Massachusetts Home Buyer Guide

Using An Attorney When Buying A Home

Boston Real Estate Now, Boston.com's real estate blog, had a post by exclusive buyer agent Rona Fischman about whether a buyer should use his or her own attorney or just use the lender's closing attorney. Below is the post in part.

"Here are the options:

"Why hire a separate attorney?
The attorney represents the lender at closing. Therefore, the attorney is not on the buyer’s side when he/she is reviewing the Settlement Statement. What if there is an overcharge?
The closing attorney makes a commission on title insurance. Can the buyer get a good legal opinion in this situation? Will the attorney be objective in advising the client about whether or not to buy it?
What if there is a different conflict of interest with the lender that only a lawyer would recognize?

"Why use the same attorney?
The buyer can save money by having one attorney do both jobs.
The attorney has no conflicts of interest because the interests of the buyer and the interests of the lender run parallel. They both want clear title, accurate flood zone maps, smoke/CO certificates and such.
The closing attorney is in a better position to solve problems with the lender at closing.
The buyer’s attorney is redundant at closing.

"Some of my buyers do it one way, some do it the other way. Either way has resulted in problems, in some instances.

"Lawyers, what do you think? What do you do, and why?

Buyers, what did you do? Did it work out?"

I commented on the post as follows.

"Absolutely get your own attorney.

"The [closing] attorney represents the lender at closing." That is all you need to know.  Should buyers work directly with listing agents? Of course not. Although the lender and buyer have similar  interests, those interests are not always aligned. Just like a listing agent has no obligation to keep what a buyer tells him or her confidential, a closing attorney could tell the lender something confidential he or she heard from a buyer.

"In addition, most closing attorneys have a very close relationship with the mortgage broker/loan officer that referred the business in the first place.

"In my experience, many mortgage professionals will tell borrowers that their closing attorney 'will review the purchase and sale agreement for free.' You get what you pay for.  This usually results in a couple of minor changes to the Standard Purchase and Sale Agreement, if any at all. I have heard of situations when the review comes after the parties have signed. That's a real big help!

"A real estate attorney representing a buyer should add a multi-page addendum to the P&S that protects the buyer's rights, interests and deposit. The Standard Purchase and Sale Agreement dramatically favors the seller.

"'The closing attorney is in a better position to solve problems with the lender at closing.' So what? S/he can still do that when the buyer has a personal attorney.

"'Buyers, what did you do? Did it work out?' The problem with this question is that 99.9 percent of buyers who are not real estate lawyers would not know whether their deposit was at risk or whether their loan commitment/rate lock could have expired. Just because those things didn't happen doesn't mean everything with the P&S was fine. It's not what you don't know, it's what you don't know you don't know.

"I am sure that there are many closing attorneys that do an excellent job for buyers, but situations do arise that make it impossible for a closing attorney to effectively represent the buyer and the lender.

"On the other hand, using a lawyer that doesn't do real estate very often might not be a much better situation."

Needless to say, I don't think buyers should use the closing attorney to review the purchase and sale agreement.

U.S. New Home Sales Plummet

New home sales in the U.S. have plummeted to a pace not seen since 1991, and prices are at 2004 levels, USA Today reported November 26, 2008. 

"The Commerce Department reported [November 25, 2008] that new-home sales decreased 5.3% last month to a seasonally adjusted annual sales pace of 433,000 homes, the lowest level since January 1991, another period when the country was undergoing a steep housing downturn."

New home sales are now 40.1 percent below where they were a year ago.

The median price in the U.S. of a new home sold in October fell to $218,000, down 7 percent from a year ago. It was the lowest median sales price since September 2004.

Of course, these numbers don't have much relevance in Massachusetts because new construction of single-family homes is a tiny percentage of the entire country's new home construction. There just is not that much available land in the Bay State.

The national new construction numbers do reflect the current economy in the U.S.

Read The USA Today Article

U.S. Existing Home Sales Decline In October

Existing-home sales, including single-family, townhouses, condominiums and co-ops, fell 3.1 percent to a seasonally adjusted annual rate of 4.98 million units in October from a downwardly revised pace of 5.14 million in September, the National Association of REALTORS® (NAR) reported November 24, 2008.

