July 12, 2018

5 Steps to Prepare Your Home for Sale

When you are thinking about putting your home on market, there are some obvious to-dos that home owners think of:  painting, staging, and de-cluttering are clearly good starting points, but there are a number of smaller tasks that get ignored.  If you are going to place your home on market, make sure you take care of these 5 things, preferably before photos are taken:

  1. Replace burnt out lightbulbs.  You want the light in your home to be maximal, so make sure there are no burnt out or fading bulbs.  Small items like a missing bulb can also be distracting to a potential buyer. It will make them wonder what else has been left in disrepair.
  2. Replace your street numbers.  You'll have potentially hundreds of people swinging by for open houses and showings, so you want your home to be easily identifiable.  Replace those old, painted over street numbers with something big, bold, and modern.  It serves a practical purpose and is aesthetically pleasing.
  3. Replace your worn-out welcome mat. Beyond curb appeal, it's an easy first impression to make.
  4. Clean your windows.  This one is usually overlooked and make a huge difference in allowing light to filter in, and for photos to look sharp.
  5. Add some greenery. Both inside and outside of the house, consider a facelift that involves plants.  You can do a small garden along the edge of your home, or put a couple of large welcoming planters with a pop of color along a walkway. It's also a game-changer to have fresh flowers or plants in vases throughout the home!

Are there any other "must-do" items that you can think of? Add them in the comment section below!

July 5, 2018

What is "Equity"?

When you speak to a real estate agent about buying a home versus renting, they will often give you a spiel about “building equity.” While that is a good line of thinking--the actual meaning is often lost on first-time buyers.  So let me explain:

Equity is the difference between the market value of your home and the amount you owe on your mortgage.

For example: if you were able to sell your home for $200,000 and you owe $150,000 on the mortgage, then your equity is $50,000. This is very simplified because it doesn’t take into account the actual cost of selling your home, which can be quite substantial.  If it costs you $15,000 to sell that home (real estate commissions and closing costs), your net equity is reduced to $35,000. In short, net equity is the amount you would actually pocket at the end of the sale.

How do you build equity?

For starters, the more money you have for a down payment on a home, the more immediate equity you will be able to build through ownership.  If you buy a home with cash, for instance, you have no mortgage and thus no differential between value and money-owed to a lender. Every penny of equity that comes of owning the home goes back to you fully. The larger your initial down payment, the more your equity builds.

Homeowners can build home equity in a variety of ways, but the three most common are as follows:

Wait

The fair market value of your home can increase because similar houses in your area are now selling for more. You may have bought your home two years ago for $100,000 but if you sold it today it would be worth $120,000 because the market has increased. Your equity in the home has increased by $20,000 due to this increase. In general, housing markets increase in value over time, so the longer you own your home, the more equity you will have, not withstanding a substantial economic downturn that effects home values.

Increase Value

If you make home improvements that correspond to a higher anticipated sales price for the home, you may be increasing your equity as well. For example, you might spend $10,000 on remodeling your kitchen and this increases the market value of the home by $30,000. Now you've increased your equity by $20,000.  Not all home improvements result in an increase in equity, though. Some routine improvements like fixing a leak or replacing a hot water heater will cost you money but may not increase the overall value of your home.

Pay

With every single payment you make on your mortgage, you build equity. Why?  Because each payment chips away at the principal balance you owe on the loan. As the loan balance decreases, your equity increases.  Making extra payments toward the principal increases your equity even more quickly.

Can equity decrease over time?

Yes, but not usually.  If the housing market crashes (like it did 2006-2011), home values will fall, decreasing your equity. You may also experience a drastic decrease in equity if you if you take out a second mortgage or home equity loan without proper foresight.  And there is always the chance that an accident will adversely affect you. If your home burns down or is damaged in a disaster and you don't have enough insurance to pay for your loss, then you will lose equity if you need to repair or rebuild out-of-pocket.

June 28, 2018

Buying a Home with Student Loan Debt

Just 20-30 years ago, the age of first-time home buyers skewed lower than it does today.  With many young adults graduating into an economy with stagnant wages and a lot of competition, want-to-be buyers often now have less work experience, lower relative income levels, and less money saved for down payment than did graduates of an older generation.  Millennials also carry higher levels of federal student loans and debt than ever before.

According to a study by American Student Assistance, 55% of student loan holders said their debt is causing them to put off homeownership, despite historically low mortgage rates and a wide array of low-downpayment mortgages available to first-time buyers.  Many would-be buyers aren't even applying for loans or considering buying a home because they are worried that their debts will make homeownership impossible.

