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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.

 Watch this video to learn about condo conversion of a multi-family home in the Greater Boston area:

Doing a condo conversion 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 should turn your two or three family house into condos depends on a few factors.

Here are three important 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 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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Top Five Mistakes Sellers Make

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It can be a tough market for selling a home, but those conditions can get even worse if sellers aren’t careful. While a seller doesn’t control the real estate market, their actions can significantly contribute to how long and how much their home is sold for.

Underestimating Cleaning Up: It may seem obvious, but I can tell you real estate agents everywhere are nodding their heads in agreement as they read this. Inviting potential buyers in to see an unkempt home is like going on a job interview without freshening up after you cleaned your garage. How can the employer notice your fantastic talents and skills if they’re hidden underneath a sloppy exterior? How you show your home tells the buyer what type of care you, the seller, has put into the home?

 

If you can’t take the time to wipe the grime off the refrigerator doors, tidy up the kids’ rooms, take out the messy diapers, put away the food, and take the dogs out of the house for a while, then you’ll likely find buyers will quickly move on to the next home on their list.

Lingering During Showings: Yes, we all want to know how the open house or showing went, but hanging around during either of those events is not a good idea. Sellers who tend to linger during showings often make the buyers uncomfortable. Buyers like to have time to explore the home at their own pace and without feeling any pressure. Sometimes buyers want to sit on the porch or out in the backyard as they discuss the home’s possibilities. And if buyers are willing to sit for a bit and talk about the home, that’s a great sign. However, the chances of them doing that with the seller present is unlikely. Many times buyers will say, “Let’s skip the home if the sellers are there.”

If you’re selling your home, do yourself a favor and hit the road for a bit. Take a walk or head to the coffee shop. As soon as the showing is over, you can get all the details from your agent. That’s why you’re paying your agent! Let them do their job. Just make sure that your agent has all the home’s selling points and any additional features that make this home standout.

For Sale By Owner (FSBO) Trap: Some people are convinced that they can do it on their own. Maybe they can sell their own home, but it likely won’t happen without some headaches. Trained specialists are called “experts” for a reason. An expert real estate agent knows the market, has connections, guides you through the process, negotiates on your behalf, and will make the process of selling your home simpler.

One potential land mine that FSBOs face is the flood of people popping in to see their home. It sounds great that there’s so much traffic, but the problem is many times the people who pop into FSBO properties aren’t actually qualified for a mortgage or may not be serious buyers. Instead they’re just looking and satisfying their curiosity at your expense. Agents know to ask the right questions to make certain the lookers are truly potential home buyers.

Not interviewing agents: If you have kids, chances are you interviewed the nanny or babysitter. Taking time to seek out top real estate agents in your are. Setting up interviews with them is equally important. Choosing the wrong agent for the job will be a headache and slow the process down. There must be a connection, understanding, and good communication between the seller and the agent. There are lots of things that go on during the sale of a home, communicating with the agent should be one of the easier tasks.

Pricing a home incorrectly: This could be the worst mistake sellers make. Yet, this is where so much help can be found. Real estate agents see homes every single day. They know the neighborhoods and the comps. They are there to help you understand what homes have sold for in the recent past and what they’ll likely sell for during the current market conditions. Get a market evaluation from your agent and understand that what is a fair price for your home in today’s market.

How Home Sellers Can Maximize Buyer Offers

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Today’s market can be a difficult one for many sellers to navigate. While your real estate agent can advise you, the ultimate decision of what offer to accept is entirely up to you.

This decision can come with quite a bit of pressure. Even in the most favorable of markets this can be a difficult time. How do you know when to accept an offer?


Here are some questions to consider:

• Is the buyer pre-qualified/approved? Selling will require an investment of time and money. You may need to find a new home or a temporary rental. There’s nothing worse than buying a new house only to find out the deal to sell yours has fallen through.

• Do you need to move? The urgency of your move may dictate what offer you accept. Many sellers need to move quickly for a new job. You may need to sell to avoid foreclosure. If you are in a rush, you may need to accept an offer that is less than ideal.

• How much do you owe? You don’t want to sell your home at a loss. And be sure to take closing costs into consideration. Many markets experienced high levels of depreciation over the last year. If you are underwater on your loan, now may not be the time to sell.

• What is the market climate? Are you likely to get another offer? How long has your home been on the market? Have you had many showings? All of these are factors to consider when contemplating what offer to accept.

