Massachusetts Property Values

Appraisals, Assessments and Zestimates, Oh My!

by Rich Vetstein on October 25, 2010

in Appraisals, Massachusetts Property Values, Realtors

Welcome back Guest Blogger, Gabrielle Daniels Brennan, from Coldwell Banker Residential Brokerage, Sudbury, MA, Check out her fantastic blog, Living In Sudbury (www.liveinsudburyma.com).

What Is Your Massachusetts Home Really Worth?

OK folks, you want to know what your house is worth? Stop obsessing over your town assessment and online estimates. At the end of the day, your house is worth what someone is willing to pay for it.

But while you follow the sale prices of your neighbor’s house and e-mail me to ask what your house is worth (sight unseen), I’ll explain to you that it is neither an exact science, a mathematical equation, or a guesstimate. So many factors go into the value of your house. In this case, perception is, for the most part – reality. The location, the condition, the square footage, the updates, the amenities, the lot, the neighborhood, the neighbors, proximity to school, the floorplan – and so much more. Size matters, but it’s not the only thing.

It’s so easy to want to use the two words interchangeably, but please know that an assessment and an appraisal are totally different things.

ASSESSMENTS: (Think – measurement rhymes with assessment) Assessments are based upon the town’s opinion of value of the land and the value of your house, based on the measured square footage and condition (excellent, very good, good, fair and poor). The square footage includes everything in the house – closets, hallways, two-story foyers, stairways, etc. So, although you may add up the square footage from each room, it’s not the same. The taxes you pay are based on your assessment. Years ago, houses were priced close to, or above, their assessed value. If a house were priced below the assessment, it was featured as a fabulous thing. Priced WAY BELOW assessment, translated, meant: “Don’t forget your checkbook as you’re running like a madman to the open house.”

These days, assessments may be in the general vicinity of the asking price. Not a lot of weight is placed on the assessed value as it compares to the true market value. Most are priced around the assessed value, especially if they sold in the past 10 years. The assessor’s office does not take into account all of the items within a house that a buyer perceives as valuable (age of systems, paint vs. 1970s wallpaper, neighborhood full of kids the same age, master bathroom rivaling the one at the Four Seasons in Nevis, etc.) Just the square footage, value of the land and the town’s rating of the neighborhood.

APPRAISALS: An appraisal is a valuation made mathematically by a real estate appraiser for the purposes of providing security to the lending institution. The bank wants to be sure that the money it is loaning – for a refinance, home equity loan, line of credit or a purchase – can be recouped in today’s market if the owner defaults on the loan. Essentially, they need to know that they would not have a problem selling the house for the amount borrowed.

The appraiser formulates his/her appraisal based on the sale prices of the houses nearby that would be comparable for the square footage, the amenities, and the condition. In some towns, it’s not necessarily apples to apples, because a house down the street may have been foreclosed upon, thus skewing the value of the subject property.

Appraisals used to be more of a formality, and now they are extremely strict. As a result of the mortgage debacle, banks have cracked down and the rules have changed. Banks used to be able to communicate with the appraisers – now they have been prohibited from having direct communication. If you have recently refinanced and your appraisal came in at one price, it doesn’t necessarily mean that that price is what you would get from a buyer if your house went on the market.

ZESTIMATES: I think Zillow is an entertaining and somewhat informative website. It is a great site to search for homes and to take advantage of all of the interactive features. The “Zestimate” is Zillow.com’s term for “estimate of the value of your house.” For houses in Middlesex County, Zillow states that its accuracy is 99 % of the homes in Middlesex County that are on Zillow. Ninety-nine percent of homes in Sudbury are on Zillow. Ninety-nine percent of those have “Zestimates.” Of that 99%, only 32% sold within 5% of their Zestimate. Fifty-eight percent sold within 10% of its Zestimate and 82% sold within 20% of its Zestimate. Median error is 8.3%.

Dizzy? This means that if your Zestimate is $800,000, your sale price may be closer to $640,000 or $960,000. It’s a pretty big spread! So, fun site – yes. Accurate – not really. Why? The information pulled by Zillow is information that is available online – and if one piece of data is incorrect (it happens all the time) then everything is skewed.

Zillow does not know what streets are busy, what houses have just updated their kitchen and bathrooms, furnaces, roofs, etc. Zillow also does not know the motivation of sellers. So, if your neighbors won the lottery and just wanted to sell the house so they could sail around the world and sold for about $50K less than they could have – according to Zillow, your house just went down $50K, also.

Unless he or she has a really good sense of humor, please don’t tell your real estate agent that you disagree with his/her extensive analysis because your “Zestimate” states “X.” It would be like telling Todd English that you know how to make his signature dish because you just Googled the recipe. So, enjoy the site, have fun searching, reading the real estate news, etc., but don’t get excited or freak out because of your Zestimate. It will likely change the next time you log on.

COMPARATIVE MARKET ANALYSIS: This is the best, and most accurate, way to know the value of your house. A comparative market analysis is written by a real estate agent. It would best completed by an agent who knows the market, knows each house that your’s would be compared to, and has his/her hand on the pulse of the buyers. A real estate agent preparing the market analysis should take into account everything about your house – the square footage, the condition, the style, the location, the demographic of the potential buyers, the market conditions, the intangibles, and the perceived value within the town.

We then analyze the house in comparison with the houses that are on the market, have accepted offers, are under agreement and have sold (closed). A market analysis conducted today would not include sales from the spring as it was a different market. It’s also very important to have a sense of what comparables appraisers will use when appraising the house for the buyer’s mortgage company.

So, assessments (pain in the assessment = taxes), appraisals (think = approximate), Zestimates (Zillow.com), market analysis (call me/real estate agent).

{ 0 comments }

Can’t We All Just Get Along? A Realtor’s Expert Advice On Civility, Emotions And Not Taking The Massachusetts Real Estate Market Personally

by Rich Vetstein on September 19, 2010

in Appraisals, Blogging, Massachusetts Property Values, Purchase and Sale Agreements, Realtors

Welcome back Guest Blogger, Realtor Gabrielle Daniels Brennan, from Coldwell Banker Residential Brokerage, Sudbury, MA! Gabrielle and her mother-partner, Carole Daniels, just launched a fantastic blog, Living In Sudbury (www.liveinsudburyma.com), which our company, HubConnected, designed and created.

Having grown up in Sudbury and now settled there with her family, Gabby’s knowledge of the Sudbury and surrounding market is unparalleled. Plus, she re-defines “concierge” service, going so far as to ensure that her buyers meet their neighbors ahead of time, get local nannies, and find the right preschool. Gabby is writing today about the mutual respect buyers and sellers should have for each other during the real estate process.

