Massachusetts Home Buyer Guide

Title Insurance

The Boston Globe's blog had an interesting post regarding title insurance. The post was the result of an article Globe reporter Binyamin Appelbaum wrote about purchasing his home in Boston.

Binyamin chose to skip the owner's title insurance policy, which apparently prompted many critical emails, mostly from lawyers. You see, lawyers make money from issuing title insurance.

The post also received several comments.

My comment to the post was as follows:

Binyamin, congratulations on your new home. Best of luck to you and your girlfriend.

I am a lawyer and a real estate broker. I do not represent banks at closings, so I do not certify title or sell title insurance.

I spend most of my time working for the clients of my exclusive buyer brokerage firm. I would estimate that about half my buyers decide to purchase title insurance policies. I purchased it when I bought my home in 1997.

I don't blame you for being upset about the lawyer adding the cost of an owners policy to the settlement statement (HUD) without discussing it with you. It frustrates me when closing attorneys just add the policy to the HUD. They're basically giving themselves a raise at your expense and without your permission.

The closing lawyer should have contacted you prior to closing (or contacted your lawyer) to discuss whether you wanted the owners policy or not. He probably contacted your lawyer to ask how you and your girlfriend wanted to hold the property, i.e., tenants in common or joint tenants, if he was the one that drafted the deed.

Another item that closing lawyers routinely add to a settlement statement without asking buyers permission is a declaration of homestead, commonly referred to as a homestead deed. Everyone should have one. It takes about five minutes to draft this document and $35 to file it at the registry of deeds, but I have seen attorneys add from $50 (very reasonable) to $150 (ridiculous) to the HUD for it.

I provide my clients with a brochure explaining what title insurance is and what it covers, and I typically inform them of the percentage of the premium that goes to the lawyer. One of the important things (in my opinion) tile insurance covers is attorneys fees. Even if a title defect is something minor and fairly easily resolved, the one-time premium probably is less than the cost of potential attorneys fees.

My opinion is that title insurance is a useful product. One could certainly debate whether it is too expensive.

What annoys so many people (apparently you too) is the mystery surrounding it. Why not just send a letter to buyers a week prior to closing with a brochure explaining title insurance and indicating in the letter that the closing attorney gets a percentage of the premium? Some closing attorneys do, but not the majority.

The bottom line: You probably should have bought the owners policy, but I understand why at that moment you decided not too.

By the way, I enjoyed your article. I appreciated your honesty about being "stumped repeatedly" despite being a real estate reporter. It's so important for home buyers to have professionals they can trust help them from the beginnings of the home search through the closing.

- Posted by Rich Rosa December 10, 07 07:07 PM

You can download the title insurance brochure (Download Title Insurance Brochure) that I provide my clients. 

Massachusetts Property Taxes

The Boston Globe has a blog that tracks Massachusetts cities and towns attempting to raise taxes by overriding proposition 2 ½. The blog is called Override Central.

This is great information for home buyers considering which community to buy in. On the right-hand side of the Web page you can click on specific cities or towns.

What's your city or town planning?

Snow Starts War Of Words Between Neighborhoods

A December 19, 2007 post on The Boston Globe's blog about parking in the City of Boston and surrounding communities after a snow storm resulted in some interesting comments between "neighbors."

The post discusses the use of markers, i.e., lawn chairs, etc., to reserve spaces residents have shoveled on the street after a snow storm.

One commenter said the following:

"I think it's interesting that certain parts of the city have been mentioned as areas where spot markers are used. Let's see: South Boston, Charlestown, Dorchester, and East Boston. Notice a pattern? These are the neighborhoods where "townies" live. In other words, the inconsiderate Boston locals that give this city a reputation for being the rudest in the country."

He also commented as follows:

"So for all of you people defending this practice, fine. But just understand that as long as that attitude prevails, your neighborhoods will continue to be thought of as backwards."

Actually, I think it is those types of comments that would give a city a reputation of being rude.

Personally, having lived in East Boston during college and law school, I understand why residents (myself included at the time) use the markers. My experience has been that it was not an issue after just a few inches of snow, but after about six or more inches have fallen shoveling out your car after the plows have come by is quite a job.