Above all, ask yourself if this offer was a reasonable offer. There are buyers that may attempt to low ball you. They may see that your home has been on the market longer than your competition. They may know that it’s a strong buyers market. In response they offer a much smaller amount for your home than it is worth. You are not obligated to accept these low ball offers. However, if you are in need of selling now, every offer warrants consideration or a counter offer.
In the end, you must accept an offer that works for you. You may be willing to accept a lower amount in exchange for a faster closing date. Or you may wish to hold out for the highest dollar amount.

Written by Carla Hill, RealtyTimes

Why Direct Deals Are Bad for the Seller?

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Ooh, a direct deal. That’s when the home buyer is not represented by an agent so the listing agent works directly with the buyer. Every agent wants a direct deal so they can keep double the commission. And sellers like it because often, without a co-broke, the commission will be cut (say from 5% to 4%).

Listing agent makes more money while seller pays less commission, so what is the problem?

I don’t like direct deals and I think they are a rotten situation for sellers!

This unconventional piece of wisdom comes from years of experience, and has recently been reenforced during a condo sale.

At an open house I hosted two weeks ago a buyer came to me and wanted to write the offer directly with me. The next day We met, sat down, wrote the offer….well, most of it.

First, by law, I had to disclose to the buyer that I work for the seller. With this in mind, we started the money conversation.

Buyer wanted to offer well under the asking price. As I discuss the price with her, she listens, she nods, and she says (I paraphrase), “You work for the seller, why should I listen to you?”

As someone representing the seller, I do not have the authority to represent any price but the full asking price. I am not free to negotiate money which is not mine. Which is besides the fact I thought the asking price was reasonable.

As I asked her to sign the offer, she hesitates, “You know, maybe I should have my own agent review this.”

I asked her if she knew anyone, she does, she calls and books an appointment with this other agent immediately.

Two hours later, I received an offer from this buyer through her buyer’s agent. It was a much higher, much better offer. It reflected a buyer who understood the market and the process.

Seems to defy logic, that a buyer’s agent will write a much better offer than the seller’s agent?

The fact is, as long as my ficuciary obligation is to the seller, nothing I say to a buyer carries much weight. I may be giving excellent and honest advice, but none of it can be contrary to my clients best interests, or what they tell me to represent.

A buyer knows there is a choice to be represented, and once she is aware of the fact she is not, hesitation sets in. Buying a condo is a bit complex and expensive.

By seeking reprentation, the buyer agent is there through the whole transaction to explain everyting, and ensure the buyer understands it. The buyer receives advice congruent with her interests, and thus she is a more informed and eager.

Financially my client is ahead because the home buyer trusted her agent’s advice - a trust I can’t instill as someone representing the seller.

An educated, well represented buyer will make stronger offers, take the transaction more seriously, and is much more likely to close.

Isn’t that the goal?

Real Estate Prices in Brookline MA: Single Family Trends

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Picture from HookedonHouses.net.

Brookline MA has one of the hottest Massachusetts real estate markets. This has put the pressure on prices on both condominiums and house and a fast-paced market. Houses, though, don’t sell as fast as condos. Most of the single family homes are considered luxury, with on-market time of six to nine month common. In fact, one Brookline house has it’s three year anniversary this month!

Currently there are 32 single family homes on market in Brookline, with a median price of $2.36 million. This time in 2012 there were 51 houses on market with a median price of $1.79 million.

This day seven year ago (2007), there were 60 single family homes on market with a median list price of $1.7 million.

House Prices in Brookline MA

In the table below you will find the four quartiles of home prices in Brookline MA. This table represents only zip codes 02446 and 02445, and excludes Chestnut Hill. (Quartiles are a way to group the homes into four categories of prices so we can analyze changes).

The median price of the bottom quartile of houses in North Brookline is almost $1.8 million, while the median price of the top quartile is almost $5 million.

Looking at the differences in these house, the most expensive houses are substantially bigger, at 8900 square feet. This is nearly double the size of the bottom least expensive houses. They also have double the number of bathrooms, but only one extra bedroom, on average.

What accounts most heavily for the difference in prices of Brookline MA houses is land. Look at the column of average square feet of land. The least expensive homes average about 10,000 sf lot size. But the most expensive homes average nearly two acres! This is nearly EIGHT TIMES as much land, or 778% more.

House Prices in Chestnut Hill MA

Houses in Chestnut Hill MA, (which is part Brookline plus a part of Newton and a small slice of Boston), have a similar trend to those in North Brookline. The disparity between house prices is about $3.13 million.

