The Buying Process

Before starting the search process, or early on, speak with your financial advisor or a qualified lender (bank, credit union or mortgage broker) to get a preliminary feel for what you can afford and what your borrowing capability will be. I can suggest lenders who can help you understand the different financing options available based on your particular financial situation and then, later, based on the specific property you are planning to purchase. At this point, you are doing your due diligence on the financing.

Secure a financing pre-approval letter, ideally, before making an offer. This will require providing the lender with information about your income, assets and debt. The financing pre-approval gives you a general direction on financing. It does not commit you to use the lender who provided the pre-approval. Once you know what you can afford, focus your home search price range accordingly. In today’s highly competitive Boston real estate market, you will want to submit a pre-approval letter with your offer. Lenders are accustomed to this request and generally should be able to accommodate a change in the pre-approval letter to match a specific offer assuming it’s within your range of borrowing capability.

As you begin to explore, you’ll discover that Boston boasts a wide array of properties and neighborhoods, distinctive in type, style, features, character and lifestyle. I’ll help you consider and prioritize a list of essential and desirable features for your Boston home, consistent with the city lifestyle you are looking for, inside and outside your home.

Location

• Downtown Boston, Brookline, Cambridge and the many neighborhoods within each, or suburbs
• Accessibility to public transportation, shopping, restaurants, health club, cultural activities and workplace

Neighborhood

• Primarily residential, commercial with residential, residential with commercial

Type/Style

• Brownstone, townhome, high-rise, mid- rise low-rise, apartment style, floor-through, single level, duplex, loft, single family, two- or three-Family

Age/Condition

• New construction, totally renovated, Move-in or Cosmetic Changes, Renovations needed, Gut Renovation

Features/Amenities

• Number of bedrooms (size/how used/# people)
• Number of bathrooms (en suite, external, shower/bath)
• Kitchen (open/enclosed); how often you plan to cook
• Dining Area (formal, combined living/dining)
• Style (contemporary, transitional, traditional)
• Detail (woodwork, moldings)
• Air conditioning (central/window)
• Appliances (gas/electric)
• Washer/Dryer (in unit/common)
• Outdoor space (garden, terrace, balcony, common/private roof deck)
• Elevator/walkup
• Pets/No pets (type/size)
• Parking (# spaces, outdoor/garage, tandem/direct, deeded, secure)
• Sun exposure (living/bedrooms)
• Fireplace
• Flooring (hardwood/carpet)
• Views (water, city, greenery)
• Concierge/doorman
• Fitness

Start with on-line research. I recommend this approach to all of my clients because it will help you get educated about relative market values and what your dollars will buy in today’s market in various neighborhoods. You can access MLS listings and sign up for listing updates on my website, or ask me to sign you up to receive listings automatically within defined search parameters relative to your interests. Upon request, I will provide a customized, complimentary market evaluation  to give you guidance on market values in general or for specific properties of interest, including competing properties sold, under agreement and currently available.

Allow time to view prospective homes that meet your criteria. Attend open houses to explore different neighborhoods, properties and price ranges, and join me on private showings that I’ll arrange.  Consider the objective information that I will offer about each property to assist you in the selection process. Plan to revisit the best properties for a second and maybe even a third time before making your final decision. The process is ongoing, evolutionary– and often time-sensitive – as new options become available. It continues until you find the property best suited to your needs and are ready to make an offer. I will provide guidance on an offer price and an opinion of value for the property on which you want to make an offer based on an in-depth analysis of the data (properties sold and under agreement) coupled with judgment. Ultimately, the decision on what a property is worth is yours. My motto is go with your gut feel. My goal is to help you make the best-informed real estate decision.

While it may seem difficult to determine the right offer to make, I will guide you throughout the process and will:

• Provide a market analysis and insights on pricing pertaining the specific property of interest, delving into an analysis of comparable properties sold and under agreement
• Provide an informed opinion on market value, including insight on the elements and terms of an offer
• Craft an offer for your review and approval
• Submit your offer to the Seller (via the listing broker)

I can also help you craft an offer in such a way that may be more attractive than another buyer’s. Keep in mind that your offer isn’t only about price. The terms, including contingencies such as inspection, financing and timing, are factors as well. Once the offer is submitted and in play, I will apply my negotiation skills and expertise to help you reach an agreement. All offers must include a $1000 deposit (in the form of a check) to bind the offer. Typically, a copy of the check is typically submitted with the offer and the actual check is delivered to the listing brokerage firm upon receipt of the fully executed offer. The documents that typically make up the offer package include: Offer to Purchase, Offer to Purchase Contingencies, $1000 Deposit, Mandatory Licensee Consumer Relationship Disclosure and a Financing Pre-Approval Letter, if possible. If the Seller has initiated a Property Transfer Notification Certification (disclosure regarding lead paint), the Buyer should complete the form and include with the offer.

