Buyers, Avoid These Mistakes!

AVOID THESE COMMON MISTAKES
When Buying A Home

Being an Accredited Buyer Representative, I take my job looking out for my buyer clients very seriously. If I am going to find the right home in the right area at the right price I need more than just “We’re looking for a 3-bedroom home in Boston.” I need to know as much about your preferences and top priorities in terms of features, location, and lifestyle. This is why it’s important to have a detailed conversation before jumping into the search; hence the tongue-in-cheek photo attached!

Please do not confuse your Google search with my REALTOR license!

Google, Zillow, Trulia, etc are not your friends.

1. Underestimating Costs
The purchase price seems to be the big number to focus on but you also need to factor in other costs including: property taxes, homeowner’s insurance, utility bills, home maintenance expenses, desired home improvements, closing costs, and if applicable, mortgage insurance and association dues/move-in fees. In fact, being qualified to buy a house doesn’t automatically make you qualified to buy a condo if the association has high monthly fees.

2. Not Getting Pre-Approved
Right now, many parts of Boston are experiencing a Seller’s Market where buyers are having to compete in bidding wars to get the home they want. If you do not have a letter showing that you are pre-approved for the purchase price of the house you want to make an offer on, you will be lucky if the seller will even look at your offer when three or more other buyers have submitted such letters with their offers.

3. Not Researching The Neighborhood
It’s easy for you to imagine yourself living in a beautifully updated home, while overlooking what it will be like living in its neighborhood. Be sure to consider schools, parks, proximity to transportation, shopping, restaurants, safety, or anything else that is important to you.

4. Ignoring Resale Value
While house hunting, the thought of selling your new home may seem a remote and distant prospect, but it might not be! Even if you imagine yourself living there forever, life often dishes out unexpected changes. It’s important, then, to consider how other buyers might react to your home when you turn around to sell it because what you think is tolerable and not a big deal might be the cause of future buyers avoiding buying it due to undesirable or hard-to-modify features. It such instances, you need to ensure that you are getting a great deal on your purchase because future buyers will want a great deal to buy yours.

5. Not Hiring Jim
You may or may not be aware of “buyer representation” and what it means. Even if you do, only a select number of real estate professionals are Accredited Buyer Representatives! This designation is earned only through experience, special coursework, and keeping up on the latest issues and trends. He is a proven and skilled professional who can achieve the best results for you.

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Landlords, Tenants, and Snow Removal

Who’s Responsible for Snow Removal?

You own a rental property and insist that you have no responsibility for removal of snow except for clearing the sidewalks as required by a municipal ordinance.  Are you correct?  No. The usual rule is that it is the responsibility of the homeowner or landlord to keep means of egress free of snow and ice. The State Sanitary Code provides that, “the owner shall maintain all means of egress at all times in a safe, operable condition and shall keep all exterior stairways, fire escapes, egress balconies and bridges free of snow and ice.”

If the residence has its own means of egress, meaning that it is not shared with other occupants, the landlord and tenant can agree to allocate the responsibility of maintaining such egress free of snow and ice to the tenant.  Therefore, in situations where there is a single or multi-family home and the occupant has its own exclusive means of egress, be sure to review the lease to determine who is responsible for keeping exclusive means of egress clear of snow.

What about when you are the property owner and occupant? Do you have a legal obligation to remove snow and ice from your own property? Yes. All Massachusetts property owners have a duty to use “reasonable care” for the protection of visitors, and are legally responsible for the removal of snow and ice from their property. In terms of liability, homeowners should be aware of the 2010 SJC ruling of Papadopoulos v. Target Corp. That case expanded the duty of property owners to remove snow and ice from their property and definitively held that Massachusetts property owners have a duty to use “reasonable care”for the protection of visitors, and are legally responsible for the removal of snow and ice from their property.

The Court did not define “reasonable care,” and the duty of the property owner will depend on the specific situation.  It is recommended that every property owner should take care to do the following: (1) review insurance policies to be sure that there is adequate coverage; (2) determine whether contractors or others hired to remove snow and ice have insurance; and (3) be vigilant when there is newly fallen snow, melting or freezing.  If complete clearing is not possible, warning signs may be appropriate.

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Government’s Heavy Hand on Landlords

Just Cause Eviction Bill Re-Introduced Again in 2017

If you’re a landlord or planning on becoming one in Boston, you have to keep informed of what you can and cannot do when your property is within the city limits of Boston. Mayor Martin Walsh has re-filed a proposal to radically change the eviction law in Boston. The “Jim Brooks Stabilization Act” is nearly identical to the just cause eviction bill filed in late 2016. GBREB strongly opposes the bill which would prohibit landlords from failing to renew a lease or terminating a tenancy at will, would limit the grounds upon which a landlord could terminate any tenancy, and would require notification to the City prior to the filing of eviction actions.

The proposed home rule petition has been referred to the Committee on Government Operations chaired by Councilor Michael Flaherty. No date for a public hearing has been set.   The bill would need to be approved by the Boston City Council and the State Legislature before becoming law.  If the bill is sent to the State House, the Mayor’s office has indicated that freshman legislator Chyna Tyler (D-Boston) intends to file the bill.

