Boston Real Estate Sales Market: Why Now is a Good Time to Sell

Boston’s population is the highest it’s been since the 1970s, up to over 625,000 people. With cranes as far as the eye can see, new developments are going up in areas considered in the past to be tired or rundown. However, buildings are not going up as fast as the demands call for it.

Buyers are chomping at the bit to enjoy the lifestyle that comes with city living offered in the downtown neighborhoods of Boston. Convenience of shops and restaurants, little to no need for cars, and the vibrant energy of the city are appealing to young professionals, empty nesters, and young families. More people prefer the location and lifestyle that comes with living in a condo over square footage and a yard that comes with a single family home. The demand is high, inventory remains low, and people are ready, willing, and able to pay what the market demands. The competition between investors and home buyers is stiff. Investors are fully aware rentals are in as much high demand as condos, so they are not concerned with the investment potential associated with rental property.

Boston city living is in high demandOver the weekend Matthew Gaskill and Alisa Peterson hosted an open house at their listing 41 Commonwealth Ave #3. A beautiful lofted one bed on the second block of Commonwealth Ave in Boston’s Back Bay neighborhood priced at $489,000. The open house was from 11:30am-1pm, in the hour and a half the door was open, over 50 groups came through. The buyers ranged from first-time homebuyers, empty nesters, and investors. And as a result the property was under agreement Monday evening after receiving multiple offers.

This is not a rare occurrence and it is fantastic for sellers. The high demand is driving up prices and lowering the days a property is on the market. More properties are coming on the sales market, however,  and well-priced properties are going under agreement after the first open house. Why wait until next year to sell? We know today’s buyers have the strongest buying power in years. Inventory remains low. Low inventory means low competition which equals the highest price possible.

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How Buying Power Affects Buying and Selling Property

Buying power in real estate is directly related to interest rates for a mortgage. Before a buyer should start searching for property to buy, the buyer will want to get pre-approved by a lender. The mortgage lender will determine what a buyer can afford in terms of purchase price based on what the buyer can afford in monthly payments after looking at income, other debt, etc.

The higher the interest rate for a loan, the less the buyer can afford to buy in terms of the purchase price. For example, a 1% increase in interest rates is equal to 10% of the purchase price of a property. As illustrated in the chart below, if a buyer could afford the monthly payments for a $400,000 home at 3.5% interest, at 4.5% interest a buyer would only be able to afford a $360,000 home. Depending on the real estate sales market you are looking in, this will change your buying options drastically.

Interest Rate vs Loan Payment

 

Freddie Mac History

With interest rates where they are, buyers have more money to spend on property. However, many potential sellers have asked me if they should hold on to their property and wait until prices go up to put their listing on the market. No one can predict what will happen next year or even a few months from now, but the current circumstances make now a great time to sell property. Low inventory means low competition. Historic low mortgage rates means strong buying power. No time in recent history has seen these two factors in play together. Even Warren Buffet has said we will not see buying power at this level for another lifetime.

 

Interest Rates from 2012-2013Even though the interests rates are ticking back up, it may be a couple years before they are back up to 5% or 7%. But I can guarantee if one seller I spoke with is thinking about holding on to their property to sell next year, there are a lot more thinking the same thing. Simply put, it is supply and demand. Right now, it is a seller’s market which is getting sellers multiple offers over asking price after a week on the market. The limited supply of available properties on the real estate sales market and an excess of buyers is pushing up the prices. Next year, if everyone decides to sell, it could become a buyers market with sellers hoping to get close to their asking price. When the supply increases buyers will take their time to look around and even under-bid.

Contact us to assess your individual situation and what the best strategy is in the current market.

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Selling Property: Are You Ready?

I have not made any secret about how great the real estate sales market is behaving right now especially if you are selling. Inventory is low and the properties on the market are getting multiple offers and selling over-asking. It is very exciting to be a seller in this market but only if you are ready to sell. So how do you know if you are ready to sell?

1. You have another place to go.

If you are thinking about selling your property and want to put it on the market to see what you can get, what will you do if you actually get an offer? Do you have another neighborhood to which you want to move? Another state? Are you looking for something bigger? Smaller? You do not necessarily have to have another home in escrow, but if you have already moved on mentally, it will be much easier to move on physically.

