1. Buyers don’t understand the roles and duties of real estate agents, especially who represents whom.
2. Buyers may innocently disclose confidential and material information about their needs and financial abilities to sellers and their agents.
3. Buyers think only sellers pay commissions.
4. Buyers think that mortgage companies and appraisers protect and promote their interests.
5. Buyers don’t carefully design strategies for better negotiation with sellers and their agents and to minimize the effect of competing buyers.
6. Buyers don’t understand the importance of attending property inspections.
7. Buyers don’t recognize the long term value of their equity position.
The home buying process can be a time consuming, costly and frustrating process for consumers, particularly when the market is a “Seller´s Market.” Searching for property is only part of the buying process. Once a property has been found that is of interest, the buyer needs to investigate the pros and cons of this potential investment.
Since real estate is often the biggest lifetime investment being made by buyers one needs to take the time to do some research. The due diligence conducted by professional Buyer Agents provides some of the information which should be obtained prior to the buying decision. Much of this research information comes from public sources such as town and county records, comparable sales data, and recommending highly skilled professional service providers such as home inspectors, attorneys, etc.
When dealing with real estate licensees, consumers need to know their rights and options as well as whose side the agent is on. Massachusetts has one of the most informative mandatory disclosure forms in the nation. It is used during the first contact between the consumer and the real estate agent to discuss a specific property.
The Homebuying Process
The process for buying real estate in Massachusetts should be approached in the following manner:
*Determine your objectives, wants and needs (locations, budget, use of property, timing, etc.)
*Make sure you can obtain any financing you will require. (Determine your qualifications, your comfort factor on monthly payments, rates, source for deposit money, etc.)
*Determine the kind of professional help you feel you need in finding and buying your property (buyer agent or seller agent, attorney, appraiser, home inspector, lender etc.). Your knowledge of the area and property values are important factors in determining the help required.
*Establish a plan for the property search in your area of interest. (MLS, FSBO, Bank owned, distressed property, neighborhood searches, auctions, open listings, etc.)
*If you are working with a real estate agent, make sure you know whose side the agent is on. Massachusetts has a mandatory agency disclosure form describing your rights and options. (You should review this state disclosure and sign it prior to discussing any property.)
*If you find a property that you like, you need to do research such as: find out as much as you can about the property, the community, the septic system, zoning, setbacks, water supply, etc. Waterfront/waterview buyers: If you are going to pay a premium for a view or being near a nice beach, make sure these attributes are not at risk (erosion, vegetation growth or a new house blocking the view, etc.)
*Walk the neighborhood and talk to residents on the street. You will be surprised at the useful information you will pick up.
*Prior to making any offer make sure you are familiar with other houses on the market that meet your needs and your budget objectives. Make sure you are also aware of the recent sales in the community and that you compare the house you want to purchase with these comparable sales.
*Most importantly, estimate the current market value of the property, and make sure this is the best property on the market for you in your price range and your community of interest.
*If you decide to move ahead, prepare a written offer to purchase which includes price, terms, conditions, and contingencies–all of which are in your best interest. (In Massachusetts real estate contracts need to be in writing to be legally binding). The typical binder deposit accompanying an offer is $1000.
*Prepare a negotiating strategy. (Identify the reasons why the property owner should accept your offer. Include information about yourself and the fairness of your offered price and terms.)
*Make the offer presentation or have your agent do so along the lines of the negotiating strategy.
*Once closure is reached with the buyer, make sure both parties sign off on the agreement.
*Hire a home inspector to evaluate the house to identify any defects requiring corrective action. A nationally certified inspector is recommended. Attend the inspection and from the report identify any problems that you will ask the seller to correct prior to the closing date.