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Should I Do a Condo Conversion for My Multi-Family House in Brookline?

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If you own a two or three family house, I am sure you thought about the option of converting the house into condominiums.

It is a tempting prospect, especially in a booming real estate market. Since the sum of condo values will exceed the house’s value, it is an idea worth exploration.

But just because the market is hot doesn’t mean it will be profitable for you! Whether or not you want should turn your two or three family house into condos depends on a few factors.

Here are three questions to ask before you consider a condo conversion for your house.

1. What is the value of the home as a single entity versus as condominiums?

Your very first step is to ask a highly experienced and real estate agent to give you a current price evaluation. The agent will need to provide you with a market analysis for several properties.

  • One analysis will be of the current market for multi-family houses Brookline.
  • Another analysis will be for the condo market in your neighborhood. For each unit in the building you will need a separate analysis, unless they are identical.

Once you know the value of the homes, you will be able to figure out how much you are willing to spend on a condo conversion.

2. What are the costs associated with the condo conversion?

There are several steps to the process, and each will cost money. There are two substantial expenses in a condo conversion.

- Legal expenses.

You will need to hire a real estate attorney who will write and file the documents, and advise you on the legal process. This may cost $12,000-$15,000.

- Rehab expenses.

This will be the bulk of your expenditure. In order to sell a two family home as two condos, the City will need to inspect the home and ensure it is up-to-code.

If your house is built in the late nineteenth century or early-to-mid twentieth century, like the overwhelming majority of the multi-family homes in Brookline, it is likely there is considerable work to do to get the house up to current standards.

I am not talking about the cosmetic changes. These are electrical, plumbing, building and safety upgrades, and getting the property up to current codes required in order to obtain a certificate of occupancy necessary to close.

I cannot estimate this cost. If you’ve maintained and updated the house meticulously over the years, it may be $10,000 of various upgrades. If your house is needs a lot of work, it can cost $300,000. There is no way to estimate this without a licensed contractor.

- Expense of selling the home.

Other than the commission, which will be a percentage of the sales, you may also have to supply an engineer’s report for the condo conversion. This will likely be less than $1,000.

3. Do I have the time, energy, and financial resources (cash) to do the necessary work?

This question is self explanatory. You need to want to do the work involved in a conversion and have the money to pay for it.

Click on the link if you are curious to learn the value of your Brookline multi-family house. Or fill out the form below.

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Renovate or Sell As Is?

Should I Renovate or Sell As Is?

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When prospective home sellers invite me for a consultation, the most common question is not,”What is my home’s value?” but, “Should I renovate or sell the house as is?”

selling house in Newton MA

If your house is on a large parcel, it may be worth more than you think!

Several considerations are made to answer the questions of renovating or selling as-is. At the top of the list is the local real estate market conditions. No one answer can be given to this question, and discussing the house without a understanding the market is futile.

The advice here applies especially to South Newton MA, Chesnut Hill MA and Brookline MA, as well as parts of Boston, where land is scarce and the houses are old. There is a great demand for luxury housing in the Boston area, which drive the pressure on the land and tear-down markets.

Brookline MA, for example, has a very high demand for land and tear-downs. An old house which can be taken down can be worth more than a bigger house, if the land is larger and buildable. Furthermore, the zoning of a parcel dictates how many units can be built and the size of the homes. This is key knowledge to the equation.

Once the local real estate market and the town zoning is understood, review the considerations below to learn how I advise my clients.

In order for me to recommend renovations to a Brookline or Newton house, these are the things I look for:

1. The home owners have energy, patience, interest, and financial resources to make changes.

If a you some cash and bit of interest in renovating things, some projects may yield a return greater than 100%. Make sure you do ONLY those projects. Don’t make these common home improvement mistakes.

2. The home is in generally good shape already.

Maybe you already have a new kitchen, so modernizing the bath would increase the value of the home. Or the home is in perfect condition other than some old carpeting, then I recommend changing the carpet. Another scenario is if the inside of the home is updated, but the exterior is a bit shabby. Here I recommend investing in making the house look great outside.

