Here is a summary of the more frequently asked questions by home buyers. You are also welcome to ask your question directly by clicking here.
Part I: Questions about getting started
1. How do I start the search?
Casually going to open houses is a good way to learn a neighborhood and home prices. You will become very knowledgeable very quickly. Be open to seeing properties which don’t exactly meet your criteria. There is an important learning process before any decisions are to be made. Remember to keep your personal information private, as the agent hosting the open house is representing the seller.
2. Where does a first time home buyer start?
The best place for a first time home buyer, or any buyer for that matter, is by hiring an agent. You want an agent who understands first-time-home-buyers needs, and agent who is patient, takes the time to explain the minutia, and who is happy to answer all your questions. You can ask family and friends for recommendations or visit Zillow to read client reviews. Feel free to ask agents you interview for referrals . It is not just about “clicking” with the right person, but entrusting them to manager the largest transaction of your life!
3. Why do I first need a pre-approval?
The pre-approval letter is your first step to securing a loan. You don’t have to secure the loan with the mortgage broker who issues your pre-approval, so there is no need for extensive shopping. Working with your local banker or a recommended broker is ideal. With a pre-approval you are confident in your ability to secure a loan, you will know your limitations and learn a lot about financing in the meantime.
4. Why should I sign up for MLS instead of Zillow / Trulia?
Zillow, Trulia and other online services usually have a delay in posting new listings. Multiple Listing Service (MLS) is the original source of new listing information, and you can have access to it only through a real estate agent. Other than missing out on new listings, these websites also have a lag in taking off the sold listings. So inventory of houses seems much larger than it really is. You are wasting your time searching through outdated information.
5. Why do I need a buyer’s agent?
A buyer’s agent job is to manage the home buying process for you. You will benefit from experience, expertise in both the process and the geographical area. A buyer’s agent’s obligation is to give you sound advice, and represent your interest. Without a buyer’s agent you may miss important deadlines, go about your search inefficiently, and make offers which will not protect your interests.
6. Can I invest in real estate if I don’t have much cash?
To invest in real estate you usually need a minimum of 20% down, plus a cash reserve to support the property in case it is not rented. It may be worth a conversation with a loan officer, but likely to be difficult to obtain a loan for an investment property with little cash.
Part II: Questions about financing and money
8. Does how I obtain a down payment matter (Gift, Loan, 401K, HELOC)?
This IS important. Planning ahead is key to avoid issues and possible tax implications. This is a conversation with a loan officer and accountant. Do not wait until you have an offer accepted before planning your down payment.
9. Homes in Brookline are so expensive, maybe I should keep renting?
Depending on your finances, family, and commute, this may or may not be true. You owe it to yourself to explore the possibility of home ownership. Do not let Brookline home prices intimidate you!
10. Should I buy only in a buyer’s market?
This depends on your family and financial situation. I recommend home buyers buy on their own schedules, and not try to time the ebbs and flows of the real estate market. Since most homeowners own their homes for many years, it is likely you will not be highly affected by a downturn, especially in Brookline and Newton. A sellers’ market is a difficult time to buy, but remember the sellers’ market means prices will go up further.
11. How do I know I am not paying too much for a house or condo?
It is your agent’s job to help you make an offer which reflects the market and puts you in the best possible position. This is one of the most important reasons to hire an agent who is experienced and analytical, who takes your money seriously.
12. How much are closing costs?
Closing costs can vary widely depending on the mortgage program you choose. Expect to pay about 6% of the cost of the home. Other than various fees, you will also be paying the first mortgage payment and real estate taxes.
13. What is a residential exemption?
When a homeowner lives in their property, (as opposed to renting it out), it is eligible for residential exemption in some towns and Cities. Boston, Cambridge and Brookline have residential exemption, Newton does not. It is your responsibility as a new homeowner to file for the exemption on time.
14. Can I buy a primary home if I don’t have much cash?
You may. This is a conversation for you to have with a loan officer. If you have high credit, low debt and a steady income, you may be eligible for a loan.
Part III: Questions about the home buying process
15. What is the agency disclosure?
The Mandatory Massachusetts Licensee Disclosure Statement is a form all agents must legally provide buyers upon showing them the first property. This is not a contract, you have absolutely no obligation, and you can sign them with many different agents. But be aware, do not provide any private information about yourself or your finances to anyone until you decided to hire.
“Do not provide any private information about yourself or your finances to anyone until you decided to hire.”
16. Should I follow national real estate news?
It may be useful to learn what is going on nation-wide, but the Boston real estate market is usually ahead of the curve by about 6-18 months. This is especially true of the condo market. Follow local trends, and ask your agent plenty of questions and stats.
17. Do I need a Radon test?
Radon is the second leading cause of lung cancer. It is a naturally occurring radiation from the ground. It can be mitigated and controlled. It is most important to check for radon if you are buying a house, or basement level condo. It should absolutely not be skipped if you plan to use the basement, live in the basement or have a dirt floor in the basement.
18. I need to Sell in order to buy. How do I pull this off?
There is no specific formula to this move, it depends highly on your resources, and the markets where you are buying and selling. A consultation from a top notch real estate agent will help you sort this out.
19. Can I Get Out of a Deal After an Offer is Signed?
This is a subject not to be taken too lightly. If your constancies are written correctly, and you follow your deadlines accurately, you can usually get our of a real estate transaction without losing escrow money.
Part IV: Questions about real estate agents and commission
20. How commission is get paid for buyer’s agents?
A buyer’s agent is almost always paid via the listing agent’s commission. The listing agent, representing the seller, has a contract with the seller to be paid a percentage of the final sale price. Usually this contract also states the listing agent will co-operate (pay) the agent for the buyer.
21. What is the difference among all the Boston and Brookline MA real estate offices?
Hiring a real estate professional is really about finding someone you like, trust, and find to be helpful. An experienced and knowledgeable agent can work in any brokerage. It is more important to find the right agent with a great reputation, than a well-known agency. If you call the company, you will likely be assigned an inexperienced agent, or someone who happens to pick up the phone. Do your research, ask questions, and hire the right agent for you. Reading agent reviews is a great way to find the agents to interview.