2. Your current place is no longer suiting your needs.

Is your one bedroom too small for you and your growing family? Or have all the kids moved out and now your large home is too much work? When you look at your current home and only see how it no longer works for your lifestyle, you are ready to move on.

3. You are receptive to advice.

Whether this is the first home your are selling or your seventh, unless you work full time in real estate, you are not an expert. Three reasons define why properties do not sell today and when you are fighting with your Realtor about any of these, you are fighting the real estate sales market.

  • Are You Ready to Sell Your Property?Price – Realtors have to abide by certain ethical guidelines, so if we are telling you the price is too high, we are not secretly trying to get you to lower the price to fit our buyer’s budget. We have done the research, we have listened to the feedback from the buyers and agents. Pricing is the difference between a sold listing and old listing.
  • Staging - This is your home that you have decorated to your taste that you love, we understand and respect this. But if your taste is preventing any buyer from being able to envision it to their taste, it will not sell. It is always a good idea to visit other listings you are competing against and “borrow” some ideas from the ones that show very well
  • Marketing – This is only as good as the Realtor you use. If you don’t want to be bothered  with what needs to be done to market your home to sell, you may not be ready to sell.

4. Timing makes sense.

Many people have held onto their property as an investment and rented it out instead of selling in a down market. In certain areas, rent is high enough to cover the mortgage and then some. However, being a landlord can be more trouble than it’s worth and with tenant laws continuously evolving (such as Boston’s New Inspection Ordinance), it may be worth it to sell now and move on.

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Should You Work with a Realtor to Sell Property?

The internet has revolutionized the real estate business. For a long time sellers could only find out what their home was worth when someone told them or the latest real estate section of the paper came out. Today, sellers can go on Zillow and get a “zestimate.” So when all the information is at your finger tips, why work with a Realtor? Many use the saying, “Would you do your own dental work?” or “Would you self-diagnose chest pains?” Selling property is a major endeavor, with the exception of a few people, working with a professional will save you time and money in the long run.

Sellers, unless you have sold property numerous times and have plenty of time, it is in your best interest to work with a Realtor. I understand many will feel I am biased, but there is much more to selling property than putting an ad on the internet and opening a door.

Why Use a Realtor to Sell PropertyMarketing is the most important factor in getting your home sold at the best possible price. Realtors have access to a variety of networks and we use them all to showcase a property to get it sold. A couple of examples include an email blast to area Realtors, hosting a broker’s open house, and radius mailers introducing the property. According to a survey by the National Association of Realtors analyzing the latest trends of Buyers and Sellers, 90% of buyers use the internet for their search, which means high quality, professional photos are a must. If the pictures are dark, blurry, of messy rooms, or if the listing does not include photos buyers will move on. Many Realtors know how important good pictures are which is why many real estate offices have a professional photographer on staff.

The showings alone can be incredibly time consuming. Depending on the market your home is in, if there is an influx of properties similar to yours, you will have to accommodate every showing you can get. If you list your property with a Realtor, you will still have to accommodate showings but your Realtor can coordinate everything from multiple showings, open houses, and private showings to better accommodate your schedule and maximize the time allotted.

Finally, since 87% of buyers use agents, if you are going to sell your property on your own, you will only save half a commission since you will most likely need to offer a commission for buyer’s agents to bring their clients to your home. The majority of sellers who sell their property without professional assistance usually have a buyer before selling. But if you do not have a buyer and want to sell your property, consider using a professional. A large percentage of owners who try to sell on their own eventually list with a real estate professional, but what has this delay cost them in terms of lost buyers and time?

Would you like to discuss what The Matthew and Alisa Group offers when we list your property? We would be happy to share our method with you, so you can make an informed decision when it is time to sell.

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Real Estate Tips to Sell Property: Staging Mistakes to Avoid

The point of staging is to show off a property to its best potential. If you want the best possible price for your property, you have to show it off as though nothing needs to be improved. I have said this in many previous blogs, but it bears repeating: once you decide to sell your property, stop thinking of it as your home and try to see it as a buyer would. Depending on your property and situation, hiring a professional stager may not be an option. If this is the case, go to a few open houses at a variety of price ranges, but see as many as you can in your price range. Take note of how your competition looks and see what you can do improve your property. If there are not many open houses to see, at the very least do not do any of the following.