 

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What’s a FICO score?

My Credit Score is Decent.
or is it?!

How many times do we REALTORS hear buyers say, “My credit is good” when it really it isn’t? Constantly. Some buyers think that their credit is in great shape when it isn’t because they don’t understand what good credit is considered these days and how lenders arrive at a different score than what you might find online.

Here is how a FICO score is determined so you can take steps to improve yours:

* 35% is determined by your payment history: having a long history of making payments on time and no missed payments on credit accounts is one of the most important items lenders look for.
* 30% is determined by amounts you owe: measured by the amount you owe relative to the total amount of credit available to you. Someone closer to maxing out their credit limit is deemed to be a higher risk for late payments in the future and this can lower his credit score.
* 15% is determined by the length of credit history: a credit report containing a list of accounts opened for a long time is ideal. The score considers your oldest account and the average of all accounts.
* 10% is determined by new credit accounts: therefore, opening several new accounts in a short period of time can lower your score. Also, multiple credit inquiries can represent a higher risk; except for those initiated by you, an employer, or a bank when soliciting “pre-approved” credit offers. To compensate for rate shopping, the score counts multiple inquiries in any 14-day period as just one inquiry.
* 10% is determined by the types of credit in use: how many retail accounts, finance company loans, credit cards, and mortgage loans are given consideration.

When all is said and done, the best number to have before taking out a loan is 740 or above. This score is viewed as a safe risk and you can get a loan fairly easily and at the best rate. Less than 740 just makes things more difficult and the interest rate possibly higher.

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FHA Conforming Loan Limits Raised

Getting a mortgage for a home can be a challenge for many buyers for a variety of reasons. However, high-cost-of-living states such as Massachusetts pose an additional challenge – higher down-payment requirements. Fortunately, the Feds understand this and try to keep the FHA low-down-payment mortgages available in such high-cost states particularly where counties see skyrocketing prices. As long as your loan amount doesn’t exceed $598,000, you will be able to purchase a home with an FHA-insured mortgage with only 3.5% down. Therefore, your purchase price cannot exceed $620,000 unless you are willing to increase your down payment to compensate for the higher price.

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Tenants, Landlords, and Marijuana

 Yes, it is legal to use marijuana products in Massachusetts; but that does not give you the right to smoke it wherever you want. Wherever smoking cigarettes is restricted, marijuana, too, is restricted. Therefore, if your landlord does not allow smoking on the premises, this includes weed as well. Please read your lease carefully before signing if smoking inside your apartment/home is important to you. Until landlords think about it, cultivating a certain amount of marijuana for personal use is permitted. However, once insurance companies notify their clients about raising insurance rates where growing marijuana indoors occurs – possibility of water damage, electrical fires, and mold being factored in – landlords might prohibit the growing of weed as well. Since the ballot on recreational use of marijuana only passed 54% to 46%, there are a lot of folks who don’t care for the presence of weed; therefore, homeowners should remove or relocate equipment during the listing period. It goes without saying, homeowners should not smoke either cigarettes or weed inside the house if they do not want to impact the value of their home when it comes time to sell it.

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Boston Increases Residential Exemption for 2017

The mayor and the Boston City Council have chosen to increase the residential exemption from 30% to 35% of the average of all residential parcels. This means that some homeowners might see their property tax bill go lower. The current tax rate for 2017 is $.01059 by which you multiply your assessed value. Therefore, if your property is assessed at $500,000 and you did not apply for your exemption prior to 2017, your property tax bill will be $500,000 x .01059 = $5295. If you did apply for the residential exemption prior to 2017, then your tax bill drops $2,433. In this example, your tax bill then becomes $2,862.

Here is a real-world example of the effect on one homeowner’s pocket book after taking into account rising values, a lower tax rate, and the new higher residential exemption for 2017:

 

Fiscal Year Property Type Assessed Value *
2017 One Family $490,900.00
2016 One Family $476,600.00

In 2016, the rate was $.011. Multiplying this by the 2016 assessed value of $476,600 = a gross tax of $5242.60. Deduct the 2016 exemption of $1,974.40 for a net tax bill of $3,268.20. The property’s assessed value rose $14,300. The tax rate fell .00041. This owner’s tax bill for 2017 is $490,900 x .01059 = $5,198.63 less $2,433 = $2,765. And so, in spite of the increase in assessed value, the combined effect of the lower tax rate and higher residential exemption have saved this homeowner $502.57 or a monthly mortgage payment savings of $41.88!

You can look up the current and assessed value of any property in Boston at http://www.cityofboston.gov/assessing/search/ and use this to determine the taxes on your current or future residence.

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Do Something for Yourself and Your Neighbors

There are two important things everyone should be on top of in the winter time and which inure to one’s own benefit!