The truth, though, is that homeownership and student debt aren't mutually-exclusive.

What goes into a Pre-Approval?

As a potential home buyer, one’s ability to get approved for a mortgage is based on three main factors:  their down payment amount, their current credit score, and their household income relative to their household debt (debt-to-income or DTI).  The key to being able to maximize their buying strength is making each of these factors as strong as possible.

How do these factors affect you?

You have the ability to control for how aggressively you save toward a down payment, and how strong your credit is by making payments on time, etc.  But a lot of buyers get tripped up by DTI; you can’t control your income, so this piece of the puzzle is often seen as unalterable. Your debt-to-income ratio is a percentage which shows the amount of your monthly income required to repay your debts.  For example, if you earn $2,500/month and had a monthly debt obligation of $1,000, your debt-to-income ratio would be 40%. DTI is heavily influenced by where you live because of the cost of rent, but in general your DTI must be 43% or less in order to get mortgage-approved.  In general, higher student loan debt does negatively impact the DTI, and consequently the buying power of young adults today. The higher the student loans a potential buyer carries, the less home they can afford in general. BUT having loans does not have to be a barrier to entry in the housing market.  Most people have the means to reduce your monthly student loan payments, which can help them with their home loan approval.

How do you reduce your DTI in relation to student loans

There are ways to reduce what you owe on your loans each month to help you qualify for "more home". The first method by which to reduce your monthly student loan obligation is to switch to a graduated repayment plan on your loans.  By doing this, the payment starts low, then rises every two years to meet the rising income of a typical young adult. With lower monthly payments, your debt-to-income ratio is reduced, which can help you qualify for your home loan at a younger age.

Another approach you can take is to request a lengthening of your payback period, known as your "term".  By lengthening your term to 15 years or 20 years, you can reduce the amount that you owe each month, which lowers your DTI. This will increase the long-term interest costs of your student loans, but will lower your monthly obligation and make your home-ownership dreams more of a reality.  This strategy takes some long-term thinking and should be done with careful consideration.

The final way to reduce your monthly student loan obligation is by seeking out debt consolidation where possible. It is likely that your student loans are of different amounts, and at different rates of interest. By consolidating your loans, you can combine your principal balances together; just make sure you find an option at a lower interest rate.

June 21, 2018

A Good Buyer’s Agent Will Give You an Edge

Sure, it can be fun to research home-buying on your own and pop around on popular real estate sites. Using websites to understand general market trends and narrow your search can be an important part of the initial buying process. However, when you take the leap from thinking about buying your first place to starting the process in earnest, the nuanced knowledge and creativity of an experienced buyer’s agent can help you identify and close on the home of your dreams. What most people don't know is that working with a buyer's agent usually costs nothing but it helps you become a successful buyer in four ways:

Stress Relief

Working with a Real Estate agent that focuses on buyers is one of the best things you can do for your mental and emotional health while shopping for a home. The buying process can be long and strenuous, and is replete with emotional highs and lows. If you were to try to learn everything there is to know about real estate in order to buy, you would not be a happy camper. By harnessing the education and experience that your agent has, you can relax a bit more. Trust that your agent will train you where needed, but handle any of the more routine stressors or conflicts behind-the-scenes so you don't have to. A good buyer's agent can also help you set expectations and see potential road-blocks well ahead of time so you are hit with as few surprises as possible. They will also be able to preview homes for you, or attend appointments you may not be able to make, allowing you to focus on your own life with more balance.

Market & Pricing Expertise

You should feel comfortable consulting your agent on ideas for identifying the right neighborhood, type of home, and price range for you. In addition to knowing the pricing and market history for an area, they should know the school ratings and public transit options, among other things. A good agent will also share data on previous home sales to help you make the right decision about what to offer on a home.

Negotiation Intelligence

Possibly the most important step in the buying process is making an offer, and negotiating terms, dates, and price. Understandably, this is what makes most buyers nervous. And for good reason! Most buyers don't know what traditional deposit amounts, timelines, contingencies, and pricing strategies look like. A good buyer's agent is an objective and experienced ally in the negotiating process. They’re trained to present your best case to the selling agent while keeping your best interests in mind, and your information confidential.