Showcasing an odd hobby

If you are an avid accordion collector or have an arachnid obsession, there is no place better to show off your passion than in your home. However, if a buyer comes in, they will not be able to look past it. Worst case scenario, a buyer has a phobia with your hobby and will leave regardless of whether your property is otherwise perfect for them.

Competing styles

People are visual creatures. Most people remember what they see more than what they read or hear. If your home is visually overwhelming (an incohesive color scheme, mismatched furniture, etc), it will be a turn off for buyers. Many people have a hard time picturing beyond what is in front of them. You want the buyers eyes to flow over the entire property, from room to room without anything jarring to stop the movement.

Theme rooms

I don’t have a problem with themes. Theme parties, theme costumes, theme drinks, etc. However, if you are selling your property, it maybe a good idea to turn The Miami Room (complete with tanning bed and bar) back into a spare bedroom or office.

Poor Staging will not sell propertyMess for the eyes, ears, and nose

If your property is messy and smells like anything other than baked goods, expect low ball offers. If you don’t think its worth the time to clean thoroughly, buyers will not think its worth the price you are asking.

Hoarding

I think the A&E television series covers the reasons why this is a no-no.

Hiding a mess instead of cleaning and organizing

If you try to stuff all your boxes of paperwork in a closet instead of organizing a filing system, buyers will not be able to see how much storage your property offers. Whether you live in a single family or a condo, storage is a plus for some and a must have for many more. If buyers miss how much storage your property offers, they may move on to something else.

Not bothering

Homes of interior designers and homes that have been done by interior designers can pass without having to be staged prior to listing the home on the real estate sales market. But even then trinkets and personal items that should be put away and excess pieces of furniture can be put into storage. Taking the time to set your property up to show at its best will help get you the best possible price.

As part of the preparation work before listing your home for sale, consult with a professional who can provide an impartial judgement on how to best showcase the property. Whether you consult a Realtor, an interior designer, a stager, or a combination of the three, take their advise to heart without being defensive. Their job is to help you reach your goal of selling a house and the best at doing so are honest with their clients, regardless of how hard their advise is to hear.
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What to Do Today to Sell Property Tomorrow

If you have sold property before, you may be aware that there is more to it than sticking a for sale sign in your yard. According to the a survey by the National Association of Realtors, 90% of buyers begin their search on the internet. Today’s buyers are much more savy about the real estate market than they may have been in the past. If you are planning to sell a house in 2013, you need to know every possible about your home now.

Sell Property Tomorrow, Start Planning Today1) Get all your paperwork in order.

If you have a single family home, find all the paperwork and receipts of work you’ve had done. If you up-dated the heating system, re-pointed the brick work, or had any other repairs or renovation work done, it is important, and buyers will want to know when and what you have had upgraded/repaired. If you are selling your condo, have the condo handbook accessible and start doing your research about the building. To avoid any pricing surprises, find out if there are any planned assessments, how many units are owner occupied, and if there is any commercial interest. If there is a high commercial interest and low owner occupancy (or other factors that might limit a buyer’s ability to secure financing), it will limit your pool of buyers. If the condo is deemed unwarrantable, only buyers who can put down 20-30% down will be able to get a mortgage from a portfolio lender. Any planned assessments you plan to pass on to the potential buyer will certainly be a turn off. If your property has any issues, it will be in your benefit to know beforehand so you can adjust your pricing expectations accordingly.

2) Start staging your home to sell now.

Start getting rid of everything you do not need or want. Two of the most common reasons properties don’t sell in a strong real estate market like this past year are price and a lack of staging. Don’t make the second mistake (or the first by pricing a home higher than the market value). Start seeing your home how you would want to see a home you are planning to buy. Get rid of all clutter and extra furniture. With so many out there who could use a helping hand, now is the perfect time to donate everything that will keep you from selling your property.

3) Talk to a Realtor.