1. Have Shovel, Clear Walkways – It is easy to ignore everything but your own driveway and sidewalk after a heavy snowfall. I mean, who even wants to spend hours cleaning one’s own space, let alone other people’s? However, if your neighbor is out of town or incapacitated, think of the Golden Rule and help him out just as you would like to be helped out. On the other hand, call 311 to report lazy or cantankerous Boston neighbors – a $50 fine is assessed each day a violation exists! See https://www.boston.gov/departments/311/rules-clearing-snow

2. Have Shovel, Clear Hydrant – You never know when an emergency might arise like a tree catching on fire, and so you will want to ensure that your nearby fire hydrant is clear from snow so that the fire responders won’t have to spend time clearing it before they can hook up to it and put the fire out!

3. A less urgent task but still important nonetheless is keeping the street drains clear so as much runoff can be drained off the streets and sidewalks to cut back on icy patches from forming nearby.

Clogged Storm Drain

Clogged Storm Drain

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For Smokers and Tokers

So, you like to smoke. Thankfully, we can do most anything we like to within the confines of our home. However, if smoking cigarettes or joints or even harmless incense, you should consider doing one of two things:

1. Don’t smoke inside your house. Step out onto the back patio/porch.

2. If quitting smoking or not smoking inside your home are options, look into purchasing a few smokeless ashtrays such as the one pictured above. Cigarette smoke and its odor cling to walls, ceilings, and your furnishings. Long after the cigarette is extinguished the odor remains. When buyers are out looking at homes, they know if a smoker lives in the house as soon as they open the front door. On odd occasions, you can even smell the odor of cigarettes before you open the door if the house reeks sufficiently enough of it. I have had buyers walk away from smokers’ houses without even going in to have a look around because they couldn’t get past the stale or pungent smell from cigarettes and marijuana. Not only can smoking in your home devalue it, the odor can prevent it from selling at all. The same goes for heavy incense users! By using smokeless ashtrays, you limit to a certain extent how much smoke gets circulated in the house.

3. If you have quit smoking or can smoke outside, there are several things you might consider doing to reduce the impact years of smoking has had on your home.
a) If you’ve ever gone to a smoky bar, you were probably reminded of your outing the morning after – when you could still smell smoke on your clothes. The same thing applies to the fabrics in your home. If possible, the fabrics in your home need to be aired out or washed in cold water, and then air dried. If line drying is impractical, use low heat. Some of your items might benefit more from a visit to the dry cleaners!
b) For those items that cannot be aired out or taken to the cleaners, sprinkle a generous amount of baking soda on all their soft surfaces. Use something similar to a colander or flour shaker to sprinkle baking soda over your carpet, fabric-covered furnishings, and mattresses. It should look like you have a thin layer of snow around the room! Then, work the baking soda into the soft surfaces by gently rubbing your hand over the mattress or fabric, or by walking around the carpeted room in your socks. Let the baking soda absorb the odor for about an hour while you clean the hard surfaces. After about an hour, get busy vacuuming everything up.
c) To clean your hard surfaces you can try white vinegar. There’s something about vinegar that gets rid of smoke smell. Because the smell of smoke is caused by the leftover resins and tars, vinegar (an acid that cuts through resin and tar) is a great way to clean those surfaces that are not made of fabric, and perhaps, some that are fabric. I know what you’re thinking; vinegar does not smell much better than smoke. Well, that’s true, but the smell of vinegar eventually diminishes, cigarette smoke does not.

4. If your house has had a chronic smoker living in it and the house reeks from years of smoke, your likely best and only solution is to bring in commercial ozone generator. The stronger the odor, the higher the concentration of ozone is required (larger machines). Alternatively, you can run several machines all at once throughout the house. It will be cheaper than replacing carpet and re-painting walls and ceilings!

The important thing that I’d like you to take away from this blog is that you should stop smoking inside your house now to prevent additional smoke odors from piling on to what is already present. This should help reduce the amount of effort required to eliminate the odors that still remain when you start thinking about selling your home.

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Are You Ready for Rising Interest Rates?

Can’t say I didn’t warn you…

Higher Interest Rates Ahead

Interest Rates On the Rise

Several months ago I was warning buyers and sellers to make a move ASAP before interest rates move up. The ridiculously low interest rates that the Feds have kept artificially low to make the economy look better than it really is was a temporary subterfuge that must eventually give way to a substantial, if not dramatic,rise back to true market value. The difference a one point increase from 3.5% and 4.5% on a $100,000 mortgage is about $60/month or $720/year. A $300,000 mortgage, therefore, costs $180/month or $2,160/year more. If a buyer is on a fixed income, you can see how his purchasing power gets eroded quickly as rates rise. This means buyers cannot afford as an expensive a house as before – or even buy at all – and eventually home values also erode due to the law of supply and demand. The upside for sellers in a market of rising interest rates is the flurry of panic buying as buyers try to buy before rates get too high. The most opportune time for rates to rise is right after a presidential election where there’s a change in government – just as has happened last month – and so it is of little surprise that we are now seeing a the hike in interest rates that I have warned everyone about. Those who heeded are happy. Those who did not, not so much…

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