Home Buyers And Sellers, You CAN Just Get Along!

Once upon a time there was a newlywed couple house-hunting in the suburbs. They held hands as they strolled into each house, they conversed with their real estate agent about every detail of their wedding and giggled like sixth graders whenever they spoke the words “husband” or “wife.”

Then, they found the house of their dreams. The dreams that mirror “happily ever after” — it was the house they imagined having babies (2 boys and 2 girls – the girls would be twins of course and would share a room painted with Benjamin Moore’s Cotton Candy).

The happy couple told their real estate agent that they wanted to make an offer for asking price, closing the exact day that the sellers wanted to close. They had enough money from their wedding gifts and unfortunate passing of Great Grandpa Charlie to pay for the house in cash. The husband dabbled in construction, so every item that appeared as a result of the home inspection would be “no big deal.”

Both sets of parents came to see the house and everyone oooh’ed and ahhh’ed instead of bringing up the fact that the kitchen wasn’t updated, or that the family room was a little smaller than what they had thought it would be, or that the garage was under the house. The parents all talked about how happy they were and they never said anything that remotely sounded like “YOU paid ____ for this??? Our house cost $37,000 when we bought it …” And then the sellers threw a welcome party for the buyers before they moved in – just to make the proper introduction to the neighborhood.

I’m sure you are thinking that this story is a work of fiction. Nope. Well, aside from the buyers volunteering to pay the asking price and the gushing in-laws, the concept of a truly pleasant real estate transaction doesn’t have to sound so foreign. Without compromising the financial objective of either party, the real estate transaction can be pleasant and satisfying to all parties involved.

The decision to buy or sell a home is as much a personal transaction as it is business. It’s an exciting one, and a process in which I truly love being involved. And although it’s certainly not as straightforward as a show on HDTV about finding the right house, it doesn’t have to be challenging. As much as buyers would like to say that they won’t buy with their hearts, that is crazy – of course they will. It’s a home. It’s where you live. It’s where your heart is. Your life is not one big business transaction.

Everyone remembers the details of their real estate transactions. Even if they bought or sold their house 12 years ago, they will tell you exactly how the buyers or sellers acted, the items negotiated during the home inspection, the credit they received, what they negotiated during the purchase & sale agreement, and the details that still make them happy or cringe.

They may not remember the date they bought their house, but they will remember everything about the closing.

I have been involved in scores of real estate transactions. When multiple persons are involved in the decision-making process for a major life event, so much can get lost in translation and people don’t always behave in a way that they, let’s say, would be proud of if a TV crew were following them around. In addition to the number of family members and friends who know EXACTLY what is best for you, there are many people involved in a real estate transaction — buyers, sellers, two real estate agents, two attorneys, possibly two paralegals, one mortgage broker, one appraiser, at least one inspector, and, sometimes, the nosy neighbor.

If my intention with this piece were to promote the value of experienced real estate agents, this would be the part where I emphasize that it is the role of the real estate agent to quarterback the entire team involved to ensure that everyone wins.

In general, buyers are excited to buy a house. When an offer is made, it is the beginning of negotiations with the seller with the goal of consummating the sale of the home. In today’s market, prices have adjusted and many sellers are having an understandably difficult time grasping the reality of the market.

Because of the resources available in 2010, today’s buyers are also the most knowledgeable, well informed and cautious. The market value of a house is what a buyer is willing to pay. Without giving up any money on the sale side and overpaying on the buy side, there are so many ways in which to make the real estate transaction one that is not so painful.

My thoughts below may seem pretty uncomplicated, and that is my objective. It is easier to have a smooth and seamless transaction than it is to have one that feels more like an act of Congress. It is a business transaction, but the basis of the transaction is emotional. You certainly don’t have become new best friends, but cordial is always appreciated.

1. MUTUAL RESPECT. The tone of the entire transaction is set with the first round of communication between both parties.

*   BUYERS: Be respectful of the sellers and their real estate agent. This does not translate into paying more. It shows that you will be a pleasure to deal with. Appreciate your sellers. They have cared for and maintained the house you fell in love with.

* SELLERS: Appreciate your buyers. They love your house enough to buy it. If you receive an offer the first day on the market, it is because your house was priced right and the buyers know the market. Don’t be greedy, it will backfire.

2. DON’T TAKE THE MARKET PERSONALLY

*   BUYERS: If a seller decides not to accept your offer, it has nothing to do with what great people you are and how many friends you have in common. It’s usually about the financial picture.

*   SELLERS: Most likely, you didn’t overpay for your house. You paid what the house was worth when you bought it. It’s exactly what the buyers want to do now – pay what the house is worth in today’s market. I’m certainly not suggesting that you don’t get frustrated or upset if you are taking a loss or not netting what you had planned, just don’t take it out on your potential buyers. What you “want” and “need” to get for your house is irrelevant. Buyers will pay what they feel it is worth and their mortgage company will lend based on what they feel it is worth.

3. WORK SMART. CHOOSE YOUR REPRESENTATION CAREFULLY.

*   Work with real estate agents and attorneys with whom you are comfortable and have trust. This isn’t the time to cut corners and do someone a favor. You deserve to have the best people on your team.

4. HICCUPS

*   Every transaction has their “thing” – something that needs to be clarified, negotiated, extended, explained. Know this ahead of time so when your own situation arises, you know that it’s normal and just needs to be dealt with.

5. NEIGHBORS

*   SELLERS: Keep in mind that the buyers are now going to have your former neighbors as neighbors.

*   BUYERS: Keep in mind that your soon-to-be neighbors are your sellers’ current neighbors.

People like to talk, especially about real estate.

At the end of the day, it’s about common decency. It’s about mutual respect between the buyer and seller of the same house. As much as this is a business transaction, it is even more a personal one.

Gabrielle Daniels Brennan and her mother, Carole Daniels are The Daniels Team of Coldwell Banker Residential Brokerage in Sudbury. You may contact them by phone at 508-277-6956 (Carole cell), 617-320-8150 (Gabrielle Cell), or by Email to [email protected]

{ 0 comments }

What Happens In Vegas Hopefully Stays In Vegas: Some Perspective On the Mass. Real Estate Market From Las Vegas

by Rich Vetstein on September 18, 2010

in Massachusetts Property Values, Real Estate Marketing

My partner, Marc Canner, and I just returned from the Agent Reboot Conference in Las Vegas where we were promoting our new Real Estate Social Media company, HubConnected (click for more information). We learned a lot of new information about social media for real estate agents. But what really struck home was how horrible the Las Vegas, NV real estate market is, and how lucky we are to be based in Massachusetts.