3. Market conditions favor home buyers.

Home buyers, to distinguish from investors or developers, tend to want to do less work. Walking into a house which is ready is highy valued by young families and overworked professionals.

In order to recommend selling your home as is, I look for the following:

selling land in Brookline MA

Your property’s value depends on the town’s zoning code.

1. If you can’t do the work, or it will be a great burden, then don’t!

Even projects which may be a good financial investment re not worth your stress and exhaustion.

2. The home needs too much work.

If your house hasn’t been updated many years, or if the house is in a consistent condition throughout, then sell the home as it is, to the right buyer. Don’t waste time and money on renovating a pink, mud-back tile bathroom if the kitchen is to remain avocado color and the wallpaper is peeling in the dining room.

It is likely the next owner will take on a major project and your bathroom may be turned into a pantry. Don’t put money into a part of the home, when the rest will remain outdated.

3. The market favors developers.

A developer is not paying a premium for upgrading something. If the devlopers are the strength in the market, they may be able to offer you more than a home buyer. Always speak with a local and highly experienced agent before you may any such decision.

4. Your house is in the immediate Boston Area and you are sitting on a chunk of land.

On a large lot in Boston, Newton, or Brookline, the house is almost always secondary. If the lot can be subdivided, if it can be turned into a multi-unit property, or if your house is small - the value is in the potential, rather than the house.

Whenever you consider selling your home, you must first speak with a real estate agent who can identify the strengths of the house. Learn the current market value of your home (Zestimates do not count), and who is the most likely buyer for your home. Only then decide to renovate or sell as is.

Thinking of selling your home? Interested in a free market evaluation of a property? Contact me today!

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3 Tips to Negotiate Real Estate Commission

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It’s a common situation all real estate agents experience. We are discussing the benefits of our services with a perspective seller, and the commission bomb is dropped: “Is the commission negotiable,” the homeowner asks.

“Some agents will do this for 4%,” is another comment I hear often in Brighton.

While most agents fear the commission questions, I welcome them. It is my opinion every perspective seller who did not ask about it, wanted to do so, but didn’t feel it appropriate. It’s on everyone’s mind.

Here are three tips on how negotiating real estate commission, and the replies to expect from the agents you interview for to sell your condo or house in Brookline, Brighton or Newton.

1. Invite more than one real estate agent for a presentation. More options will give you leverage. Tell the agents you are interviewing others. Knowing this, some agents may offer you a better commission price on the spot or expect to negotiate.

The best real estate agent you will interview will be unfazed by competition and follow-up when you finish interviewing. A highly qualified real estate agent who believes in what she does will not offer a discount.

2. Ask for a specific discount. When home sellers ask me the vague question, “Is the commission negotiable,” my answer is, “Only if you want to pay more.” Everyone laughs, subject is dropped.

When you ask for a specific commission reduction, “Can you reduce it by 0.5%?” for example, the answer must be more specific. A weak real estate professional will be caught off guard and likely say yes.

Your best candidate will say no, and tell you why. The commission breakdown should be transparent. You’ll understand why a 0.5% break for you is a 25% discount in the listing agen’ts compensation. Would you take a 25% pay reduction from your boss? You’d probably look for a better job.

3. Don’t be timid. Most home sellers interviewing real estate agents are uncomfortable negotiating and shy about asking for the discount. Many real estate agents rely on your timidity to get paid full price. If you do not ask the hard questions, you may not find your best candidate.

The best real estate agent to sell your home will never offer a commission discount up-front, and will not yield on negotiating the commission. An agent ready to negotiate commission will be all too ready to negotiate the price of your home and terms and conditions for your sale. If you can easily negotiate with an agent, you should be wary of hiring him to represent your interests.

Instead, use the real estate commission negotiation question to find a confident agent who can handle uncomfortable questions and demonstrates the value of her commission.

Do you have a commission question? Are you considering curious about the costs of selling a home? Write me below:

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Luxury Houses in Chestnut Hill MA: Days on Market Getting Shorter

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Chestnut Hill MA houses come in a wide variety of styles and prices. The most obvious reason is Chesnut Hill is not a municipality, but a zip code including parts of several towns: Pieces of Brookline, Newton, West Roxbury and a nibble of Brighton. Houses in West Roxbury will be priced lower than Brookline, even if next door to each other. This is due to the difference in amenities, namely schools, in which Brookline exceeds Boston.

