Guide to Buying in Boston
Whether you’re a first-time home buyer, finding a new place to live, or looking to purchase a lucrative investment property, Nobee will be your guide through the process. Our mission is to provide catered support and transparency at every step of the way, always with your unique needs in mind. We dedicate our utmost attention and care to each of our clients to ensure a successful real estate purchase. Check out our Buyer’s Guide below to learn more about the process.
1. Setting Search Criteria
People approach residential real estate purchases in the Boston area with different objectives in mind. First, you need to consider your long-term goals and how home ownership factors into them. Maybe you’re simply looking to turn rent payments into mortgage payments towards a tangible asset (hello equity!) or you’re seeking independence from neglectful landlords. Perhaps you’re hoping to buy a home as an investment. Before we can begin viewing properties, you should consider several important factors. What type of home best suits your needs in the coming years? At the moment, your dream home might be a luxury condo in the heart of Boston with quartz countertops, stainless steel appliances, high ceilings, and other attractive features. But what if you plan on expanding your family, whether children or fur babies? Will your home have enough space for growing youngsters? What school system will your children attend, and what parks and amenities are available nearby? These potential futures have to be accounted for when picking the right neighborhood for you.
On the flip side, if you’re looking to invest, we should look towards up-and-coming neighborhoods that have growth potential in Greater Boston. Would you owner-occupy an investment property to secure better financing? Another question to ask yourself is how much work you yourself are willing to put into your property: are you a go-getter who wants to get your hands dirty with big renovation projects, do you have extra cash for hiring professionals, or would you prefer something turn-key (ready for move in). Determining how much ‘sweat equity’ you want to invest is another important factor in finding the right place. Nobee asks you all the right questions from the start to synchronize our search criteria with your vision and best guide you on your journey to home ownership and meeting your goals.
2. Offer to purchase
First things first: Boston’s real estate market is very competitive, meaning that the amazing deal you had your eyes on might not be available for very long before it sells. You’ll have to be prepared to submit offers on short notice, so that you don’t miss out on that perfect home. It’s also a good idea to get pre-approved by your mortgage broker and to have your finances in order prior to viewing any properties so you can readily submit a strong offer and maximize your chances of landing your dream home by showing proof of financing.
Once you’ve found the perfect place, it’s time to submit an offer! By analyzing other similar, recently sold properties in the neighborhood, your broker will run a comparative market analysis (CMA) to help you better understand the property’s value. It’s important for the consumer to understand that the listing price isn’t always the final sales price. Listing agents have many strategies to get more buyers through the door, so it’s important to understand that some places may sell for well above or below the asking price. Your bidding price should take a few things into account: 1) the valuation provided by the CMA, 2) the maximum price you’re willing to pay, and 3) the chances of you finding something similar at a better price. Everyone wants a great deal, but if a buyer falls in love with the right home, it may be worth paying an extra 5-10% to secure the right deal. In a hot real estate market, you’re not just negotiating with the seller, but also attempting to outbid multiple offers, which can seem daunting. Luckily, you’ll have Nobee to comprehensively analyze all of these factors and help guide you to an appropriate bid amount.
In addition to locking down a strong offer, contingencies can play a major factor in negotiating a home purchase. These serve as the buyer’s protections that allow them to back out of the transaction based on predetermined agreements. For example, a mortgage contingency would ensure that you have a way out of the transaction in the case that you cannot secure the funds to purchase despite doing your best to perform your contractual duties, while an inspection contingency would allow you to negotiate repairs. If you are an investor or an experienced buyer looking for a “fixer-upper,” you may feel comfortable taking the risk of waiving an inspection contingency and analyzing the property on your own. The more contingencies you are willing to waive, the stronger your Offer to Purchase will appear, but it is also important that you fully understand the risks you are taking.
When it comes to finances, are you able to put down cash for a large portion, if not all of the purchase price? With plenty of cash buyers to compete with, the more you can offer out-of-pocket, the stronger your offer will be. The final component of your Offer to Purchase is a deposit as a sign of good faith -- typically $1,000 in the Boston area. With this deposit, the contract becomes legally binding for both parties, and will only be forfeited to the seller in the case that you, the buyer, fault on any of the agreed upon terms in your offer. Otherwise, this sum will go towards the purchase price.
3. Contingencies and Purchase & Sale Agreement
After the buyer and seller mutually agree upon the Offer to Purchase, it’s time to follow through on the included contingencies. You or your broker will schedule a licensed property inspector to review the property for environmental contaminants (e.g. lead, radon, asbestos, etc) and various structural, electrical, and plumbing issues. Their report will especially highlight any serious material defects or signs of future trouble, as well as the general conditions of the property. Any defects can either be negotiated out of the final sale price, or, if repairs would exceed the amount declared in your inspection contingency, you can walk away from the deal entirely. Remember that the seller can turn down repair requests or price drops, and you don’t want to risk losing the property, so make sure you are looking for serious defects.
After the inspection contingency is settled, it’s time to sign the Purchase and Sales Agreement (P&S). The buyer’s and seller’s attorneys rework the original Offer to Purchase to include a detailed description of any negotiated concessions. Along with signing the P&S agreement, you (the buyer) will put down a much more substantial deposit -- often 5-10% of the full offer price. This payment, in addition to your initial $1,000 deposit, will be placed in escrow until closing, whereupon it will go towards your purchase price.
If you are working with a mortgage originator, the next date to look forward to is the lender’s commitment date, which is the final day of the mortgage contingency. Your lender’s commitment letter signals that they have completed a deeper analysis of your debt to income ratio, market data, home appraisal, etc. and are willing to execute the loan amount. At this point, it’s important that your financial situation stays the same (don’t go making any big purchases just yet!) while the lender does a final review prior to closing. If all goes well, we’re clear to close!
4. Finalizing the Transaction
Closing on your new home is quite straightforward: both parties and their attorneys meet to sign all closing documents. At closing, all funds that are due will be transferred to the appropriate parties. Finally, the newly executed deed is recorded with the town, and the sale is complete; you are officially a new property owner!
5. Final Remarks
Sales transactions are all different, and can bring up unexpected circumstances. It is imperative to have an experienced and trusted real estate broker to help you navigate the buying process. Nobee will serve as your trusted advisor and guide to ensure that all your real estate goals are met when purchasing your next home.