The pace of existing home sales is 1.6 percent below the 5.06 million units sold in October 2007.

Even with the overall decline, a number of areas saw solid sales gains from a year ago, including many California and Florida markets, as well as Boston, Minneapolis and Denver.

Existing home sales in the Northeast slipped 1.2 percent to an annual pace of 830,000 in October, a pace 9.8 percent lower than a year ago. The median price in the Northeast was $241,700, down 9.8 percent from October 2007.

Read The NAR Press Release

North Andover, MA Median Home Price Rises

Bucking the trend in most Massachusetts communities, North Andover, MA saw a 3.9 percent increase in the median price of a single-family home from January through September ($509,300) compared to the same nine-month period in 2007 ($490,000).

The data comes from the MLS Property Information Network, Inc.

Sales of single-family homes, on the other hand, declined 11.9 percent, from 159 sales  to 140.

The median price of a condo in North Andover decreased only 0.2 percent during the first three quarters of 2008 compared to the same period in 2007.

Condominium sales declined 26 percent, from 115 to 85.

I have put together more detailed data and graphs below.

Single-family Sales           
Jan. 1st through Sept. 30th           
Year    No. of Sales    Median Price    DOM
2005      208                  $589,950       83
2006      172                  $525,000     107
2007      159                  $490,000     124
2008      140                  $509,300     136

 

Condo Sales           
Jan. 1st through Sept. 30th           
Year    No. of Sales    Median Price    DOM
2005      118                   $246,500       76
2006      153                   $280,000      103
2007      115                   $220,000      164
2008       83                    $219,500      235
 

 

Find the the latest home listings in North Andover, MA.

Happy Thanksgiving

I hope you have a safe and happy Thanksgiving.

ALERT: Massachusetts Mortgage Interest Rates Decline

I have been contacted over the past couple of days by several mortgage professionals I work with.

The news is all the same. Interest rates have dramatically dropped over the past few days.

I am hearing quotes of 5.50 percent on a 30-year, fixed-rate mortgage with no points and 5.75 percent with no points and no closing costs.

Rates have not been this good since the beginning of the year or before.

If you're interested in a referral to a reputable mortgage professional for a purchase loan or refinance, don't hesitate to contact me anytime on my mobile (978.835.5906) or online. 

Boston Prices Hold Up Compared To Other Cities

The Boston Metropolitan Area showed a 5.7 percent decline in home prices in September compared to September 2007, according to the S&P/Case-Shiller Home Price Indices, a monthly report that tracks U.S. home prices in 20 metropolitan areas.

Only Charlotte (3.5 percent), Dallas (2.7 percent) and Denver (5.4 percent) had smaller price declines.

Phoenix was the weakest market, reporting an annual decline of 31.9 percent, followed by Las Vegas, down 31.3 percent, and San Francisco, which saw a drop of 29.5 percent. Miami, Los Angeles, and San Diego did not fair much better with annual price declines of 28.4 percent, 27.6 percent and 26.3 percent, respectively.

Read The S&P/Case-Shiller Press Release

Connecticut Home Sales Decline

Single-family home sales in Connecticut dropped 5.3 percent in September compared to a year ago, bucking a 12-month trend of double-digit percentage declines, The Warren Group, a publisher of real estate data, reported November 13, 2008

"Home sales fell to 2,163 from 2,283 in September 2007. The 5.3 percent decline in sales is modest compared to the prior 12 months when monthly home sales sank year-over-year anywhere from 16.3 percent to 32.8 percent. Still, year-to-date sales plunged 24.5 percent to 19,381 from 25,680 during the first nine months of 2007"

The median price for a single-family house fell 7.5 percent to $260,000, down from $281,000 in September 2007. The year-to-date median home price is down 8.3 percent to $275,000 from $300,000 in 2007. The third quarter median home price of $280,000 was 8.2 percent lower than the median price of $305,000 during Q3 2007.

Read The Warren Group Press Release

Massachusetts Home Sales Rise For Second Straight Month, Median Price Continues Decline

Single-family home sales in Massachusetts increased nearly 14 percent in October compared to October 2007, the second consecutive month that sales increased in the Commonwealth, The Warren Group, a publisher or real estate data, reported November 25, 2008.