Houses in 02467 range from the modest Cape to the most magnificent mansions Brookline has to offer. All of them have an improving market and find buyers fairly quickly. Below find a break-down of the four quartiles of current Chestnut Hill single-family listings, their median price range and average days on market:

7-day Market Stats by Quartile for Single Family properties in
CHESTNUT HILL, MA 02467 as of 08 Nov 2013
Quartile Median Price Sq. Ft. Lot Size Beds Baths Age Inventory New Absorbed DOM
Top/First $4,500,000 6,000 40,075 6.18 6.00 64 11 1 1 55
Upper/Second $2,285,000 5,400 22,651 5.82 5.05 42 11 0 1 85
Lower/Third $1,595,000 4,000 14,810 4.64 4.32 36 11 0 1 80
Bottom/Fourth $1,075,000 2,612 7,841 4.18 2.73 62 11 0 0 76

 

A snapshot of current market conditions shows an unexpected market trend: Days on market for the most expensive houses is the shortest! Conventional wisdom says the higher the price, the longer it takes to sell. Because this is a snapshot of current conditions, we don’t know how long these houses will take to sell, but we do know the eleven most expensive houses have been on market, on average, less time than the least expensive eleven houses in Chestnut Hill.

The graph below shows the trend of recent months. Although in general expensive homes have taken longer to sell than the rest of the market, in recent weeks the most expensive houses sitting on market haven’t been there for long.

What does this mean? 1. New luxury homes are coming on market, pulling down the average days on market of old listings. 2. Luxury Chestnut Hill homes which have been sitting on market for a long time are now off market – either under contract or terminated listings.

The luxury housing market in 02467 is strong, and will probably continue to show signs of strength though the spring market.

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Median House Price Brookline MA

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Median house prices in Brookline MA are on the rise again.

Brookline’s market for single family houses is only 22% of the total number of properties sold in the past twelve months. But in dollars, the Brookline market for houses had $246.5 million in closings, worth 42% of the dollar volume of real estate sold in Brookline in the past twelve months. The rest is accounted for almost entirely by condominium sales.

Search currently available houses for sale in Brookline MA

Brookline houses are comparatively expensive, averaging $1,521,000. Land, space, driveways, and privacy are highly desirable in the urban setting. Coupled with the convenience of Brookline’s location and top rated public schools and the reasons behind the prices are quite clear.

Below find a three year chart of the median house prices in Brookline MA. Prices started a sharp rise in early 2011, with a clear trend upwards with seasonal dips since. Where are they headed next? A seasonal dip or another downturn?

Wondering what your Brookline house is worth? Fill out the form below for a free, no obligation evaluation.

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Today’s Home Selling: Listing Agents as SEO Expert

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Selling a home used to be characterized by three activities: putting up a yard sign, hosting an open house, and advertising in the paper. Some agents did this extremely well. If selling your home was that simple, no wonder so many people chose to sell homes by themselves.

These days, selling your home is a lot more complex and requires a new level of sophistication. Listing agents need to be search engine optimizing (SEO) experts. Most agents don’t understand this yet. Brookline Realtors, Newton MA real estate agents, and Boston real estate in general often lag behind in these matters.

According to the National Association of Realtors, 88% of buyers use the internet in their home search, and I bet that number is even higher in the Greater Boston Area. Where else would you begin any search for anything? When you are finding answers to your queries, it means someone has taken the time to put content together and optimize for you to find.

Home searches are not just beginning online, but they continue online as well. Buyers don’t stop their search as they get closer to finding their home. Photos, floor plans, videos and information is reviewed and used to make shorter lists of homes to see. Online home profiles are used to compare and contrast homes and to make final decisions as well.

If this is how buyers choose to consume information, it is the listing brokers’ responsibility to feed that information accordingly. A successful online marketing strategy for a home has two functions. First, to be found by as many targeted buyers as possible. To be easily found is great, but quality trumps quantity. I would rather have five visitors to the home who are qualified, ready to buy, and are the right fit for the home than 25 visitors who are browsing and curious.

