you go rushing off looking for homes or you may end up with no representation." Understand Buyer Representation. To read more about what a good agent can do for you click here.

4. Go house hunting.
Do it consistently for a condensed period of time.

5. When you find an acceptable home, make an offer.

6. Negotiate the best deal - use help from your Metropolitan agent & info and skills you've acquired.

7. Schedule a home inspection.

8. Hire a real estate attorney.

9. Negotiate a purchase and sale contract.

10. Officially apply for your mortgage loan.

11. Obtain homeowners insurance.

12. Arrange your movers.

13. Schedule a walk-through.

14. Review HUD Settlement Statement and get bank check to bring to the closing.

15. Go to the closing and get your keys.

Some Recommended Additional Reading

100 Questions Every First-Time Home Buyer Should Ask
by ILYCE R. GLINK

How to Buy a Home When You Can't Afford It
by Robert Irwin

Home Buying for Dummies
by Eric Tyson, Ray Brown

Buy Your First Home! 2E
by Robert Irwin

The 106 Common Mistakes Homebuyers Make (and How to Avoid Them), 3rd Edition
by Gary W. Eldred

Home Buyer's Checklist
by Robert Irwin

The 106 Mortgage Secrets All Homebuyers Must Learn--But Lenders Don't Tell
by Gary W. Eldred

Mortgages for Dummies
By Eric Tyson, Ray Brown

How to Save Thousands of Dollars on Your Home Mortgage, 2nd Edition
by Randy Johnson