This is a crucial part of the process whether you are buying property or selling property. Talk to a few Realtors. Learn how they would market your home and see if they understand your goals and needs. Some real estate agents are motivated to sell fast and others are motivated to get you the best possible price. Discuss what your plan is, why you are selling, and find someone you are comfortable with and trust to sell your property.

Selling property can be emotional, so it is very important to start the process of separating yourself from your soon-to-be former home. If 2013 spring real estate market is anything like we saw in 2012, you can sell property in as quickly as a day. You should start planning out exactly what your next move is now, so if your property does sell quickly, you know your next step and are excited for it.

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Real Estate Transfer Tax: Fact or Fiction?

Plenty of rumors were spread during the election. Now that the dust has settled, we can start separating what was fact from what was fiction. One rumor in particular had myself and fellow Realtors concerned, the rumor of a 3.8% real estate transfer tax included in the Obamacare bill going into effect on January 1, 2013. If true, this would indeed affect many people. Fortunately, it is has been completely misunderstood and will not impact 97% of real estate transactions. In fact, it is wrong to call it a real estate transfer tax. It is a capital gains tax.

This video from the National Association of Realtors, addresses some of the rumors and explains how and when this tax will come into play.

Here are the basic facts:

  •  The new 3.8% tax increase is to help Medicare and goes into the Social Security Trust.
  • The tax only applies to individuals that makes over $200,000 a year or couples that make over $250,000 a year.
  • Sales of primary residences can still take advantage of the $500,000 capital gains exclusion, but the tax will apply to anything above that cap.
  • Any capital gains on non-primary residences (investment properties, second homes, ect.) will be subject to the tax if the owner’s income exceeds the limits previously mentioned.

Working in a bustling city, many of my clients own investment properties and pied-à-terres throughout the downtown neighborhoods. If you feel you will be affected by this new tax, please consult a tax or financial consultant to learn exactly how.

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3 Tips to Overcoming Fear and Panic that Comes with Buying or Selling Real Estate

Congratulations! You have decided to make a major life change. But did you realize every major life decision will be filled with doubt, confusion, and stress? Depending on what stage in life you are in, you may have an idea of what to expect. However, since we are all human, no matter how many times you can go through something, major life changes will take an emotional toll on us all. Here are three ways to at least manage some of the emotional turmoil during a real estate transaction.

1) Know what to expect.

One thing my teammate and I require is a consult before moving forward on any real estate journey. Whether you want to buy a home or sell a home, we insist taking the time to sit down and talk about the real estate market, how it will affect you, and what your expectations and goals are. Having a clear understanding on what you want, what you can expect, and how we can help will relieve a good amount of stress.

2) You are not a passive participant in this process.

About the Make the JumpAlliteration aside, this is a great mantra to repeat to yourself. If you feel stalled in the process, try something different. Buyers, you can search a different area or price range. You don’t have to go higher, you can look lower and consider how you can make renovations. Sellers, you can adjust the price or add incentives. Pricing and staging can have the most effect on how people react to your property. If the property is priced fair for the market and it shows beautifully, get creative! If you are hearing an issue is a lack of parking, offer to pay to rent a parking spot nearby for a year. But if you are not discussing your frustrations with your Realtor or your willingness to be creative, you may continue to feel dis-hearted and discouraged.

3) Be confident in your decision.

There will never be 100% certainty in any decision you make; this is a fact of life we all have to accept. But there is always the best decision to make to help you achieve your goals. No one buys a house to buy a house, a deeper reason is always present. Whether you want to invest in real estate and build wealth, have a home to raise a family near good schools, or have a condo in the city to enjoy the lifestyle, a deeper goal is involved in the purchase. The same is true with selling a home. Once you are clear on the reason you are doing something, the decision becomes a more confident one.

None of these tips are achievable without clear and continuous communication between you and your Realtor and especially you and your partner. A major life change is difficult to go through alone, being open and honest about your wants and needs will only make the process less stressful and more rewarding.

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What is Dual Agency?