Paperwork Mastery

From the offer to purchase to the closing papers, the paperwork on a sale can get overwhelming; and most buyers don't even know what paperwork is necessary when. The average real estate file is between one and three inches thick—with many legally binding documents that can greatly impact your finances or legal claim on a property. With the help of a real estate agent, you can trust that your papers are in order and save yourself hours of combing through documents you don't understand. Today's best agent also harness technology to make paperwork a breeze. Agents using programs like dotloop and Docusign have thought deeply about the buyer experience and want to make sure you spend more time doing things important to you, and less time driving to and from an office to sign papers.

June 14, 2018

Featured Listing: 15 Whipple Ave, Unit 5

Light-Filled Roslindale Condo with Garage Parking & In-Unit Laundry

If you're one of the many buyers looking for a turn-key property in Boston, you have surely seen the lack of inventory.  With this listing returning to market, brought to you exclusively by Krystyn Elek & Chris Masterman of Unlimited Sotheby's International Realty in Newton Centre, at least one new buyer will find that home they have been looking for. Enter this sleek 2-Bed/2-bath penthouse condominium boasting an open and airy footprint with modern finishes. Located on a cul de-sac-street just minutes from Roslindale Village and local transit lines, this unit offers an ideal combination of comfort and convenience. Built in 2006, the space features wood flooring, Nest central HVAC, full-size in-unit laundry, recessed lighting, and generous closet space throughout. The kitchen is thoughtfully finished with stainless steel appliances, gleaming stone counters, and Shaker style wooden cabinetry; it also plays host to an adorable breakfast bar. The association is professionally managed, and the unit also has deeded garage parking, deeded off-street parking, and a sizable storage space. If you think this could be the right fit for you, call Krystyn today at 843-209-5044 or visit:

15whipple.com

Open Houses will be hosted this weekend on Saturday and Sunday from 11:00am to 12:30pm.

June 7, 2018

5 Essential Steps to Screening Tenants

In the city of Boston, and the surrounding suburbs of Brookline, Newton, Cambridge, and Somerville, being a landlord can be an incredibly profitable venture.  Holding onto a property in a city with increasing property values and rent rates means that you have your money in a relatively secure investment, and can pull in cash month-on-month. What's not to love?

Obviously, there is a certain level of responsibility that comes with owning an income property:  you have to make repairs on the property itself, and you must abide by local and federal regulations when it comes to renting your home.  Whether it's a full- time gig for you, or it's your side hustle to earn some extra income, there is a lot to think about and understand if you want this venture to be successful. First and foremost, you need to ensure that you find the best tenants possible. You can do this by following 5 simple rules:

Contact Previous Landlords

One of the quickest and easiest ways for you to know if you have a reliable tenant on your hands is to ask their previous landlords.  Simply ask if they pay rent on time, were respectful of the space, and were easy to work with.  Past experiences usually hold the key to future experiences. This is also helpful because sometimes outstanding tenants don't look great on paper--this might help you in determining what to do about applicants on a financial threshold.

Run a Credit Check

Running a credit check will give you a quick and easy overview of how seriously a renter takes their debts.  You'll want someone who pays rent consistently in full and in a timely manner.  Seeing their patterns of making payments on credit cards and loans will give you good insight into their ability to pay rent on time.  Generally, you want tenants who have a credit score above 700 and have no recent history of delinquency.  Note that past damages can hang on credit reports for a very long time, so ask tenants to explain old red flags--they may have been young or made a silly mistake, so give them a chance to show you they are reliable now (speaking to past landlords is a good way of knowing this).

Verify Income & Employment

The application for renting your property is ultimately filled out by the tenant, who may or may not be a trustworthy person.  Part of knowing whether a tenant is qualified to rent your space and will remain qualified is knowing their financial situation.  Call their employer when time allows, and verify their employment status.  You don't want to rent a $4000 apartment to someone who just lost their job.  You can also request recent pay-stubs to make sure their income matches what they've represented.  Generally, you'll want a tenant whose gross annual pay is 36x the monthly rent.

Request a Copy of Photo ID

Many times, all it takes is something small to deter dishonesty. Requiring a photo ID can be enough to encourage someone interested in fraudulent behavior to move on to another target. It is not a guarantee, but it does make the process more challenging for those with impure motives. This also makes it easier to run credit successfully and quickly as you will have a verified address and full name on hand in case a tenant goes by a nickname or something of that sort.

Meet Tenant in Person

The last thing you want as a landlord is a tenant that is hard to work with. It's an extra step that will go a long way in determining the relationship you'll have with your tenant. Take the time to meet them if possible so you can get a feel for how they communicate, how they act, and if the relationship is likely to be easy-going or tenuous.

