Buyer Prepare

Know What Your Seller Already Knows Before Making an Offer to Purchase Residential Real Estate in Massachusetts

“Buyer beware” is a time-worn clichéd phrase, but one which could not be more true in regard to residential real estate. Despite the fact that the housing market has cooled somewhat due to adjustments in home prices and rising interest rates, the pressure a buyer feels when they find the house of their dreams to get it without overpaying is the same in any market. Preparedness is the key to knowing the market and gaining insight into the seller’s motivation and constraints, and allows a buyer to make the most confident bid possible.

There was a time in the not very distant past that the only way to get to know a home-buying market was to shop it for months. Not until a buyer had looked at house after house could they make any intelligent assessment about what good value was in any given market. Real estate markets are unique to the other markets we deal with as consumers. First of all, the stakes are enormous. Purchasing real estate is far and away the most expensive and important purchase/investment most of us will ever make. Second, real estate is by definition unique; no two properties can occupy the same space. This applies to the physical characteristics of the land, of course, but also to equally important issues like community, schools, government, recreation, proximity to work and the like. Seemingly subtle differences between communities, particularly in the suburbs, can create very different markets for real estate in terms of desirability, demand and therefore price. Third, the process by which real estate is bought and sold is very reliant on rigid timeframes, making the decision-making process all the more stressful.

Chuck Knoll, who coached the Pittsburgh Steelers to four Super Bowl Championships, was asked before the last one, which appearance had made him the most nervous. His response: none of them. Why? Because he said he had prepared his teams the best he knew how, and if that wasn’t good enough there was no way to blame himself, therefore there was nothing to be nervous about. What he was trying to say is that if you prepare for an event completely, and things do not turn out the way you want, nobody, including yourself, can blame you. Stress has less to do with what the outcome of an event will be than whether a negative outcome was due to your shortcomings, or lack of preparation.

So in the not-so-old days, the only way to know a market was to shop it to death. Of course, realtors will tell you that the second best way to know a market is to work with an experienced realtor. While realtors can often bring great value to buyers and sellers of real estate, they are not the ones signing the deposit check. Confidence at the offer stage must come from the gut.

So in 2006, how does a prospective buyer prepare to the point of confidence? The answer is simple: the internet. Knowing what resources are available on the web can make the difference between getting the house of your dreams and letting it slip away to another buyer.

One thing many buyers, particularly first time buyers, overlook is the information available through public records, often available online or with a simple phone call. Records from the Registry of Deeds can tell you several important things: (1) what did the seller pay, (2) how long ago did they buy it, and (3) how much do they owe on their mortgage(s)? More subtle information can be found by looking back to previous owners to see how quickly the property turned over in past years. If a property keeps being sold (assuming each seller is not making a fortune), then there’s something not so obvious that makes the owners decide to move out soon after moving in.

Tax records can be useful in certain ways. While the assessed value of a property has little to do with its’ market value, it can be of assistance in comparing the relative values of properties in the same community. In addition, if a seller is claiming to have recently made significant improvements to their property, tracking the assessments can provide confirmation.

There are now more sophisticated resources available that purport to provide updated, current appraised market values for a property you are looking at as well as surrounding properties. Further, rapidly improving advances in digital technology can bring a buyer up close to a property from many different angles and canvass the neighborhood.

Once a prospective buyer has a handle on what may be an appropriate offer, it is important to take one more step to insure the utmost in preparedness, and again, the internet can be used as a valuable tool. Much like shopping for the right home, shopping for a lender was once a tedious and tiring process. By utilizing the resources provided by the internet today, a prospective buyer can compare rates and fees with a simple click of a button and finding the right lender and loan program for you can be just as important as finding the right home.

By conducting such research with regard to your potential lender, the buyer can add to the leverage they possess at the offer stage. Obtaining a commitment or pre-approval letter before making an offer assures the seller of the serious nature of you offer and allows you to bargain from a position of strength as a result of being well prepared.

Preparing in these ways will allow a buyer to confidently offer what they feel is fair value for any home. What happens after that may be out of their control, but it will greatly reduce the stress involved.

Parker | Scheer recommends that both buyers and sellers consult an experienced real estate attorney prior to signing any documents connected with real estate, including the offer to purchase, as the terms of the very first written documents can control the terms until the closing.

Contact a Massachusetts Real Estate Attorney

For more information on buying a house in Massachusetts, or if you are looking for a real estate attorney in Massachusetts, please contact Rob D. Stewart. If you prefer, you can also telephone our offices in Boston seven days a week at toll free 866-414-0400.

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