How bad is the Las Vegas real estate market? Check out these stats:

Las Vegas home values have plummeted from a high of $294,000 in 2006 to $121,000 in July 2010. That’s a 59% drop.

Meanwhile, the foreclosure rates are still off the charts, comparatively. In the last month alone, approximately 13,000 Nevada houses and condo units received a foreclosure notice, and that’s down 13.9% from the same six-month period last year. Extrapolating, that’s roughly 156,000 foreclosure for the last 12 months! Mind blowing numbers…

The Massachusetts Real Estate Market

As the above graph indicates, the Massachusetts real estate market is now officially in recovery mode, gaining from the lows of 2009.

By contrast, only about 4,100 Massachusetts homes received a foreclosure notice last month. What makes this data really amazing is that the Nevada population is around 2.6 Million, while Massachusetts is triple that at 6.5 Million.

That’s why Nevada has been the #1 state for foreclosures for 3 years running, where a whopping 1 in 84 households are in default or foreclosure. And that’s why the Las Vegas real estate market is all about foreclosure, REO properties and short sales. Thankfully, that’s not so here in Massachusetts.

So, the lesson from Las Vegas is that we Bay Staters actually have a lot to be thankful for here. It could be a lot worse. And hopefully, when it comes to real estate, what happens in Vegas, stays in Vegas!

{ 1 comment }

Debunking The July 2010 Housing Report: 5 Reasons Why Massachusetts Home Sales Will Continue To Rise

by Rich Vetstein on August 27, 2010

in Massachusetts Property Values

A National Association of Realtor’s report released Wednesday indicated that home purchases fell 27% in July, a drop that jolted the real estate industry, according to the Wall Street Journal, and sent shock waves through the broader economy. As a result, a number of economists provided dire warnings of a continued down slide in real estate prices.

At first blush, this news could have the “echo chamber” effect of turning the purported downturn into a self-fulfilling prophecy, discourage consumer confidence, and sidelining a number of prospective Massachusetts home buyers from the fall housing market. Here are 5 reasons why the national housing report won’t impact the Massachusetts real estate market.

1. Massachusetts Has a Strong Housing Market.

Massachusetts has bucked the national trend as its housing market has remained strong. Indeed, parts of the Massachusetts housing market actually saw a surge in activity in July 2010:

From July ’09 to July ’10, these towns had an surge in sales:

Norwood (+117%)
Bedford (+78%)
Easton (+27%)
Brookline (+20%)
Melrose (+20%)

Several towns saw an increase in year-to-date median home prices in July, including:

Cohasset (+25%)
Marblehead (+12%)
Dennis (+6%)
Norwood (+5.9%)
Melrose (+4%)

2. The June 1^st Time Tax Buyer Credit Caused An Artificial Decrease in July Purchases.

The government stimulus program brought out the seasonal first time buyer’s in full force during June. Thus, the normal sales cycle was altered which skewed the July numbers

3. Massachusetts Is Always Out In Front Of The National Numbers

The national housing report gives equal weight to markets blighted with foreclosures and economically hard hit areas like Detroit, Las Vegas, Florida, Arizona and parts of Southern California. Greater Boston has historically been a unique “inelastic” market along the lines of Washington, D.C. and San Francisco. Negative national trends do not necessarily correlate to the Massachusetts real estate market.

4. “It’s the Economy, Stupid.”

Massachusetts has a strong and diverse economy, a number of high paying jobs (no, I’m not running for governor), a very limited number of new housing starts, and several industries that have constant employment turnover- a tried and true recipe for a hot housing market.

5. Historically Low Interest Rates

The average rate for a 30 year mortgage has fallen to 4.5%, a 50 year low! Prospective borrowers who pass on this- caveat emptor “buyer beware.” A number of economists predict that the Fed will gradually ease rates back up to counter inflation.

{ 1 comment }

Why The Bachelor & Bachelorette Need A Real Estate Agent

by Rich Vetstein on August 4, 2010

in Disclosures, Massachusetts Property Values, Massachusetts Real Estate Law, Real Estate Marketing, Realtors

A Special Guest Post By Gabrielle Daniels Brennan, Coldwell Banker Residential Brokerage, Sudbury, MA. Check out her Blog, Living in Sudbury www.liveinsudburyma.com!

Similar to the obsession over Massachusetts real estate and addiction to the Multiple Listing Service (MLS) is our addiction to The Bachelor / The Bachelorette TV series. Many of us really didn’t want to admit that we were glued to the TV/DVR on Monday nights, or that we conveniently didn’t want to make plans, for fear of missing this show. For those who have much better things to do than to watch, the series revolves around a single bachelor or bachelorette (deemed eligible) and a pool of romantic interests (typically 25). The Bachelor/Bachelorette then go through a *grueling* series of dates with the pool of potential mates, weekly-elimination style, with the winner getting the “final rose” and possibly a marriage proposal.

As a busy Metrowest Massachusetts Realtor and an admitted fan of the show, I can attest that the process that each Bachelor and Bachelorette go through to find *true love* can be easily translated to the real estate home buying and selling process.

Buying & Selling Real Estate Is A Lot Like Matchmaking

Buying and selling a house is serious business. For most, you are buying or selling your largest single asset. In addition to needing data and supporting information to make a sound business decision, there is tremendous emotion that goes into the process. Getting married is more serious (well, to some), but the process is comparable. At the end of the day, if you have grown out of a house, you can sell it. Not as easy in a marriage.

There are so many commonalities between matching Bachelors/Bachelorettes and Home Buyers/Sellers. There is no such thing as a “typical” transaction/relationship. When representing either side, it’s so important to understand the people and what makes each person tick. On the Bachelor, the first night cocktail party actually makes a lot of sense from a home buying perspective. So often, on the first day out with a Realtor, a home buyer will see everything that fits the criteria “on paper” that they think they want in a house. Just because you want a 4 bedroom/2.5 bath Colonial, doesn’t mean you will like all of them. Many get eliminated from consideration on the first day. Unlike the show’s host, Chris Harrison, my job is to understand why you eliminated specific suitors and to make sure that you aren’t introduced to any more!

The Bachelor/Bachelorette Desperately Need A Real Estate Agent!

