Andrew T. Schena's archive
In a real estate transaction, no matter a South Boston Condo, a Back Bay Townhouse, or a Downtown Penthouse, both buyer and seller are out for their own financial interests from day one. Without proper guidance, buyers often jeopardize their position and wind up paying more for their dream property, or lose it all together. If you are in the market to purchase a new condo, single family or multi-family property anywhere in Boston, or Metro-Boston for that matter, don’t make any of these five mistakes when negotiating:
1) Not Employing a Buyer’s Agent – For some reason, many buyers are leery of hiring a realtor to act on their behalf.
Buyers fear that working with one agent will limit their options. In fact, working with a designated agent can bring you more listings and opportunities than you can typically find on your own and generally do it much faster. Good agents will also know if there are pre-construction units that are not yet on the market that they can suggest to you if you are willing to wait out the construction process.
Buyers may also think that working with an agent will cost them money or that they could negotiate a lower price if they did not have an agent involved. This is typically NOT the case at all. Sellers must agree in advance of putting their property on the market with a listing agent, how much they will pay to sell their home. The listing agent simply shares that fee with a buyers agent, if there is one. By not having a buyers agent, you are essentially negotiating without representation against a seller who does. A good buyers agent will have the discussion about how they are paid and typically should only receive their payment from the listing agent or seller.
2) Not Having the Same Information As the Seller – Before you submit an offer, you should remember the seller has already decided how much money they want from the sale of their property. They have had the luxury of reviewing recent sales activity in their market and have set their expectations. As a buyer, you also need to know the comparable properties they are basing the value of their property on, and figure out what is a fair market price, market conditions included. Would you want to fall in love with a South End brownstone and not know that it is $75,000 overpriced? I wouldn’t, but that is me.
3) Not Having Enough of a Deposit – As a buyer you want to always show a seller your seriousness with your Earnest Money Deposit amounts. Acting conservatively by proposing a low deposit amount, no matter how well qualified you may be, will quickly tell the seller otherwise. Sellers will generally gauge the strength of your offer first by price, and second by deposits and financing amounts. In a competitive situation for a specific South Boston Condo, I have seen a buyer with low deposit amounts have their offer rejected in favor of an offer with the same price, but higher deposit amounts.
4) Having Too Many Contingencies – A contingency is a condition that must be met prior to either a contract signing or a closing. The two most common contingencies are a Home Inspection before signing a purchase contract, and a Financing Contingency before closing on the sale. These two are regarded as normal. Additional contingencies such as “Subject to the Sale of Your Current Home” can tank your offer very quickly. If you are a first time buyer, you need not worry about such a contingency!
5) Being Impatient – As anxious as you feel to buy your new home, remember, a seller is just as anxious to sell theirs! Having a buyers agent to separate your emotions from the transaction and act in a planned, strategic way, allows you the confidence that you won’t overpay and rush to judgment on your perfect property.
I have personally purchased and sold property all over Boston, and Eastern MA for that matter, so I understand what it’s like on both sides of the fence. Most people only buy or sell an average of 3 times in their lives, so it’s natural to be uncomfortable when it comes to negotiating the largest assets of your lifetime. When you hire an agent, be sure they are a professional and are educated where you may not be. It’s okay not to know everything! A good buyers agent will set you at ease and always have your best interests at hand.
If you have any comments regarding this post, or are interested in buying a new property, please feel free to reach me at Andrew@capresidential.com.
As Boston condo’s become ever more popular due to lifestyle desires and proximity to the amenities of a major US city, many buyers don’t take into consideration the association’s reserve account.
Most buyers know that a condo complex, may it be a former 2 family building or a 300+ unit facility with tennis courts and a pool, that their condo association fees are to cover items such as trash removal, snow removal (if you’re lucky), and the building’s master policy. The more amenities an association provides, the higher the fees. But most buyers don’t look beyond the actual association fee. What they should really be questioning is how healthy the association’s reserve is.
In Massachusetts, the law states all condominiums to be required to maintain an adequate replacement reserve fund collected as part of the common expenses (GL Chapter 183A, S10(i)). Now granted this may be overridden by a vote of 67% of the beneficial interest in the association at an annual meeting, but Fannie Mae, Freddie Mac, and FHA all require an annual operating budget to include a reserve fund of at least 10% of the budget. Considering those GSE’s dominate the lending landscape, it is wise for the associations’ sake to be able to sell and finance units easily by having the reserve. Also, as with anything, doing the bare minimum to pass can often get you in trouble down the line.
The reality is, if an association has not properly been funding its reserve, and a deferred maintenance issue rears its head, as it often does with aging properties, the unit owners will face special assessments on top of their monthly condo association fees to pay for said projects. For instance, if the property needs repointing, or a new roof, and there is not enough money in the reserve, then the unit owners will have to directly pay an increase, ie. special assessment, to have that work done.
Reserve studies from qualified analysts can be great tools used by an association to give a much better idea of what the annual reserves should be based up on the status of the capital items at the association. Feel free to inquire to your association to see if they have ever had one performed, especially if you are buying into an older complex.
The bottom line is, just be cautious to not only confirm what your association has in reserves, but what that amount is in comparison to the actual budget. That will be a tell-tale sign as to the health of your association, and the avoidance of any future special assessments.
There are many people in life that achieve great things. Those certain individuals are both revered and slandered as most people express their own opinions through many different channels these days. The one common attribute that most types of successful individuals possess is never being complacent. Not in their business, not in their personal lives, nor in their individual achievements.
Success, no matter what you apply it to, is not just a God given right. There has to be hard work attached to any natural given talent in order to rise to the top. Many people say that pro-athletes make the millions of dollars because they were given a gift of physical skill or body type. I agree with that sentiment, but there is much more to it. What often gets overlooked is the extreme hard work, training and dedication that is committed, away from the spotlight that allows that athlete to fine tune their skills to be the best, and achieve top flight status. The same goes in business.
After listening to some of the brightest minds and successful real estate business owners over the past few days, there is one commonality found amongst all of them. Creating a system, and taking action.
Just having a natural talent will definitely get you places, but if you want to achieve that upper echelon of production, or even if it’s a basic goal, you’ve got to work to get there. Too many people today enroll or start reaching for things that they want, and then expect it to fall in their lap. They don’t have a plan to get there, and when they meet the first wall of resistance, they give up.
Success is never easy. Success is achievement. No matter if it’s physical, mental, family, or professional, write down your goals, map out how to get there, take action and work with a purpose. Just make sure you look up from time to time to measure how far you’ve gone, and how effective your actions have been. You may hit your goals a lot sooner than you think.
CAPITAL RESIDENTIAL GROUP BLOG
Treasuries and mortgage markets opened weaker this morning with the US stock indexes looking slightly better after falling 172 points on Friday. The bellwether 10 yr still hanging close to 3.00%, unable to sustain under 3.00% for any length of time. There are no economic reports today but the momentum will pick up through the rest of the week after very little last week.
Courtesy of RateAlert.com