Whether you are looking to buy property or looking to sell your property, if you are working with a Realtor, one of the first things you will learn about is agency and the different types of agency. During your first meeting with a Realtor, you will have to sign a Mandatory Agency Disclosure Form stating in what capacity the Realtor is speaking about property. The agent will disclose if she is speaking to you as either a seller’s agent or buyer’s agent. Whether working as the buyer’s agent or seller’s agent, Realtors owe buyers and sellers undivided loyalty, reasonable care, disclosure, obedience to lawful instruction, confidentiality, and accountability provided the agent disclose known material defects in the real estate. The Realtor must put her client’s interests first and negotiate for the best terms and price for their client.

As all Realtors know, you cannot thrive in this business only being a seller’s agent or a buyer’s agent, so most Realtors work as either or at any time (depending on local laws and office policy). It gets interesting when a Realtor is both at the same time for the same deal. This is called acting in dual agency.

Dueling Agents

Dueling Agents…Get it?

Dual agency is when the Realtor is both the seller’s agent and the buyer’s agent. This can only happen with expressed and written consent from both the buyer and the seller. This written consent has to be given by both parties before executing an offer to purchase a specific property. Once both parties agree to allow the Realtor to represent them, the Realtor enters dual agency and becomes a neutral party. At this point, think of your Realtor as Switzerland! The Realtor can pass along factual information between buyer and seller but cannot interpret the information for either party. Nor can the Realtor offer analysis or advice to either the buyer or the seller. For example, the Realtor can give a comparative market analysis (CMA) or comps for the property to the buyer that were previously provided to the seller when determining a listing price, but she cannot analyze it with the buyer nor can she advise what price the buyer should offer. However, if new properties show up in the comps given to the buyer, the Realtor has to provide the same updated information to the seller.

By nature, a dual agent cannot fulfill the same duties of a seller’s agent or buyer’s agent. A Realtor in dual agency still owes both the buyer and seller confidentiality of material information and accounting for funds. However, while in dual agency the Realtor cannot negotiate the best terms or price for either party.

For seasoned and educated buyers and sellers, working in dual agency can be a good thing, since they only need to communicate with one Realtor, thus cutting down on delays caused by passing information back and forth between parties. However, for first time home buyers who are nervous and do not fully understand the buying process, this is not ideal. No one is ever taken advantage of, but with the experience of making such a major purchase, having a Realtor exclusively in your corner, helping you understand the market, and getting you the terms you want can be a relief to the emotional stress that comes with buying your first home. That being said, if you are working with a Realtor you trust and they have the property you have been looking for, you have no reason not to go for it.

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The Year is Not Over for Motivated Home Sellers and Home Buyers

Thomas Jefferson said “never put off till tomorrow what you can do today,” and this should be the mantra repeated by buyers and sellers this time of year. With the holidays are coming, most home buyers and sellers believe “if I haven’t found the right home” or “if I haven’t sold yet,” it is best to stop now and regroup next year in the spring. Since this is such a common belief, it would seem pointless to argue the contrary. But this is exactly what I am going to do.

Still Time to Close Escrow Before the Year is OverSince it is a common mindset to hold off buying or selling a home until after the holidays, this means less competition on both sides. For buyers, it is obvious to see how this is a good thing. In Boston, where there has been very little inventory on the sales market, good quality, well-priced listings have sold quickly for close to, at, or over-asking price and many times with multiple offers. This time of year, motivated home buyers may be able to find a home with less stress and intensity than in spring.

On the selling side, if your property has been sitting on the market, now is the time to show buyers how much of a motivated home seller you are! If it is priced fairly for the market, try a small price drop and take new pictures. Make buyers forget that it has been sitting and the result can be renewed interest. Less competition from sellers who have taken their homes off the market also works in favor online casino of the seller who has an active listing.

The people who are still searching for properties this time of year are serious and motivated home buyers. These are the people that will trudge through terrible weather, work with shorter amounts of daylight, and go to open houses instead of malls for holiday shopping. On the other end of the spectrum, the sellers that are letting strangers into their homes wearing wet or muddy boots while they go wait somewhere out in the cold are motivated home sellers. These are the groups that want to put in an offer and want to accept an offer, not the type who are browsing or throwing out a line and hoping for a bite.

If you are a buyer or seller looking to close escrow before the year ends, contact the Realtors of Matthew and Alisa Group Real Estate to discuss the best strategy for meeting your goals before the end of the year.

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