As homebuyers approach the Boston Area housing market, there can be a lot of anxiety and even dread that comes with the house hunting process. While hot markets like ours can be intimidating, Own Up has a network of experienced real estate agents who know this market inside and out. We spoke with three influential agents in the area to demystify some of the myths and truths about buying a home in the Boston area:
True or False #1: The listing price is just a suggestion
“This is a competitive landscape,” Jason Highland says. He’s principal/realtor at O’Connor & Highland . “Properties are often selling for anywhere between 1% and 6% above the listing price.”
So, Highland often asks clients for their “real” number.
“Is it $600,000? Or $550,000? If it’s $550,000, I’ll only show homes listed up to $500,000 so we can go above the asking price in order to compete, without exploiting the buyers’ comfort threshold.”
Verdict: TRUE. And be prepared to go up.
True or False #2: It’s impossible to buy in Boston without overpaying.
“When you’re working with quality people, you can win,” says Highland. “It’s not impossible, and not everyone is a cash investor willing to pay 10% over the asking price.”
In fact, Highland’s team helped 41 buyers in 2017, six or seven of which were first-time buyers utilizing 3%-5% down loan options.
That’s consistent with national numbers, says Highland. According to research by the National Association of Realtors, the average down payment last year was 11%, not 20%.
Verdict: FALSE. There is still room for first-time homebuyers who pick the right team.
True or False #3: Every home sale in the market ends up in a bidding war
Spencer Lane, from Coldwell Banker Residential Brokerage says almost all of his buyers come across bidding wars on properties they’re considering.
“Some have made multiple offers and lost multiple properties,” he says. “So, we often decide to put our best foot forward by taking steps like waiving contingencies, which the buyer may not have considered before. The model has changed significantly from what it used to be.”
Brian Dougherty, managing partner at Robert Paul Properties, has developed strategies to prevent his clients from getting into bidding wars. He encourages them to look for homes in off-seasons like late Winter, he looks for homes in towns with higher taxes like Weston and he utilizes a peer-to-peer agent networking platform to find homes before they are listed.
“We work with buyers to source them off-market inventory whenever possible, so it’s a more civilized experience,” he says.
Verdict: TRUTH. But you can sometimes find a home before it gets to the market.
True or False #4: Writing a letter to the seller can help you win a bid
If multiple offers look similar, a letter can help to differentiate an offer and make the buyer more memorable and likeable to the seller, according to Jason Highland.
“Everyone, even if they’re the most analytical person in the world, feels their home is special,” he says. “They want to pass the baton to someone who will care for the house. If the potential buyer can connect emotionally to that, it’s an intangible asset that can make all the difference.”
Brian Dougherty says letters can help on a case-by-case basis: “The agent needs to know the variables and motivations of the seller. But, if you can work to establish a connection - maybe you realize the buyer went to the same college or works in the same business - that can help.”
Verdict: TRUTH. It can help, but it’s not a guarantee.
True or False #5: You have to have saved 20% for a down payment
Spencer Lane argues that having 20-25% ready for a down payment can help in a multiple bid situation.
But, according to Jason Highland a minimum of 5-10% can work:
“There are unique programs that each individual town runs that help with the lower end of down payments, and the state has a program through Mass Housing, but 5% is the starting place and 10% puts you in a good place.”
“A strong pre-approval letter from a good lender can be just as effective if your down payment is going to be closer to 10%,” agrees Brian Dougherty.
Verdict: FALSE. 10% and a good pre-approval letter goes a long way.
True or False #6: You should be prepared to make an offer soon after seeing the home
There’s a broad consensus among the agents we spoke to that buyers should be ready to make an offer within 48-72 hours of seeing the house. That sounds intimidating, but preparation is key:
“One of the first things we do with new clients is spend two hours with the buyer, running through a needs analysis and a market analysis, so that they come out understanding what the pricing dynamics are and the number of homes they should expect to see,” says Highland.
The advice from Spencer Lane is to be patient, and be prepared.
“Sometimes you can find the property you want to buy in the first couple of weeks of the search,” he says. “But, if buyers aren’t appropriately prepared, they won’t be able to strike when that great property comes their way. That’s why having a pre-approval letter and a good understanding with the agent is key.”
Verdict: TRUE. Be prepared to move quickly.
True or False #7: With low inventory, it’ll be impossible to find the right home for you
When Jason Highland begins work with a new client, he has them develop three to five “must-haves”, and another three to five “like to haves.” Although there’s no perfect home, regardless of budget, if the buyers find a home that covers 70% of the list, Highland says that’s a home to consider making an offer on. If it’s at 80%-90% of the list, write the offer now.
When it comes to wish lists, Dougherty is of a similar mind: He tries a tactic in which he sends sample listings to both parties, if it’s a couple. He asks each of them for “initial knee-jerk reaction” in one or two lines to the listings, and he says it’s an effective and thought-provoking exercise that helps them focus on their priorities
Lane encourages buyers to remember what can be changed later - if it’s a fresh coat of paint or an open layout, renovations and painters can fix those issues. Other things, like parking and numbers of bedrooms, can be deal-breakers and he tries to focus on those elements.
Verdict: FALSE. Don’t let perfect get in the way of the good.
True or False #8: It’s too difficult to predict the price of closing costs and inspections
Brian Dougherty says transparency is key: “Ask the team at Own Up to provide an estimation of closing costs, so that there are no surprises.”
Lane has a positive take on home inspections: “They’re a great way to learn about the house and how its systems work. There are will always be elements of the house that are wrong or incomplete, but it’s important to know when to negotiate and when it’s best to pack it in and walk away, if it’s not right for you.”
Lane also reminds folks to ensure they are using good home inspectors. “There are a lot of questionable ones out there,” he says.
Verdict: FALSE. Own Up can help you get a good grasp of your costs.