Jake & Vienna, (c) ABC, The Bachelor

If The Bachelor or The Bachelorette producers are truly serious about helping its “star” find love, I think that Host Chris Harrison should behave more like a Buyer’s Agent during the next season of The Bachelor. For those of you who already appreciate and understand the true value of Buyer’s representation, you are one step ahead. For those of you who think you are getting “a deal” without Agent representation, I have 3 words for you: Jake and Vienna.

Last season’s Bachelor, Jake, had no help. Vienna, his now former fiancée, was the pretty house with the nice big kitchen and partially finished basement. She is the house that is lived in, a house that is ready for you to entertain in. But there isn’t much upstairs. Bedrooms are small, possibly mold in the attic, the poor quality roof needs to be reshingled every few years, ice dams in the winter, and the garage door doesn’t close (catch my drift?). As soon as the season ended, so did they.

If, like a Real Estate Agent, Chris Harrison were acting in the best interest of the Bachelor/Bachelorettes, it would have been his responsibility to not only introduce the Bachelor/ette to the appropriate suitors matching their needs, but to:

Assess the TRUE value of each suitor (house)
Give the Bachelor/ette some history about the suitor and the suitors’ family (neighborhood/community)
Provide information that would reveal any work that has been done to the house, before it came on the market, along with permits, etc.
Work with the Bachelor/ette on their financing – will they be able to afford their choice? What will it cost to maintain the relationship?
Disclose any and all research about their history. If any liens (restraining orders) are in effect, this would be important to know
Very importantly – negotiate EVERYTHING on behalf of the Bachelor/ette
Manage the home inspection (home visits) – make sure the Bachelor/ette is asking the right questions
Make sure that everything proceeds smoothly prior to and at the closing (Fantasy Suite and beyond…)

Getting That Final Rose (The Keys)

Ali & Roberto, (c) ABC, The Bachelorette

Bottom line is that your Real Estate Agent is there to guard and protect your real estate purchase and your wallet. We want you to be as sure about your decision as Ali seems to be with this season’s winner, Roberto. We aren’t here to tell you how to decorate or to follow you around a house like the helicopter date in Bora Bora. We are here to guide you, to tell you if we feel you are making a mistake (Jake and Vienna). To negotiate for you. To point out the big issues that we see while you are ogling the gorgeous marble in the master bath (Ed & Jillian). If you want someone to agree with everything you are doing, bring your BFF along. It could be the most dramatic home purchase process ever or it could be truly enjoyable and exciting (Trista and Ryan).

When buying a home, you don’t want to make a mistake. You don’t want to second-guess anything (Jason & Molly). As Real Estate professionals, it’s our preference that you don’t show up on the cover of US Weekly in tears (or the equivalent). If you decide to buy or sell on your own, don’t come crying to us “After the Closing” when you realize that you overpaid for the house that has taken 3 years to sell or that your Buyer couldn’t get their financing and now you can’t close on your purchase (Brad Womack). We would rather be handing you the final rose at your closing.

Gabrielle Daniels Brennan, Tel: 617-320-8150 Email: [email protected]

Carole Daniels & Gabrielle Daniels Brennan

The Team of Daniels and Daniels

Carole Daniels and Gabrielle Daniels Brennan are the #1 real estate team in Sudbury. As a top producing, award winning Mother/Daughter team, Carole offers over 31 years of successful Real Estate Sales and Marketing experience. Daniels and Daniels are #30 in New England and within the top 1% of Agents internationally. Gabrielle and Carole have been a team for 7 years. Prior to Real Estate, Gabrielle spent over a decade in sports and event marketing for ESPN, The Olympics, Coca-Cola, Arby’s and NIKE. They work 24/7 for their clients and love what they do. For more information go to: www.liveinsudburyma.com.

{ 4 comments }

McMansions Out Of Favor: New Homes Reportedly Getting Smaller

by Rich Vetstein on June 14, 2010

in Massachusetts Property Values, Massachusetts Real Estate Law, Realtors

The Wall Street Journal Blog has a very interesting article on the recent demise of McMansions:

America’s love affair with McMansions continues to wane: The size of new single-family homes completed last year fell 3.2% to 2,438 square feet, according to the National Association of Home Builders trade group, which analyzed Census data.

It’s the second year of downsizing, officially ending an expansion that spanned nearly three decades: The average home sized peaked at 2,521 square feet in 2007. It came in flat in 2008 and fell in 2009 as builders built smaller, less ornate homes priced lower to compete with foreclosures. The new generation of homes has fewer bedrooms: Just 34% of last year’s homes had four or more bedrooms. Between 2005 and 2009 – years that include the building boom – the proportion of homes with three bedrooms jumped from 49% to 53%.

Fewer bedrooms means fewer bathrooms. The percentage of homes with three or more bathrooms came in at 24% last year, down from a peak of 28% in both 2007 and 2008.Home sizes have fallen before, but this time the change might stick around for some time.

“We also saw a decline in the size of new homes when the economy lapsed into recession in the early 1980s,” says David Crowe, the National Association of Home Builders’ chief economist. “The decline of the early 1980s turned out to be temporary, but this time the decline is related to phenomena such as an increased share of first-time home buyers, a desire to keep energy costs down, smaller amounts of equity in existing homes to roll into the next home, tighter credit standards and less focus on the investment component of buying a home.”

I’ve witnessed the steady influx of McMansions into my own 1960’s era Sudbury neighborhood, and I dealt with them as a zoning board member. There are obvious pros and cons with the trend. I’ll raise some thoughts, and open up the dialogue.

A dilapidated property converted into a McMansion can be beneficial for property values and neighborhood aesthetics. Local zoning boards have come up with good guidelines to minimize the impact of larger houses in a neighborhood of smaller houses. However, on a macro level, McMansions tend to reduce the stock of otherwise suitable affordable housing stock within a community–and that can have long term effects. That 3 bedroom multi-level will do just fine for many first time home buyers. But the sprawling 4,000 s.f. McMansion is unaffordable to most. Once a McMansion is built, the affordable home which it replaced is gone from the housing stock, and will most likely not be replaced as builders aren’t interested in those types of starter homes anymore.

It’s encouraging to see the market self-regulating and providing a shift back to smaller and more affordable homes. I think that’s good for everyone.

Your thoughts?

{ 2 comments }

Real Estate Fear Factor: Dealing With Stigmatized Property

by Rich Vetstein on June 8, 2010

in Appraisals, Disclosures, Massachusetts Property Values, Massachusetts Real Estate Law, Realtors

The well maintained 4 bedroom Colonial in a North Shore suburb with a great backyard looked nice enough thought “Debbie,” the buyer. However, she was dismayed to learn from neighbors after closing on the property, that the prior owner had committed suicide in the house. The real estate agent never advised her of this, and she says she would have never purchased the home if she had known this.