Ask your inspector to check the building exterior, roof, systems, common spaces and interior spaces, including windows, air conditioning, electrical panel, dishwasher, washer/dryer, water pressure and temperatures, etc.
Most offers include a home/building inspection contingency and this is quite typical and expected by Sellers. A home/building inspection typically occurs within approximately five days of the accepted offer at the Buyer’s expense; sooner is better so you know where you stand and, in today’s highly competitive Boston market, offering to do an inspection within a few days may help to position your offer more competitively with the Seller. An inspection contingency may include different types of inspections: building/home, pest, lead, and radon. I will arrange, in advance, to allow your inspector access to the basement, roof, and wherever systems are housed. Upon receipt of the inspection report, the Buyer typically has two days to either respond with issues for the Seller to address as part of the Purchase & Sale Agreement or back out of deal as a result of the inspection (also within two days, as stated on the contingency form, so as not to lose your $1000 deposit). There may be a renegotiation as a result of the inspection, which is handled between the brokers or the attorneys. Typically, I will initiate by sending your request to the listing broker, or we will jointly decide whether the issues need to be handled by the attorneys. The Seller may request a copy of the inspection report before responding to your request to address an issue by fixing it or compensating for it with a credit or reduced sale price. If further assessment of an issue is required as a result of the inspection, we can request, in writing, additional time for that purpose. The process for addressing the inspection prior to closing is typically incorporated into the Purchase &Sale (P & S) Agreement.

Once you have an accepted offer and completed the home/building inspection, you will need an experienced real estate attorney. Research attorneys and make a hire decision; I will provide names. . Given the quick time frame for signing the P & S, you will need to hire an attorney quite quickly. Before making this decision, ask any attorney you speak with for an explanation of his or her role in the process, the services he or she provides and inquire, upfront, about all costs from start to finish, and any other fees. If your purchase is going to be an all cash transaction, let the attorney know as this has an impact on the process and, possibly, the costs. Clearly communicate the agreed upon dates/deadlines for the signing of the P&S and the closing to make sure the attorney can meet them. Fees may vary, but ultimately, select an attorney with whom you feel comfortable, based on references, but also your own due diligence. Once you have completed the home inspection (or possibly prior), provide your attorney with the accepted offer package including the MLS sheet and all the condominium documents and financials, as well as the contact information for the Seller’s attorney. I can facilitate this for you. Your attorney should:

• review the P&S (drafted by Seller’s attorney), condominium documents and financials
• conduct a title search
• review the deed
• prepare for and possibly conduct the closing, including preparation of all closing documents

In the case of a cash transaction, the Buyer’s attorney would typically do the closing. When a lender is involved, the lender may have a closing attorney. This will be determined in the course of the process.

Once you have an accepted offer, the Seller’s broker should provide you with all condominium documents, which may in include:

• Master Deed
• Declaration of Trust
• Any Amendments
• Rules and Regulations
• Minutes from condo board meetings
• Condo Association Financials

Review all of the documents and let me know if you have any questions that need to be answered by the Seller. Also, I would suggest that you also ask your attorney and/or your financial advisor to review the condominium documents and financials. Get your questions answered and be comfortable with your understanding of the documents prior to signing the P&S.

Once the inspection is complete and you are moving forward with the purchase, it is time to start the loan application process with the goal of securing a financing commitment by an agreed upon date with the Seller. Do your due diligence on lenders, but you will need to move quickly. I can direct you to qualified lenders, but it is your decision to select the best lender given your unique circumstances. Ask about the costs, processes and time frames for securing a loan. A good lender will answer your questions about each. Given that you have committed to a closing date based on speculation of how long it will take to secure the financing, make your time frame clear to your lender. Be prepared to provide extensive detailed personal information to the lender throughout the loan process. This is standard practice. The lender will send an appraiser to the property, which is part of the lending process as well. Follow up with the lender to make sure the process is moving along in a timely manner. Closings have been held up as a result of delays on the part of the lender, which can result in unanticipated costs.