Prices continued to fall, with the statewide median home price falling by more than 10 percent during October compared to the previous year.

Single-family home sales rose 13.7 percent to 3,698 from 3,253 in October 2007; however, year-to-date sales declined 12 percent. A total of 34,668 single-family homes sold in the first 10 months of 2008, down from 39,383 during the same period in 2007.

Before prices can level off, inventory will need to be reduced. A few more months of positive sales growth should help reduce inventory.

Plymouth, Berkshire and Suffolk counties experienced the biggest jump in single-family home sales in October. In Suffolk County, home sales surged 71.2 percent to 125 from 73 in October 2007. Berkshire County home sales climbed 35 percent to 139 from 103, and Plymouth County
saw its sales increase 24.7 percent to 379 from 304.

Meanwhile, the median single-family home price in Massachusetts tumbled 13.9 percent to $285,000 in October from $331,000 a year earlier. The year-to-date median home price has fallen to $310,000, 11.2 percent less than last year’s $349,000 median price through the first 10 months of the year.

The steepest declines in median home prices so far this year have occurred in Barnstable, Bristol and Worcester counties, where prices have declined by about 13 percent from 2007.

Condominium sales in October fell, but not as sharply as in previous months earlier this year. Condo sales were down 7.4 percent to 1,660 from 1,792 in October 2007. Year-to-date condo sales have sunk 22.7 percent to 17,665 from 22,854.

The dramatic decline in condo sales is not a big surprise to me, since the median price of a single-family home is at or below where many condos were selling for a few years ago. Given a choice, most home buyers outside of Boston will choose a single-family home.

The median condo price dipped 5.5 percent to $260,000 in October from $275,000 last year. The year-to-date condo price is $278,000, 1.5 percent lower than $282,255 in 2007.

Meanwhile, the Massachusetts Association of REALTORS® (MAR) reported November 24, 2008 that single-family home sales were up 6.6 percent in October compared to the same time last year.

MAR reported that condo sales were only down 1.0 percent in October compared to the same time last year. That's quite a difference from The Warren Group numbers.

MAR also reported that the inventory of residential properties on the market as of October 31, 2008 decreased 13 percent compared to the same time last year (from 51,993 listings in 2007 to 45,118 listings in 2008).  At the current sales pace, the numbers represent approximately 9.9 months of supply, a decrease from 11.9 months of supply in October 2007. 

On a month-to-month basis, the average months of supply is down from 10.2 months in September 2008.  It is considered a balanced market when there are between 7.5 and 8.5 months of supply.

Read The Warren Group Press Release

Read The MAR Press Release

October 2008 Housing Data from the Massachusetts Association of REALTORS®

Low-income, 55+ New Construction Condos Available At Reduced Price In Haverhill, Massachusetts

Community Action, Inc. in Haverhill, MA has applications available for low- to moderate-income residents 55 years old or older to buy new construction condominiums for the reduced price of $209,100 and $220,913.

The two-bedroom condominiums are part of The Fairways development located off Route 108 (Newton Road) in Haverhill.

The maximum allowed annual income for a single person is $54,700. For a two-person household the income limit is $62,600; the three-person household income limit is $70,400; and the four-person income limit is $78,200.

Applications are available at Community Action, Inc., which is located at 145 Essex Street in Haverhill. For more information, you can call Richard Lynch at 978.373.1971.

Units are available for rent starting at $1,295 per month.

If you'd like to see The Fairways, please don't hesitate to contact me at 978.835.5906 or online.

Rhode Island Homes Prices Fall Sharply

Rhode IslandSingle-family home prices in continued to drop in September, with the median single-family home price plunging 17 percent to $220,000 from $265,000 compared to September 2007, The Warren Group reported November 18, 2008.

The 17 percent plunge in median price was sharpest drop in monthly home prices in Rhode Island since The Warren Group began tracking the state’s housing market in 1989.

"While prices dropped significantly, single-family home sales slipped by about only 1 percent in September. Home sales fell to 568 from 573 in September 2007. The modest sales decline is in contrast to August when home sales dropped more than 20 percent from the same month in 2007. Still, the sales pace was the weakest it’s been for the month of September in 12 years."

