Resources for buyers. Sellers. Investors

Before You Begin Your Home Search

You have established a relationship with a mortgage broker or a lender and have been issued a letter of pre-approval. Many good lenders will create an excel document for you showing various scenarios you would be approved for including one with a lower down-payment but higher monthly payments, one with your maximum down payment and lower monthly payments, and a range of anticipated monthly mortgage payments. You may also choose to pay down your interest rate, which can add to your closing costs but lower your monthly payment for a few years. Please note, most of the time, these payment scenarios don’t include property taxes. It is also important to note the cash to close includes more than your down payment. Please ask your lender for a full list of possible closing costs you will be responsible for on closing day.

You have discussed and understand the buyer broker compensation. The fee for the buyer’s broker has been customarily paid for out of the seller’s proceeds despite the fact that the responsibility has always remained with the buyer. This custom became so common that sellers were beginning to get the impression that the offer of co-broke compensation was mandatory rather than voluntary and a lawsuit was filed against the Realtor organization. As part of a settlement agreement, the National Association of Realtors’ new industry standard requires all buyers to sign a contract with their agent prior to viewing any property. This contract clarifies that specific buyer broker compensation is the responsibility of that buyer, but the funds for this compensation can still be made a negotiable item with the seller. What this means is, if the buyer thinks their offer is strong enough to add the contingency that buyer broker compensation is paid for by the seller, it can be requested in the offer. But in the case they may need to strengthen their offer, they don’t have to include this request and can cover the buyer broker compensation themselves. One more thing to note, listing agents often pre-negotiate buyer broker compensation as part of their contract with the seller. If this has been done, these escrowed funds are paid for by the listing broker at the time of sale. Depending on how much the listing broker is paying and/or the seller is paying towards the co-broke compensation, the buyer may be ultimately responsible for little to no portion of the buyer broker compensation.

You have established a relationship with a trusted real estate attorney. Though real estate attorneys don’t serve an official role in a real estate transaction until after an offer has been accepted, it is a mistake not to take full advantage of their knowledge from the very beginning. Best practice is to think through all the nuances of what you are offering from the onset so the attorney doesn’t get left with the difficult job of trying to get you out of sloppy and half-baked offer language. When making an offer, especially in a competitive market, you and your agent may come to the conclusion that a creative contingency may best serve you, but you will be hard pressed to find an attorney to draft that specific language for you by the offer deadline, unless you have a pre-established relationship.

You have communicated your limitations to your buyer’s agent. Once you hit the offer deadline for a specific property, the clock is ticking and “time is [often] of the essence.” Because competitive situations can get tense, it is always best to discuss all items that are on the table and all possible scenarios ahead of time, so you don’t agree to something in the moment that you later come to regret.

• In addition to knowing what purchase price would be preferable and comfortable for you, know exactly how high an offer you can afford to make in case you are asked to up the ante. Will you still have the necessary cash to close?
• How much of your down payment will be available immediately to bind your offer? How much can you access within the first ten days to put down with your P&S deposit?
• How long can you wait to close if asked to extend, how quickly can you prepare to close? How flexible are you — can you accommodate a deal subject to the seller finding suitable housing?
• Would you be open to a use and occupancy agreement? What about a rent back agreement?
• How important is a home inspection to you? How would you feel if you were asked to waive it? Would you be willing to accept home repairs up to a certain amount to limit the seller’s liability?
• Are you willing to pay your own broker compensation instead of asking the seller to pay it?
• If you are making a cash offer, are you willing to waive the appraisal contingency if asked?

Necessary Disclosures and Paperwork

• Massachusetts Mandatory Licensee-Consumer Relationship Disclosure
• Exclusive Buyer Agency Agreement
• What We Owe Our Clients
• Facts For Consumers
• J. Barrett Acknowledgement Form
• Fair Housing considerations Regarding Buyers Letters
• Lead Paint Transfer Notification Certification

The Home Search Process

The MLS. The Massachusetts Multiple Listing Service Property Information Network, or MLSPIN, is the largest database of property listings in Massachusetts and almost always the source of where all other real estate websites pull their property information. This database is available to real estate professionals through a membership which comes with strict guidelines and regulations to ensure that the property information is accurate and the most up-to-date. For these reasons, once your buyer’s agent knows your search criteria and sets up a profile for you, the MLSPIN should be your go-to for property searching online. Other websites such as Zillow or Redfin do not follow the same standards of practice, often showing a property is available after it has been placed under contract, not including offer deadlines when there is one, or showing a property listing alongside an unrelated agent, leading the consumer to believe they should be reaching out to this stranger with questions instead of their own agent.

Open Houses. Open houses are a great opportunity to explore the details and feel of a home in person, and also a great way to assess how much interest there might be in that property, which has direct bearing on how high an offer might need to be to be competitive.

You will always see a notification card at the open house disclosing to consumers that the listing agent represents the best interests of the seller; and most of the time the open house will be run by the listing agent, so it is best to keep a poker face and keep your comments to yourself until you are out of earshot of both the listing agent and your competition.

Though you might feel compelled to ask the listing agent questions about the home, I would advise asking your buyers agent to ask these questions in writing so you have a record of the responses. It is key to remember that the listing agent is trying to sell you that particular home because selling it is in the best interest of their client. Your agent, on the other hand, is working to get you the right house for the best price and terms for you.

Always sign in as your buyer’s agent, so all communication to the seller’s agent will be through them, your advocate.

Private Showings

Offer Strategy

A Competitive Offer Price Is Just the Beginning. Every item within a contract is negotiable.

1. Price

• Purchase Price
• Initial deposit to bind the offer
• P&S Deposit — upon executing the Purchase and Sale
• Asking the seller to cover a portion of the buyer broker compensation, or choosing not to
• Escalation Clauses

2. Contingencies

• Mortgage Contingency
• Appraisal Contingency
• Inspection Contingencies: Lead, Limited Inspection, Aggregate Amount
• Home Sale Contingency
• Vacant and Broom-Swept versus Tenanted and/or as-is
• Inclusion of specific personal property

3. Offers of Value to the Seller

• Subject to Seller Securing Suitable Housing
• Exclusion of certain appliances or fixtures

4. Timing

• Duration of offer
• Deadline for Purchase and Sale Agreement to be signed
• Deadline for financing
• Closing Date
• Use and Occupancy or rent back agreement
• Granting extensions