The second function of a successful online marketing strategy for a home is appeal. Your home needs to look amazing online. Professional photos, floor plans, complete information, and a video all help. More than ever the preparation for a home sale is important so the photographs and videos inspire the buyer to schedule an appointment.

Incomplete information may have been acceptable in the days when the buyer’s agent was the gatekeeper of information, but no more. Any listing agent who’s marketing plan focuses on open houses, yard signs, and advertising is missing the point, and a good chunk of good buyers for your home.

How did you find your home? How long ago was that?

Boston Next Real Estate Bubble? More Fluff from the Globe

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Last week the Boston Globe’s real estate blog called Boston Real Estate Now published a post called, “The Next Housing Bubble?” This small piece is jam-packed full of nonsense, misleading information and irresponsible journalism.

The first problem with this post is the title, “The Next Housing Bubble?” Bubbles are a conclusion made in hindsight, and make no sense in predictions as we crawl our way out of a slump. This whole post was based on JP Morgan’s prediction of a 12% jump in home prices over the next four years as reported in Housing Wire. A 12% increase in home prices over four years hardly makes for a bubble. So why call it that?

Next, the article continues to claim the Boston area as a “one of the most bubble prone metro markets in the country.” Although I agree with the assertion of lack of inventory and new construction, lack of housing is not what creates real estate bubbles. Shortages and scarcity lead to organic price increases, not bubbles. Bubbles are full of air – not continuous real demand!

Of course the demand for housing has its ebbs and flows. Prices went down in Boston but most of our neighborhoods did not suffer the economic blow of Cities where housing and new construction is abundant, like Miami and Phoenix. Those cities had new construction condo buildings with less than 30% occupancy and price falling 50-60%.

Another quote that is the mark of irresponsible journalism, “Of course, a 12 percent jump nationally translates into a 20 percent jump in Greater Boston.” If this is true, please provide historical evidence of Boston’s real estate outpacing national real estate markets. It didn’t outpace the last “bubble” (if you believe we had one).

My next bone to pick is with the value of data the Globe uses. The Globe’s purpose, I thought, is to inform the local readers. There is no way national real estate headlines inform the local buyer or seller or provides a basis for decision making. Furthermore, the Globe’s stretching this national prediction to apply to Boston’s market adds to confusion and nonsense.

National real estate numbers, regardless of integrity of source, are totally and completely meaningless to you, dear friend. Real estate only matters on the local levels – your street, your neighborhood, maybe your town. If you want to learn about your local Boston area market, Boston Real Estate Now is proving to be an unreliable source.

Lastly, the author discounts the only piece of valuable information. “The bank (JP Morgan) predicts 2.5 million problem loans will get bailed out this year through foreclosure rescue programs - sounds like wishful Wall Street thinking to me.”

The big bank is in a pretty good position to report accurately if they believe it is likely they are to have a deal coming together with the government. This is the only interesting information I find in the report. The Globe calling it wishful thinking shows a lack of thoughtfulness going into the post.

Do you like keeping up with your local real estate market? I’ve got the perfect thing for you! Learn about my Local Housing Data Newsletter. It’s reliable, timely, and free. Now you can be the expert…click here.

Brookline Real Estate Update

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There has been a lot of talk about the shrinking supply of homes in the market. The shift in this critical market condition is nicely shown in the months of supply of Brookline’s single family houses chart. In May 2o11 there was over 10 months of supply - meaning, it would take 10 months to sell all the homes if no new ones came on market. Last May, this number was under 8 months.

Although average house prices in Brookline were down over 9%, the shrinking inventory is a sign of a healthier market. Months of supply tells us how many homes are on market and the level of demand. Lower months of supply is great news if you are planning to sell your home soon. More interested parties, less competition, maybe (MAYBE) higher asking price.

But this information means something else if your house is already on market. If you are currently trying to sell your house in Brookline, the good news is you have less competition and more potential buyers. The bad news is that while all the other homes are selling, yours is still on market. If you home has been on market much more than four months (average market time), it may be time to discuss alternative marketing options or a price adjustment with your listing agent.