The Seller’s attorney typically initiates the draft of the Purchase and Sale Agreement (P&S). He/she should submit a draft of the P&S to the Buyer’s attorney within a few days following the inspection, depending on the agreed upon time frame for signing the P&S. Your attorney will review the P&S before submitting it to you for review. Further negotiation may occur at this time between the Buyer and Seller (through their attorneys and sometimes their brokers). When both parties are in agreement with the draft Purchase & Sale Agreement, the attorney will provide a “clean” final version, which must be signed by both parties to be a valid contract. Typically, it is signed by the Buyer first and then by the Seller. Upon signing the P&S, typically you will need to deliver 5% of the purchase price, including the $1000 deposit, which is held in escrow by the listing brokerage firm (as is the initial $1000 deposit). When purchasing a condominium under construction, the process and requirements may differ or in any circumstances, the process could differ. Once the P&S is signed, you are committed to complete the transaction unless any of your contingencies yet to be satisfied cannot be met. Your attorney can explain further any legal obligations prior to signing the P&S.

On the morning of the closing or the day prior, to be determined a few days before the closing, do a walk-through to make sure all issues have been addressed to your satisfaction and nothing has affected the condition of the property as you expected to find it. If something needs to be fixed as a result of the inspection or tested to ensure it’s in proper working order, we can visit a week or so prior to closing and then do a walk-through the day of closing. If any issues arise at the walk through, we will bring them to the attention of the Seller and come to a satisfactory resolution.

Discuss the closing process with your attorney and become familiar with the steps, as well as the items and documents you’ll need to complete the purchase transaction. At closing, the ownership of the property will be transferred to you, but the transaction must be recorded at the Registry of Deeds to be completed. As a Buyer, your role at this phase of the process is to:

• Sign legal documents: the agreement between you and your lender regarding the terms and conditions of the mortgage, and the agreement between you and the Seller transferring ownership of the property.
• Deliver funds to complete the purchase. This takes into account all deposits held in escrow, closing costs, attorneys fees, etc.

Your attorney should explain the funds you need to deliver for closing. Buyers handle the numerous fees associated with obtaining a mortgage and transferring property ownership by either rolling them into the principal balance of the new loan or agreeing to pay higher interest rates and having their lenders foot the bill. Some buyers may have to pay these out-of-pocket fees. Be sure to ask your lender to explain all aspects of the financing process from start to close so that you have a complete understanding. You will receive the following documents at closing:

• HUD Settlement Statement: prepared by your attorney, showing all costs associated with the transaction (Seller debits and credits, and Buyer debits and credits). Ask me if you’d like to see a sample document in advance.
• Final TILA (Truth in Lending Disclosure) Statement: outlines the cost of your loan and APR, and takes into account any modifications made to your rate and points between application and closing.
• Mortgage Note: states your promise to repay the mortgage, indicates the amount and terms of the loan, and what the lender can do if you fail to make payments.
• Mortgage or Deed of Trust: secures the note and gives your lender a claim against the home if you fail to live up to the terms of the mortgage note.
• 6D Certificate: attests to the fact that all fees/assessments owed by the Seller to the condo association are paid and up to date. This document must be notarized by condominium association trustees and delivered at the closing (if not a few days earlier).
• Smoke & Carbon Inspection Certificate: Sellers of residential properties built prior to 1975 having one to five dwelling units must obtain a Certificate of Compliance (CoC) for smoke detectors upon sale or transfer. Residential dwellings built after 1975 or having six or more dwelling units are exempt and not inspected by the Boston Fire Department for smoke detector compliance because they are installed under the building code that went into effect in 1975. Sellers of all residential dwelling units, regardless of the year of construction or number of units, must obtain a Certificate of Compliance for carbon monoxide detectors. The Certificate of Compliance is issued by the Boston Fire Department and attests that the fire alarm and the carbon monoxide detectors are in working order. The appropriate inspection(s) is typically paid by the Seller and ordered by the listing broker on behalf of the Seller.

Once you’ve reviewed, received and signed all closing documents, the transaction must be recorded at the Registry of Deeds, which is done by the closing attorney. The transaction must be on record to be considered complete. Typically, it takes a few hours from the closing process for the transaction to go on record. Your attorney should let you know immediately when that occurs. At that point, the home is yours and you are free to enter it. You’ll need to pick up the keys from one of the brokers or one of the attorneys. That can be determined on the day of closing.