In Massachusetts, real estate brokers struggle to sell homes tainted by shocking murders, suicides, or even suspected “haunted houses.” For real estate brokers, sellers and buyers, these “stigmatized” properties are particularly difficult to deal with as they raise unique valuation problems and disclosure issues.

“Haunted Houses”

Under Massachusetts law, however, real estate brokers and sellers are under no legal obligation to disclose that a property was the site of a felony, suicide or homicide, or has been the site of an alleged “parapsychological or supernatural phenomenon,” i.e., a haunted house. Thus, buyers are on their own to discover these types of stigmas—however, a quick Google search on the property address or prior owner may have revealed the prior suicide in “Debbie’s” case.

Power Lines, Cell Towers & Underground Gas Pipelines

Less notorious, but equally challenging, are stigmas such as high tension power lines, cell towers, high pressure underground gas pipelines, landfills, nearby sex offenders, former Army bases, and other environmental concerns. These are much more challenging to handle, and are becoming increasingly prevalent.

While there is an ongoing debate whether electric and magnetic radiation emitting from powers lines and cell towers are harmful to humans, there are studies suggesting that buyers perceive them as health hazards and will drop asking prices accordingly. Neighborhood opposition to cell towers and new gas lines are becoming increasingly widespread, vocal and well-organized. Also, virtually all power lines and gas pipelines running over property will carry with them recorded easements which typically restrict building near the lines. Depending on the proximity of the lines, these easements may impact potential home additions and backyard activities such as pool installations, etc.

Buyers need to be cognizant of the impact of all potential stigmas, whether well-publicized or not. For most off-site conditions, Realtors and sellers are under no legal obligation to disclose them to buyers. Buyers, you need to do your due diligence. Check the town assessors maps (often available online), registry of deeds information, the Mass. sex offender registry, use the internet and Google Maps to verify any potential impacts on the property, and drive around the neighborhood. You’d be surprised what you’ll find.

Helpful links: National Ass’n of Realtors Field Guide To Stigmatized Properties

{ 2 comments }

When Good Fences Make Upset Neighbors: Adverse Possession Law In Massachusetts

by Rich Vetstein on June 2, 2010

in Adverse Possession, Boundaries, Deeds, Fences, Massachusetts Property Values, Massachusetts Real Estate Law, Title Defects, Trespass

Click here to read about my most recent adverse possession trial victory.

Massachusetts Adverse Possession Law

Robert Frost ‘s famous poem The Mending Wall says “good fences make good neighbors.” When that fence encroaches over a neighbor’s property line, however, that good neighbor can turn nasty very quickly.

When boundary or encroachments disputes arise, a little known legal doctrine often comes into play: adverse possession. Adverse possession is a common law concept in Massachusetts under which homeowners may lose title to their land by sleeping on their property rights for 20 consecutive years against a neighbor who has taken actions contrary to their property interests. Yes, a neighbor can effectively take over ownership of your land if you sleep on your rights. Massachusetts adverse possession law reflects a public policy aimed at inducing landowners to actively protect their land.

The classic example of adverse possession is a neighbor who puts up a fence or paves a driveway several feet over their neighbor’s property line, without permission, and this “adverse possession” continues without objection for 20 consecutive years. Despite the fact that the neighbor’s fence or driveway encroaches the property line, under the adverse possession doctrine, the property owner may lose title to the disputed strip of land by not doing, saying or even knowing anything about it.

Requirements For Adverse Possession

A landowner can obtain adverse possession only by filing a lawsuit and establishing several elements of the claim. (My property law professor used a handy acronym called OCEAN to help students remember them). The use of another’s land must be Open, Continuous (for 20 years), Exclusive, Adverse and Notorious. Each element has its own specific requirements, and all adverse possession cases are very fact-specific. The law does not favor adverse possession, so the burden of proof on the claimant is relatively high.

Adverse possession can also occur through multiple prior owners during the 20 year period under a theory called “tacking.” Adverse possession can also be in the form of an easement, or merely a right to use property, called a “prescriptive easement.” This could apply to the gamut of utility, pathway, or access easements.

Surveys and Stakes

Surveys typically form the genesis, and play an important role in, adverse possession cases. The parties must know where the true lot lines are on the property. Sometimes, there are disputes as to the survey in cases of old, poorly laid out lots. Remember that even if you believe the neighbor is wrong about the lot line, it is against the law in Massachusetts to remove survey stakes. (Mass. General Laws Chapter 266, Section 94). Also under Massachusetts law, a surveyor is allowed to enter upon your land, with reasonable notice, for purposes of completing a survey.

Tips To Prevent Adverse Possession

The key to preventing adverse possession is to be proactive regarding your boundary lines and property rights. If you suspect an encroachment, obtain a full instrument survey, not a mortgage plot plan which can be inaccurate. If an encroachment is found, consult an attorney for further advice.

Generally, the most effective methods to prevent adverse possession are to:

Posting “No trespassing” signs (can be helpful, but is not fail-safe)
Physically demarcate lot lines with a fence, gate or the like (survey stakes alone may not be enough)
Document giving permission to an encroaching neighbor by written document or agreement
For prescriptive easements, record a statutory Notice to Prevent Acquisition of Easement. Note: this notice will not prevent a claim of adverse possession to the entire land.
Bring a lawsuit to “quiet title”
Submit your land to the Land Court registration system

The more land you own (especially raw woodlands) the more proactive you need to be.

Lastly, when buying new property, consider getting an enhanced title insurance policy which has coverage for encroachments and boundary issues, at a small premium over standard rates.

Adverse Possession Lawsuits

Given the high cost and low supply of land in Massachusetts, adverse possession disputes often wind up in litigation. Adverse possession litigation can be expensive because these cases are very fact-specific and require a fair amount of witnesses, factual investigation, title research, and even expert testimony. Adverse possession cases are generally difficult to win, but they can be successful with the right facts and good preparation.

The Massachusetts Land Court hears adverse possession cases along with the Superior Court. Depending on the facts of the case, the plaintiff can do a bit of “forum shopping” between the two courts.

Click here to read about my most recent adverse possession trial victory.
Click Play to listen to my radio broadcast on adverse possession
_______________________________________________________

Richard D. Vetstein, Esq. is an experienced Massachusetts adverse possession attorney who’s handled numerous adverse possession cases and trials in Land Court and Superior Court. Please contact me at [email protected] or 508-620-5352 if you are dealing with a Massachusetts adverse possession dispute.