Brookline single family homes have an average price of $1.3 million. Lower price ranges have sharper drops and much lower inventories. Brookline condos are down to 3.2 months of supply last month. More on that next week.

Finding Your Newton or Brookline House: A Guide for Frustrated Buyers

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I overheard someone talking about the long and disappointing process of looking for a home in Brookline the past year. “There is nothing in our price range.” I hear this often, especially about Brookline and Newton houses. So I want to give all the frustrated buyers a few words of advice from experience. Here are three questions to ask yourself and ponder.

1. Am I looking in my price range?
Sometimes I find buyers, especially those looking in a seven figure price point, looking at homes with the dream criteria list, but not the right price range. These buyers go see Brookline homes that have a specific number of bedrooms, square footage, certain style, etc. But the houses are totally out of the price range.

Instead, only look at home you can afford, plus 5-10%. (See my previous post about looking at homes above your price range). Are you sure they won’t do? Don’t rely on the pictures on the computer only, go look at some of the homes. Perhaps with some imagination and a little investment down the line it will be the dream home you can’t afford now.

2. Am I giving up easily?
Buyers going from house to house they can’t afford tend to give up. Looking for a home is a long process so why spend all these hours on something you don’t think will come together?

Hang in there! In fact, I suggest that buyers who are outbid regularly to keep at it. Yours will be a longer and more intense search, but with the dedication and persistence, you can find the right home. Sometimes a home that sits for many months on the market will sell for less than it would otherwise, or a poorly marketed for-sale-by-owner will sell for too little (FSBO’s have many disadvantages in the market ).

Luck, it is said, is preparedness and openness for opportunities. If you quit your search, you will not be positioned for much real estate luck.

3. Am I working with the right agent?
You can find the right agent who’ll be dedicated to your long home searching journey. Don’t commit to anyone until you find someone who is impatient or pushy.

One of the very first things an agent does with a buyer is set expectations. Sadly, though, most agents think this means to set YOUR expectations of what you’ll not get for your money in TODAY’s market. There is more to it.

If an agent says your expectations are unrealistic, walk away and hire someone else. Seriously. No agent knows when and how things will change. There are various opportunities, situations, and if you are serious about moving, you will find the right home.

If you are committed to finding a new home, and you know your needs are as such that you MUST move, then please give yourself plenty of time to search for a home. Find an agent to be your partner, and make the decision that this will take a while. As my Grandmother used to say, “With a bit of patience and some creativity, anything is possible.”

Look at Homes Priced Higher Than You Can Afford in Brookline and Newton

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My fellow real estate agents will hate me for this post, more the reason you, my non-agent friend, must read it.

Are you looking to buy a home? What’s your price range?

Whatever your price range, look at homes priced up to 10% higher! You can find a home you love at a great price. This strategy works if you have time, patience, persistence and an agent who is not shy about negotiating.

This is not a suggestion simply based on a few anecdotal stories, but statistics. Looking at the ratio of sale price to list price (SP:LP), you learn the final sale price of a house compared to the asking price. This ratio was 95% in Brookline and 96% in Newton in 2011. But there is a ratio I like even better: sale price to the original asking price (SP:OP) . From this number you learn the final sale price as a percent of the asking price before it was reduced. This number is obviously lower, at 91% in Brookline, 93% in Newton.

On average, a houses in Brookline in 2011 sold for 9% LESS than their original asking price, and 5% LESS than the final asking price. For example, a house went on market for $1,650,000. Over time, the price was reduced to $1,580,500, and finally sold for $1,501,500. A buyer who can pay up to $1.5 could have seen this house, waited 125 days (average market time in Brookline in 2011), and bought it.

This means the house was overpriced. Not all the houses will be overpriced when put on the market at $1,650,000. These days, they may even sell for over asking. But on average, if the house prices in Brookline in 2011 sold for 9% less than the original asking, you should be looking at homes priced higher than you can afford.

Please have your agent check the SP:LP and SP:OP ratios for your area and neighborhood. We can search it by zip codes, price ranges, types of homes, etc. Adjust your search criteria accordingly. Note that usually the higher the price range, the lower the ratio (larger price differential).

Buy bravely!