It never really seemed like a big deal when I lived there in the late 80s and early 90s. The vast majority of people seemed to respect the idea that someone who did the work deserved the spot for a few days. It's a bit difficult to explain unless you've lived on such a street.

Did some people take it to the extreme? Certainly, but that's life.

My comment is number 9.

The bottom line: Why should someone who barrels out of their parking space in the morning to go to work without laying a finger on a shovel come home later in the day and take a nicely shoveled spot someone spent a couple of hours (or even 45 minutes) working on?

The Boston Herald reported December 27, 2007 that Boston residents are defying a city rule to remove markers within 48 hours.

Sox Owner To Wait To Demolish Brookline Homes

Boston Red Sox owner John Henry will have to wait to demolish two homes on the Brookline estate he purchased for $16 million in August 2007, the Boston Herald reported December 21, 2007.

"The Brookline Historical Commission voted last week to impose a demolition delay on Henry’s Sargent Road estate, after determining that the two structures he wants to tear down are historically significant."

In September, Henry filed paperwork at Brookline Town Hall, indicating plans to demolish the property’s 13,000-square-foot mansion and 5,000-square-foot guest (yes, the 5,000-square-foot home in referred to as a "guest house") house.

Apparently, his plan is to consolidate the four adjoining parcels and build one single-family home on the land.

But where will the guests stay?

Read The Boston Herald Article

Mortgage Applications Slide; Interest Rates Rise

U.S. mortgage applications slid 7.6 percent compared to the previous week, the Associated Press reported December 27, 2007.

MarketWatch reported December 27, 2007 that average rates for 30-year, fixed-rate mortgage loans rose to 6.17 percent compared to 6.14 percent the previous week. 

U.S. Home Prices Continue Decline

According to the Standard & Poor's/Case-Shiller home price index, U.S. home prices fell in October for the 10th consecutive month, posting the largest monthly drop since early 1991, the Boston Herald reported December 26, 2007.

The record 6.7 percent drop in the home price index also marked the 23rd consecutive month prices either grew more slowly or declined. The old 6.3 percent record decline occurred in April 1991.

The Case-Shiller home price index tracks prices of existing single-family homes in 10 metropolitan areas compared to a year earlier.

"Miami posted the largest decline among those 20 markets. Home prices in the Miami metropolitan area fell 12.4 percent in October compared to the same month last year, surpassing Tampa, Fla. as the worst-performing city. Tampa posted a year-over-year loss of 11.8 percent."

Read The Article In The Boston Herald
Read The Article In The Boston Globe

Merry Christmas And Happy Holidays

I hope your holidays are joyous and safe.

Multi-family Homes In Boston For Less Than $300K

As of December 21, 2007, there were more than 100 multi-family properties listed on the MLS Property Information Network for sale for less than $300K throughout the City of Boston.

Finding a decent multi-family property at a price that would allow it to be cash-flow positive was next to impossible just a year or so ago, but that is beginning to change.

Check out this three-family property in East Boston for $250K.

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Think The MA Housing Market Is Bad?

The San Francisco Bay Area saw single-family homes sales plunge more than 36 percent in November, declining to levels not see in nearly 20 years, the San Francisco Chronicle reported December 20, 2007.

"A major reason sales are sluggish despite falling prices in many regions is that it remains difficult to qualify for or afford jumbo loans, still necessary for average home shoppers in the pricey Bay Area."

The 15.4 percent slide in single-family home sales in Massachusetts seems mild in comparison.

Read The San Francisco Chronicle Article

NAR Believes Market Is Stabilizing

The National Association of REALTORS® (NAR), a trade organization representing the real estate industry, predicts existing-home sales will stabilize  in 2008; however, the recovery for new-home sales will have to wait until 2009.

"The Pending Home Sales Index, a forward-looking indicator based on contracts signed in October, increased 0.6 percent to an index of 87.2 from an upwardly revised reading of 86.7 in September.  It was the second consecutive monthly gain, but remained 18.4 percent below the October 2006 index of 106.8"

Read A Boston Globe Article About NAR Prediction

Read The NAR Press Release

Do you believe the real estate market is stabilizing?