{ 15 comments }

The 2 Major Snags That Can Derail Your Mortgage Loan: Significant Home Repairs And A Low Appraisal

by Rich Vetstein on May 19, 2010

in Appraisals, Fannie Mae, FHA, Massachusetts Property Values, Mortgages

The mortgage lending underwriting environment has changed dramatically in the last several years. At the peak of the bubble, mortgage professionals joked that you needed only to be able to fog a mirror to get a loan. These days, even borrowers with good incomes and good credit scores can get turned down.

Much of the change is driven by the stricter underwriting standards imposed by Fannie Mae, Freddie Mac and FHA. There are two major issues which come up repeatedly in transactions today which can derail a borrower’s loan: (1) extensive home repairs, and (2) a low appraisal.

The house requires substantial repairs

A lot of properties on the market these days are foreclosures owned by banks, short sales, or otherwise aren’t in great repair. Further, in a buyer’s market, sellers will not hesitate to agree to a list of repairs.

Broken windows, defective appliances, roof leaks, unfinished renovations, and serious water damage can all cause problems with obtaining final lender approval of the loan. At worst, the a substantial amount of required repairs could cause a lender to bail out. At best, the lender will require a pre-closing inspection and make the loan commitment subject to the satisfactory completion of all work.

Talk to your lender before the purchase and sale agreement is signed to figure out the extent to which substantial repairs will affect the underwriting process.

The appraisal is lower than the purchase price

Occasionally during the bubble an appraiser would decide a home was worth less than the price a buyer and seller had agreed upon. But that was relatively rare. Critics accused appraisers of colluding with lenders to “hit the number” — deliver the values needed for loans to be approved.

These days, appraisals are administered is a completely different fashion. New rules – the Home Valuation Code of Conduct (HVCC) – hold appraisers to higher standards and sharply limit communication between appraisers and lenders. Mortgage professionals cannot select their “hand-picked” appraiser now; there is basically a random lottery system to select the appraiser. The downside of this lottery is that the appraiser may not be very familiar with the town or neighborhood being appraised. So the appraisal may fall short of the agreed-upon selling price. Even if the first appraisal goes well, a second evaluation — known as the review appraisal and now ordered by most investors that buy home loans — may not.

Today buyers, sellers and their agents often attempt to manage the appraisal process by recommending better comparable sales available than the ones the appraiser used. As a buyer’s attorney, I always negotiate an “out” in the purchase and sale agreement for the buyer’s protection in case the appraisal comes in too “low.” If the appraisal remains under the purchase price, buyers may need to reopen negotiations with the seller or come up with a bigger down payment to make a deal work — or pay down their mortgage in order to refinance.

Have you felt the change when you have tried to get a loan?

{ 0 comments }

Early Impact Of First Time Home Buyer Tax Credit Appears Strong

by Rich Vetstein on May 2, 2010

in Massachusetts Property Values, Realtors, Tax Credit

The deadline for getting under contract for the First Time Home Buyer Tax Credit was last Friday, and some preliminary statistics are already coming out demonstrating how popular the program was.

The Boston Herald reports that almost 30,000 Massachusetts buyers have taken advantage of the credit already, and that doesn’t include the most recent weeks of frenzied activity in April.
The National Association of Realtors estimates that 4.4 million Americans will ultimately receive tax credits. That includes 900,000 buyers that NAR projects wouldn’t have purchased homes otherwise.
Massachusetts sales of single-family homes for March leading up to the credit were up about 28% over last March — the largest March year-over-year increase on record. Once the statistics for April come out, we should see some very strong numbers. Realtors were reporting very heavy activity last week, leading up to the tax credit deadline. This week was our busiest of 2010, by far, for new purchases.

The Other Foot…

But…all good things must come to the end, and the biggest question looms. How will the real estate market fair in a post-tax credit world? One school of thought is that the tax credit created an artificial demand which will ultimately hurt the natural equilibrium of the market. Others believe that the stimulus was just what the doctor ordered, and expect the housing market to stay strong and on track. It’s probably going to be a bit of both, and the proof will be after the data comes in through June 30 when all tax credit sale must close.

Congratulations to all those new home buyers who were able to find a home! Lastly, I believe that folks who buy in 2010 can claim the credit on their 2009 returns by amending their 2009 return. Click here for the IRS website. Talk to your CPA for more guidance.

{ 1 comment }

Recent Flooding Impacts Spring Sales Season And Raises Thorny Disclosure And Inspection Issues

by Rich Vetstein on April 9, 2010

in Home Improvement, Insurance, Massachusetts Property Values, Massachusetts Real Estate Law, Realtors

While folks here in Massachusetts are finally drying out from the Big Flood of 2010, it’s clear that it has negatively impacted the spring real estate market, and will have repercussions for years ahead for buyers and sellers of affected properties.

Impact On The Market

As recently reported in the Boston Globe, realtors around the state have said the flooding caused canceled and delayed closings, final walk-throughs under inches of standing basement water, and postponements of listing homes for sale. Also, lenders are requiring re-inspections and second appraisals to ensure that homes haven’t lost significant value due to the flooding. This is unfortunate as we’re in the middle of the usual busy spring sales season, made even busier by the soon-to-expire $8,000 first time home buyer credit. (Hey President Obama, how about extending the credit for Massachusetts like you did for the tax filing deadline!).

Disclosure Dilemma

Sellers who’ve been affected by the flooding are asking themselves and their realtors how they should handle the inevitable question from buyers: did your basement flood? Under Massachusetts disclosure law, while sellers are under no obligation to volunteer information, they must answer truthfully to any question posed directly by buyers regarding the condition of their property. Real estate agents are held to a higher standard. They must affirmatively disclose any fact that may have a material impact on whether the buyer would purchase the property. You better bet that whether a home experienced water penetration is “material.”

So, realtors and sellers would be wise to come clean if a home was affected by the recent flooding. The key is how to present the flood damage in the best possible light. Which brings me to the next topic…

Get It Fixed, And Done Right

How did you repair the water damage, and are you taking any steps to prevent it from happening again? Tough questions, because this was a 50 or even 100 year storm event. A flooded basement two weeks ago may never get a drop of water again.

Regardless of whether you are now going to invest in a perimeter drain/sump pump system, homeowners should hire licensed contractors who will pull permits to repair all flood damage. Having it done right will prevent even greater headaches later in the form of mold, dry rot and the like. As my friend general contractor George Lonergan of Lonergan Construction points out, pulling permits gives sellers the ability to show buyers that flood damage has been repaired correctly by licensed and qualified contractors with sign offs from the local building inspector.