The least expensive houses are a bit smaller than half of the size of the top quartile, and have half the number of baths. But the difference in average lot sizes is substantial. The largest homes have a parcel which is on average 546% bigger than the smallest homes.

The trend of days on market is predictable: cheaper houses sell faster - there is more demand. Yet even though it takes a long time to find a buyer for the luxury homes, their prices are still on the rise.

Land Scarcity

The scarcity of land in Brookline is well known. Land values are driven by two things. First, our love and appreciation for a private yard. Many buyers for a single family house in Brookline are upgrading from a condo, and thus the yard is highly coveted. (Yours truly can relate).

The second reason is the potential for subdivision or building new houses. Building houses in Brookline is a lucrative business, if one can get it. Some lots can be subdivided which currently may have one small home on them. With house prices in Brookline high and rising, it is no wonder land is so highly valued.

Want to stay ahead of the curve? Click on the link and sign-up for my weekly Brookline MA real estate summary report where you will learn the market trend. It’s free!

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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Condo Prices in Brighton MA: February 2014 Market Update

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When will the condo market loosen up?

For a couple of years we’ve seen condo prices in Brighton MA surge. But is this market slowing down soon?

Since the beginning of 2012, median prices of condos on market in Brighton increased from $259,000 to $337,000 this past week. This is a 30% jump in prices.

The laws of supply and demand play out in the real estate market, as inventory has steadily dwindled. In 2008, 150 condos on market was not unusual in zip code 02135. Today there are less than 40.

If lack of condo inventory drives the price up, what causes inventory to be so low? There are a few variables which keeps housing inventory low and prices rising:

Rising Rents

Rents in Brighton, and Boston as a whole, have increased considerably. Even though there is no reliable index to measure rents, I estimate rent in Brighton increased approximately 20-25% in the past two years.

Low Interest Rates

Low rates have made it easier for homeowners and investors to refinance and reduce their monthly expense on their condo. Furthermore, many homeowners have become landlords as both low rates and rising rents made it possible to keep the Brighton condo while buying a house in the suburbs.

Expectations of Rising Value

Many potential home sellers witness the market heating up. With every condo selling for a bit more than the last, the homeowner prefers to wait. If there is no rush to sell, why not wait and realize another 5% or 10% in home value?

The 2008 Financial Debacle

Many condo owners in Brighton who bought in 2005-2007 were first time home buyers with little or no money down. Without equity in their homes, the market downturn in 2008 meant many were upside-down in their mortgage.

When the home is worth less than the mortgage on it, it is difficult or very expensive to sell. Many couldn’t afford it. Other than the mortgage payoff, there are other transaction costs of selling approximately 6% of the sale price.

For many condo owners in Brighton, breaking even just starting to look like a reality.

Low Housing Inventory All Over Greater Boston

Brighton homeowners are often first time home buyers who will upgrade to a larger home. As I meet young families to discuss moving to a larger home, I explain the challenge they face is not in selling the condo, but in buying the new home.

The home purchase dictates their ability and timing of the sale . When my clients are not finding homes in their chosen areas and budgets, I advise against putting the condo on market. Where will they go?

Is the Brighton MA condominium market ready to loosen up? When and how will the inventory pick up, and thus the frenzy end?

My prediction is to see a turnaround later in 2014. The turnaround will mean a slowing in the home prices increase, as more inventory comes on market. The buyer-seller relationship will be more even handed.

Most buyers for condos in Brighton will be first time home buyers and investors will exit the market. Once income return on the property falls below a threshold (which I estimate at 5.5-6%), these properties will be too expensive to investors and home buyers will out bid them.a

Frankly, I expected a turnaround by Spring 2014, but so far this year we are not seeing inventory pick-up. This could be because of the weather, so my theory may hold true after all. But as of now, I expect the inventory pick up and condo price frenzy in Brighton to slow late 2014.

Do you want to learn how much your condo’s value increased? Tell me a bit about your home and I’ll give you a current, in depth market analysis.

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Home Prices in West Roxbury MA: 02132

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Located in the South-Western most post of Boston, West Roxbury is sometimes believed to be a suburb. As a local resident, I enjoy reminding people I am indeed a Bostonian!

It is easy to see why many think it is a suburb - tree lined streets, single family and two family houses dominate the neighborhood, and everyone has a little bit of lawn to enjoy. The streets are tame and the traffic moves. Bellevue Hill and the Highlands are home to colorful Victorians and expansive Colonials.

West Roxbury has been an attractive choice for young families in need of an easy commute into the City by car or train. And now this has put much pressure on home prices.

