It is common for enthusiasm to carry you away during a home purchase, but it is crucial to understand the process and to know your rights as well as any legal issues that might be applicable. Investigate real estate agents, go to open houses and check out the paperwork before you start. An informed buyer makes the right decisions.
Before the Sale
- Is your budget ready? Are you ready to buy a house? It is a good idea to be sure your finances are in order and buying would be appropriate at this time.
- Get help with purchase. If you're having trouble, Massachusetts offers homeownership assistance through the Department of Housing and Urban Development.
- Know the neighborhood. Investigate the area around your intended neighborhood and take some time to observe the housing market in that area. Study the homes on the market and their listing and sale prices.
- Collect the data. Start your prep work by visiting homes when there is an open house. Note features, expenses for comparison down the line and informed decision-making.
Contracting with a Buyer's Real Estate Agent
Working with a real estate agent when buying a home offers you real value. It should be noted that the listing agent or seller's agent represents the seller of the property, not you as the buyer. Contract with your own real estate agent for buyer protection and advice:
- Understand the process. A professional experienced agent will offer you advice to guide you through the complex home buying procedure. The agent you hire works for you and your best interests—not the seller's.
- Help with the details. Reams of paperwork, home inspections, mortgage broker selection, price and repair negotiations are complicated, and an agent can help you navigate the red tape. It can be a real time waster viewing homes and properties that don't come close to matching your needs. An agent can screen out the houses that don't suit your needs and target your search.
How to Find a Real Estate Agent
Finding a real estate agent is similar to finding a real estate agent in many states. Verify the agent you are considering is licensed in Massachusetts, and investigate the agent's personal integrity and reputation and knowledge of the area you're considering a home buy. Also:
- Ask questions about commission expected, the time span of representation with the agent and if your agreement is exclusive right to represent, exclusive agency right to represent or an open right to represent. Look into the real estate agent's history of home sales in the area over the last year.
- Request a list of referrals from previous clients as references. It is a good idea to choose two or three agents for consideration before selecting your agent.
- The Massachusetts Board of Realtors has additional information about buying a house in Massachusetts.
You should consider hiring a lawyer for a portion of your home purchase. A lawyer will help in assuring the purchase and sale agreement and mortgage documents. An attorney also assists with the mortgage commitment letter, Good Faith estimates of Closing Costs, escrows and proper calculation of lender's fees is crucial.
Title insurers, friends, family, federal, state and local bar associations all have information and lists of lawyers who work in real estate.
Discuss all fees up front and degree of representation and protection to avoid unnecessary confusion.
Massachusetts' Property Disclosure
Sellers must disclose any problems they know about in writing. These concerns include infestations, water leaks, hazards, structural damage, fire damage and any neighborhood issues to any potential buyer.
In Massachusetts, the property disclosure is made via a disclosure form, in writing and signed by the seller. Your real estate agent or attorney will be able to explain which disclosures are required. It is common for agents to insisting on full disclosure forms, required or not.
If you have a septic system, confirm there is a Title 5 certificate ensuring the property meets with the state's environmental code for on-site sewage treatment, transport and disposal.
Property owners are required in all states to disclose lead hazards. Check the EPA's website for further information on buyer's rights and seller's responsibility.
In Massachusetts, the purchase agreement contract is a standard form with fill-in-the-blanks. The Greater Boston Real Estate Board's form is the most commonly used, or one similar. This form is seller-slanted, necessitating a buyer's real estate agent's experience to avoid any pitfalls and create riders to the agreement to suit the buyer's needs.
Purchasing agreements must include the purchase price, total down payment and closing date. The purchase agreement also specifies who, buyer or seller, will pay for which settlement or closing costs, the type of loan you are applying for, the interest rate, term of the loan and the date by which the loan must be in place.
Mortgage lenders require an appraisal on the property. The appraisal is paid for at closing as part of the mortgage fees. The appraisal determines the average value of the home you're looking to buy in comparison with other similar homes in similar neighborhoods.
Home inspections are a detailed evaluation of the property, and potential buyers may attend. A detailed report will be made of any issues that could affect home value. The buyer usually pays for this inspection. Find an inspector at the websites for ASHI (American Society of Home Inspectors) and Massachusetts Home Inspection.
Additional inspections you may discuss with your real estate agent include pest inspection, water analysis, radon gas test, lead hazard, septic inspection (if applicable), well water test and underground oil tank inspections.
Legal Title Concerns
Title search and insurance are legal issues your lawyer can assist you with. A title search is performed to verify the home you're buying is free from liens that could keep you from taking possession of the property. Liens on the title affect the seller's legal ownership and ability to transfer the property title. Probate, construction, tax and other liens are put on record for the property's title in the town records. Uncovering any problems with the property's legal ownership ahead of time saves time, money and grief.
Once your attorney has had the title search performed and assuming there are no issues with the title, you can also purchase title insurance that is bought with a one-time fee at property close. Title insurance protects owners in the event that title to the property is found to be invalid.
Considerations when Buying Foreclosure or Short Sale Properties
When buying foreclosure or short sale properties in Massachusetts, it should be noted that the servicer or investor manages the sale of these types of properties and provides a release of title, which is needed for a clean sale and title transfer—or short payoff. It is just as important to have a real estate agent in foreclosures or short sales. The offer of purchase and short sale approval are a bit different than a traditional home purchase.
- Short sales are preferable to foreclosures. In short sales, the buyer agrees to be bound for set approval period of 60 to 90 days in exchange for seller taking the property off the market and not accepting back-up offers. The deposit amount is usually 1 percent of purchase price, and the buyer will obtain financing during this approval period.
- It is considered an act of good faith for the buyer to get financing in order and ready by the time the short sale approval comes through. If the financing is not in order, the buyer will not be considered a serious short sale buyer.
- Short sales or foreclosures are not necessarily faster or cheaper than is typical. It can time for the transaction to complete—perhaps months—and purchase price must satisfy the lender or investor holding the property. Once approval is gained, most short sale approvals are only good for 30 days.
- Lenders typically set the procedure for their foreclosures or short sales.
As this article provides a brief, general introduction to the topic, you should contact a Massachusetts real estate lawyer for specific legal advice.