Read The Warren Group Press Release

Mortgage Applications Decline, Interest Rates Lower

U.S. mortgage applications declined 6.2 percent compared to the previous week, USA Today reported November 19, 2008.

The data comes from the Mortgage Bankers Association.

Mortgage interest rates have fallen for the third straight week.

Average U.S. rates for 30-year, fixed-rate home loans declined to 6.04 percent, down from 6.14 percent the previous week, United Press International (UPI) reported November 20, 2008.

The data comes from Freddie Mac. A year ago the rate stood at 6.2 percent.

Read The USA Today Article

Read The UPI Article

Historic Kimball Tavern Sold At Auction

Historic Kimball Tavern, located in the Bradford section of Haverhill, MA, sold at auction Thursday November 20, 2008 for $190,000, less than expected for the more than 300-year-old structure.

Built in 1690, community leaders founded Bradford College there in 1803. The property is located across from the Bradford Common.

A Haverhill, MA contractor, who plans to use the site for an antique shop, made the highest bid, The Eagle-Tribune reported November 21, 2008. The contractor, Cale Wood, also must pay a 10 percent fee to the auctioneer, bring the total price to $209,000.

I viewed the property at an open house on November 14, 2008. The property seemed to be in decent shape, especially considering the age. There seemed to have been several updates over the years. The property includes about eight parking spaces.

"Wood said he was willing to bid up to $220,000 for the tavern, which is assessed by the city at $795,000. The 3,883 square-foot structure lies on less than a half acre." 

More than 40 people attended the auction, but only nine were registered to bid. Of the nine, only four made bids, according to The Eagle-Tribune.

A group made up of interested neighbors, the Bradford College Alumni Association, and the nearby First Church of Christ also bid, but had to drop out of the bidding at around $180,000.

Read The Eagle-Tribune Article

More Photos And Information From The Auctioneer

Do Toll Hikes Make Metro West Less Desirable?

The Massachusetts Turnpike Authority (otherwise know as maybe the most bloated and ineffective part of Massachusetts Government) Board last week gave initial approval to drastically raise tolls, effectively doubling the charge for cars at the Sumner and Ted Williams tunnels from $3.50 to $7. The cost of driving through the Allston-Brighton and Weston tollbooths would jump from $1.25 to $2 under the plan.

The plan is still subject to public hearings and a final vote by the authority board. Good luck trying to find out when those public hearings will be held. The vote was on a Friday afternoon. They'll probably hold the hearings on the Vineyard. 

I heard recently on a radio talk show that a driver from Metro West could end up paying as much as $2,000 annually for the privilege of sitting in traffic on the way to work in Boston.

That got me thinking. Many home buyers who already work in Massachusetts, and will not benefit from the fact that New Hampshire does not have an income tax, decide against moving to NH because a community's property taxes may be $1,500 to $2,000 more for the same priced home in Massachusetts. Why wouldn't home buyers that work in Boston decide against moving to Natick, Westborough or other Metro West communities?

Would the cost of commuting from Metro West factor into your decision on where to buy?

Massachusetts House Speaker Sal DiMasi has thrown his support behind a proposal to raise the gas tax, instead of the tolls. A legislator representing Natick plans to file a bill to raise the gas tax 6 cents and eliminate all tolls.

"Governor Deval Patrick has said that the turnpike's financial struggles have made a toll hike unavoidable. While he has not ruled out a gas tax increase, Patrick has said that now may not be the time because of the faltering economy."

Sounds like the Governor may be hoping for the toll increase now and the gas tax increase later.

Read The Boston Globe Article

Read The Boston Herald Article

Rental Groups Oppose Home Buyer Assistance

Organizations that support landlords oppose proposals to assist home buyers.

I think the reasons are pretty obvious.

The National Multi Housing Council (NMHC) and the National Apartment Association both oppose proposals for a federally financed interest rate buy down on mortgages or any overturn on bans on seller-financed down payment programs.

"'The government should not be using taxpayer dollars to sustain inflated housing prices. When prices return to market levels, buyers will return. Such a resettlement will not only restore affordability to the housing sector, it will also put it on a much stronger footing going forward,' says Doug Bibby, NMHC president."

Read The REALTOR Magazine Online Article