Below find a chart presenting the median prices of single family homes for sale in West Roxbury for the past three years. Prices are clearly on the sharp rise.

The natural forces of supply and demand are at play. Below you’ll find a chart of the inventory of houses for sale, in the past three years. The lack of housing is obvious. This puts further pressure on home sales as sellers feel comfortable asking for higher prices when they have no competition.

 

What to expect will happen to home prices in West Roxbury MA this Spring? I expect the sharp rise will be tapered as more home owners sell their home this Spring. Yet, I still don’t believe demand for housing will be fully satisfied by inventory, as this neighborhood will continue looking more and more attractive to young families.

Brookline Condominium Market: Will Buyers Remain Powerless?

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The Brookline MA condominium market has been tight and getting tighter for a couple of years now. Buyers compete for properties in any price range, and inventory remains low. The number of buyers increase as the inventory has steadily decreased.

The graph below shows peak inventory in 2013 is lower than off-season inventory in the previous two years.

As interest rates remain low, more buyers enter the market and look for homes. Second time buyers can finally sell or rent their first home easily. First time home buyers are finding rents skyrocketing and lending more plentiful.

But why aren’t homeowners jumping at the market opportunity to sell their homes? In a rising market, homeowners believe they will fetch more money for their home if they wait. If recent history is an indicator of things to come, this is true. Prices have been rising quickly.

Average price of sold condos:

October 2012: $580,753

March 2013: $630,326

October 2013: $671,088

 

But, alas, recent history is not an indicator of things to come. It’s the longer history to consider with a fairly repetitive and predictable nature of the real estate market. The tight conditions can’t last forever.

Potential home sellers will hold on to their Brookline condominium until they perceive the market has topped off. By the time they put their home up for sale, buyers will regain power, the Brookline real estate market will be more even-handed. Days on market will start to climb and bidding wars will be over. I predict this will be by the middle or end of 2014.

Those considering selling your home who do not have to buy another property in Brookline, this is a perfect opportunity. You can take advantage of the last two seasons of a unique sellers’ market.

Boston Real Estate Abatement: Don’t Overpay Real Estate Taxes!

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Avoid overpaying taxes by understanding Boston’s abatement process for real estate taxes

Every year the City of Boston adjusts assessed home values for a real estate tax base, and there is a lot of confusion around this number. Allow me to offer some clarifications and suggest how to avoid overpaying real estate taxes.

What is the city’s Assessed Value?

The City’s assessed assessed value for your house or condominium is not the market value of your home. It should roughly represent the market value of three years ago, I was told anecdotally. But I recommend you attach no interpretations to the number provided by the municipality.

Most likely, Boston’s assessed value of your home in Brighton, Jamaica Plain, West Roxbury and almost anywhere in Boston is well under current market value. This is a good thing. Remember, this number is your tax base, so a lower assessed value means a lower real estate tax liability.

What is Abatement?

The Commonwealth of Massachusetts allows homeowners to request abatement from their town or city if it is believed the assessment is wrong and needs to be adjusted. Most commonly, the abatement process is used when the home’s assessed value is higher than the market value.

I requested abatement when my Brighton condo’s value well exceeded the market value. If I would have sold the condo at the time, it would have been worth about $30,000 less than the value the City used to calculate my taxes.

The abatement procedure was painless and quick, and my condo’s assessed value was adjusted and my taxes lowered. But I realized many of my neighbors did not do the same. Either they didn’t realize there was a way to lower assessment or they didn’t realize the assessment was too high.

Should I Request Abatement from the City of Boston?

If you believe your condo’s assessed value is too high, meaning it exceeds the market value, you should request an abatement. If your neighbor’s similar condo just sold for less than your assessed value, apply to have your value reduced.

If you are unsure of the market value of either Boston or Brookline property, contact me and I can provide you with this information for free.

Don’t know your Boston property’s assessed value? Find it here: http://www.cityofboston.gov/assessing/search/

For your Brookline property’s assessed value database is here: http://apps.brooklinema.gov/assessors/propertylookup.asp

Abatement instructions are provided here: http://www.cityofboston.gov/assessing/abatement.asp

Boston’s abatement application is not available online, you must pick it up from City Hall or give them a call:(617) 635-4287.

Town of Brookline Abatement:

Brookline real estate abatement is similar to Boston’s. The abatement application is available online with more information at http://www.brooklinema.gov/index.php?option=com_content&view=article&id=166&Itemid=90

 

If you want to apply for abatement, do it NOW, deadline is February 1!