Lastly, I want to point out to buyers that they shouldn’t simply walk away from a home which experienced flooding or has a sump pump system. Many properties in river watershed communities like Wayland, Sudbury, and Natick for example have historically been subject to flooding and wet basements. Seeing a well run and working dry basement system/sump pump/french drain is a good sign actually. What you don’t want is what looks like a dry basement which later floods and then requires a sump pump system later on.

{ 1 comment }

Federal Aid And Tax Extension To May 11 Available To Massachusetts Homeowners Affected By Flooding

by Rich Vetstein on April 1, 2010

in Insurance, Massachusetts Property Values, Massachusetts Real Estate Law

President Obama and the Federal Emergency Management Agency (FEMA) on Monday night declared a “major disaster” exists in Massachusetts due to rainstorms and flooding that began earlier this month and continues. The 7 affected Massachusetts counties are Bristol, Essex, Middlesex, Norfolk, Plymouth, Suffolk, and Worcester counties. Federal funds to homeowners in those counties affected by the recent flooding will be available. (Most flooding damage is not covered by standard homeowner’s policies, so this aid is very helpful to those hardest hit). The FEMA Massachusetts flooding resource page is here.

Also, the IRS and Mass. Department of Revenue announced tax filing extensions to May 11 are available to flood victims in the above affected counties. The extensions are automatic for all filers.

Very important: If you are considering applying for aid, document all damage and repair efforts. Take photographs and video of the flooding and resulting damage. Keep copies of all receipts for sump pumps, air blowers/fans, equipment, contractors, plumbers, electricians, etc. Keep copies of all estimates for repairs. Basically, treat this as any other insurance claim.

The federal aid package includes:

Rental payments for temporary housing for those whose homes are unlivable. Initial assistance may be provided for up to three months for homeowners and at least one month for renters. Assistance may be extended if requested after the initial period based on a review of individual applicant requirements. (Source: FEMA funded and administered.)
Grants for home repairs and replacement of essential household items not covered by insurance to make damaged dwellings safe, sanitary and functional. (Source: FEMA funded and administered.)
Grants to replace personal property and help meet medical, dental, funeral, transportation and other serious disaster-related needs not covered by insurance or other federal, state and charitable aid programs. (Source: FEMA funded at 75 percent of total eligible costs; 25 percent funded by the state.)
Unemployment payments up to 26 weeks for workers who temporarily lost jobs because of the disaster and who do not qualify for state benefits, such as self-employed individuals. (Source: FEMA funded; state administered.)
Low-interest loans to cover residential losses not fully compensated by insurance. Loans available up to $200,000 for primary residence; $40,000 for personal property, including renter losses. Loans available up to $2 million for business property losses not fully compensated by insurance. (Source: U.S. Small Business Administration.)
Loans up to $2 million for small businesses, small agricultural cooperatives and most private, non-profit organizations of all sizes that have suffered disaster-related cash flow problems and need funds for working capital to recover from the disaster’s adverse economic impact. This loan in combination with a property loss loan cannot exceed a total of $2 million. (Source: U.S. Small Business Administration.)
Loans up to $500,000 for farmers, ranchers and aquaculture operators to cover production and property losses, excluding primary residence. (Source: Farm Service Agency, U.S. Dept. of Agriculture.)

How to apply for assistance: Those in the counties designated for assistance to affected residents and business owners can begin the disaster application process by registering online at www.disasterassistance.gov/ or www.fema.gov or by calling 1-800-621-FEMA (3362) or 1-800-462-7585 (TTY) for the hearing and speech impaired. The toll-free Teleregistration numbers will operate Monday through Friday from 7 a.m. to 1 a.m., on weekends – Saturday and Sunday from 7 a.m. to 10 p.m., until further notice.

{ 9 comments }

Green Energy Trends: Geothermal Technology Becoming More Popular In Massachusetts

by Rich Vetstein on January 3, 2010

in Green Technology, Home Improvement, Massachusetts Property Values, Massachusetts Real Estate Law, Realtors, Technology

I’m pleased to welcome guest blogger, Leslie Mann, a Realtor with Hallmark Sotheby’s International Realty who specializes in the Dover-Sherborn area of Massachusetts. Leslie is here to talk about geothermal technology, which is growing in popularity in Massachusetts.

Geothermal technology is a great way to heat and cool your home. It costs far less to run and maintain than conventional heating/cooling systems—and reduces your carbon footprint!

According to the EPA, geothermal heat pumps can save homeowners more than 70 percent over conventional air conditioners and up to 44 percent over traditional heating systems. Plus you can take advantage of federal tax credits for new and existing homes using geothermal heat pumps.

Instead of using fossil fuels like oil or gas, geothermal systems use the earth’s natural warmth to heat your home. In the winter, geothermal systems use the earth’s natural heat to heat your house, and in the summer they draw excess heat out of your home and allow it to be absorbed into the earth. A geothermal heat pump doesn’t create heat by burning fuel, like a furnace does. Instead, it collects the earth’s natural heat through a series of pipes, installed below the surface of the ground. Fluid circulates through the loop and carries the heat to the house.

Here are some additional homes for sale in Greater Boston’s Metrowest area that feature geothermal technology:

9-room contemporary home for sale in Carlisle on 4+ acres with in-law suite featuring geothermal heating and cooling $1,055,000.

Five-bedroom Doeskin Hill estates contemporary home for sale in Framingham features four-zone FHA heating/geothermal cooling $1,099,000.

Described as “eco-chic” this new 4800 square foot center entrance colonial for sale in Wellesley featuring geothermal heating and cooling. $1,950,000.

These stylish contemporary townhomes for sale in Newton feature solar panels and geothermal
heating and cooling. $1,789,000

Thanks Leslie for the informative post! Check out Leslie’s great blog, Real Estate In Metrowest for more good tips.

By my own research, a 3 ton geothermal system costs about $7,500. But with the tax credits and energy savings, homeowners will quickly recover the added cost compared with a conventional fossil fuel system. It will be interesting to see whether Massachusetts homeowners, many of whom are environmentally conscious, will consider the benefits of geothermal heating and cooling systems. If I had the extra cash or was building a new home, I certainly would!

{ 5 comments }

Massachusetts Real Estate Law Year In Review: Top Posts Of 2009 And Predictions For 2010

by Rich Vetstein on December 28, 2009

in Closings, Condominium Law, Electronic Closings, Fannie Mae, FHA, Foreclosure, HUD, Massachusetts Property Values, Massachusetts Real Estate Law, Mortgage Crisis, Purchase and Sale Agreements, Realtors, RESPA, Short Sales, Technology

In the spirit of the New Year, let’s look back at the top legal issues of the past year and peer into the crystal ball for a glimpse at 2010.

Top 5 Posts For 2009

#1. The Catch-22 Impact of New Fannie Mae Condominium Regulations. In January, Fannie Mae was the first government agency to drop a big bucket of cold water on condominium lending underwriting practices which some say contributed to the condominium market meltdown. FHA and others would follow later in the year. The new guidelines had condominium developers and associations, buyers and sellers in a tizzy, as Fannie Mae imposed much tougher pre-sale requirements, condominium financial guidelines and the imposition of unit owner HO-6 insurance policies, among other requirements.

#2. New FHA Condominium Lending Guidelines Sure To Slow Financing and Chill Sales. The Federal Housing Administration (FHA) followed Fannie’s lead in tightening condominium lending requirements. Originally proposed over the summer, FHA delayed implementation of the new guidelines until earlier in the month and watered down some of the most stringent requirements, after major lenders and community association groups complained.

#3. There’s Nothing Standard About The Massachusetts Standard Purchase and Sale Agreement. Great to see a post about buying a new home ranking so highly. An indicator of the recovery of the Massachusetts real estate market perhaps? Check out this post for the ins and outs of the very seller friendly standard form P&S and how to level the playing field if you are a buyer.

#4. Massachusetts Land Court Reaffirms Controversial Ibanez Decision Invalidating Thousands of Foreclosures. If you were following the foreclosure mess, you couldn’t have missed this judicial bomb dropped by Massachusetts Land Court Judge Keith Long. The so-called Ibanez ruling invalidated thousands of foreclosures across the state because the lenders did not record their paperwork up to date at the registries of deeds. Lenders have appealed the ruling, but hundreds of foreclosure titles remain unmarketable in the wake of this controversial decision. More to come in 2010.

#5. Short Sales Get Boost From New Obama Treasury Guidelines. On December 1, the Obama administration set long-awaited guidance on a plan for mortgage companies to speed up short sales of homes and other loan modification alternatives to stem the rising tide of foreclosures. The Home Affordable Foreclosure Alternatives Program provides financial incentives and simplifies the procedures for completing short sales, a growing practice in which a lender agrees to accept the sale price of a home to pay off a mortgage even if the price falls short of the amount owed.

Honorable Mention. I would be remiss if I didn’t mention the new RESPA guidelines and the new Good Faith Estimate and HUD-1 Settlement Statement which go into effect Jan. 1, 2010.

2010 — The Year We Rebound

The Massachusetts Real Estate and Mortgage Market

All signs are pointing to a real estate rebound for the Bay State in 2010, with home and condominium sales surging over 50% from last year in November. I have definitely seen an uptick in new purchases on my end and we are preparing for a busy 2010. Along with good news from the real estate market, however, comes higher interest rates as the bond market reacts to positive news. My friend mortgage consultant Brian Cavanaugh at SmarterBorrowing.com does a good weekly mortgage market update and is presently advising borrowers to lock into current rates as he predicts rates will rise in 2010 to close to 6% for a 30 year fixed. Of course, when rates go up, buying power goes down, thereby cooling the market a bit.

Regulatory

Hopefully we’ve seen the end of increased regulation of the condominium market from the government giants. Let’s toast that they can let the market take its course with the new guidelines in effect.

Stimulus/Home Buyer Credit

As the economy continues to recover, you can probably bet that the Obama administration is going to let up on the stimulus/credit throttle for 2010. So take advantage of all the credits available now, because this is probably the last you will see of them for awhile.

Housing

On the housing front, Massachusetts builders are reportedly foregoing McMansions in favor of the more affordable middle market of homes in the $400,000 to $600,000 price range. Finally!

Technology

Lastly, technology, the internet and social media will play an even bigger role in how realtors, lenders and real estate attorneys do business. The National Association of Realtors says that 87% of home buyers use the Internet to search for homes. I tell all my Realtor friends they must have a strong Internet presence and to take advantage of blogging, social media and Active Rain to boost their online presence.

For attorneys, in 2009 we saw the tip of the iceberg for electronic recordings and closings as well as online transaction management. Our office just set up an online transaction management system where buyers, sellers, loan officers and realtors can view the status of the loan whenever they want through a secure online portal. It’s a fantastic tool. While electronic closings are a way’s away from gaining the necessary critical mass of lender acceptance, many Massachusetts registries of deeds are now e-recording, and that will continue to rise. The next decade will certainly bring electronic closings and paperless transactions into the norm.

Well, let’s clink our glasses to a very happy, healthy and fruitful New Year!

{ 0 comments }

Time’s A Runnin’ Out On The First Time Homebuyer $8,000 Credit

by Rich Vetstein on September 8, 2009

in Massachusetts Property Values, Massachusetts Real Estate Law, Tax Credit

Now that time is running out on the First Time Home Buyer Credit–what I call the Realtor Cash For Clunkers program — I came across this comically shameless video produced by one of America’s largest real estate brokerage companies.

[http://www.youtube.com/watch?v=2leBqxcwhvI]

But seriously folks, the credit seems like a good idea, but filled with exceptions. From what I can decipher, the basics of how you qualify for the credit are:

First-time buyer refers to anyone who has not owned a principle residence in the past three years.
Non-married buyers qualify as long as one person meets the first-time buyer definition. Married tax payers must both be first-timers to qualify.
The tax credit is equal to 10% of the purchase price, up to a maximum of 8,000 dollars.
The home must be purchased between January 01, 2009 and December 01, 2009 and remain your primary residence for three years.
You don’t have to pay it back. (Filing options available from the IRS website).

The confusing part comes into play for those looking to use the tax credit towards their downpayment or closing costs. The basic story is that FHA-approved lenders are able to create an additional loan that would allow you to access this money upfront for the following:

Assist in covering your closings costs.
Buy down your interest rate.
As additional money towards your downpayment.

From what realtors say, the catch is that buyers must still fund a minimum down payment of 3.5% from their own wallets. The tax credit can be used in addition to the 3.5% downpayment but cannot be used to make up any part of the 3.5%. The other catch is apparently these loans are not easily carried out and assistance is not widely available to say the least. Massachusetts just came out with its own program.

My friend Metrowest Massachusetts real estate broker extraordinaire Bill Gassett has all the details in his real estate blog and here.

Good lord, my head is still spinning from that video. I’ll leave it to the realtors to explain the credit in some fashion of clarity.

{ 0 comments }