May 3, 2018

The Hidden Costs of Buying a Home

Money with title

Buying a home is a big investment, but your purchase price isn’t the only expense you need to prepare for. Understanding the various fees and expenses that go into closing on a property can help you make a well-educated buying decision.  Below, I will tell you a bit more about financial obligations you may have to meet.

Down Payment: While not required for all mortgages, a down payment helps reduce the monthly mortgage payment and may eliminate the need for Private Mortgage Insurance (PMI), which you will be required to carry if your down payment is less than 20%.  A down payment also builds instant equity, which may be a source for low-cost borrowing with a home equity loan or line of credit.  In highly competitive areas like Boston, Brookline, or Newton it's wise to set aside at least a 5% downpayment, and up to 20%.  On a purchase of a $800,000 home, that's between $40,000 and $160,000 of cash on hand! You can get loans between 0 and 5% down, but they will be difficult to get accepted in our market.

Home Inspection: Some lenders require buyers to have a home inspection, but even if that isn't the case for you, having a home inspection is a small investment that is well-worth the cost. The up-front cost may give you an opportunity to negotiate with the seller if the inspection reveals any safety concerns.  If you are offering in a competitive situation you can have an education-only inspection (ask your agent how to do this) just to know what you're getting into. Home inspection costs can vary widely depending on the size of the home, the breadth of the inspection, and the geographic location where you are buying, but it's wise to set aside $1000.

Attorney Fees: If you are buying a home, you'll want to enlist a Real Estate Attorney to help with the process.  Primarily, your attorney will work to protect your deposits on the home by drafting protective language into the purchase and sale.  They will also perform a detailed title search prior to closing and will work to have the seller clear up any deficiencies in title.  In general, real estate attorneys charge a flat fee for service and you can plan to have this cost up to $1800, less if the attorney can also serve as the closing attorney for the lender (this usually drops the fee significantly).

Closing Costs: The chunk of change most buyers don't know about is the collection of fees associated with closing the mortgage loan—and these can add up quickly. Your lender should provide you with an estimate of how much you can expect to pay is closing costs, but plan for 3% to 6% of the home’s purchase price.

  • Processing Fees cover the lender's costs to prepare the loan
  • An Appraisal Fee allows your lender to accurately determine the value of the home to ensure you’re not paying more than the house is worth.
  • The first premium on your Private Mortgage Insurance (PMI), may need to be paid during the closing process.
  • Be prepared to pre-pay an entire year’s worth of homeowners insurance at closing

Other costs lumped into the closing costs could include survey fees (to determine the property boundaries), title insurance and recording charges (the cost for state and local governments to record your deed, mortgage and loan documents).

**All prices outlined here in are estimates based on past experiences. Buyers should consult inspectors, lenders, and attorneys for specific pricing and fees.

April 26, 2018

6 Facts You May Not Know about Brookline

There are certain things everyone knows and loves about Brookline--the amazing green spaces and fantastic schools to name a couple--but even Brookline natives residents may be surprised to learn these pieces of trivia.

  1. Brookline was once known as the hamlet of ‘Muddy River’ and was considered part of Boston until the Town of Brookline was independently incorporated in 1705.
  2. The Longyear Museum features exhibits on the life of Mary Baker Eddy, the founder of Christian Science
  3. Brookline has been the home to a number of famed individuals, including President John F. Kennedy, Barbara Walters, Conan O’Brien, and Robert Kraft.
  4. Brookline is the “sister city” to Quezalguaque, Nicaragua
  5. The public school system is a true melting pot; approximately 30% of students come from homes where English is not the first language.
  6. The city is home to Newbury College, New England Institute of Art, Pine Manor College and parts of Boston University.

Now you know Brookline!

April 19, 2018

Overseas Real Estate Investors: Is Boston a Good Option?

It is well known in communities both inside and outside of the United States that Boston has quickly become a hub of international investment.  Several of the city’s luxury condominium buildings report that almost one quarter of recent buyers have been international clients, many of them paying in cash.  

 

The reason for Boston’s strength in the local market is twofold:  firstly, the city enjoys a steady stream of newcomers because of the large population of students and physicians. Boston and Cambridge host a whopping 9 medical centers and hospitals between them, and that number grows to 24 when you consider all of the Greater Boston Metropolitan area.  Higher Education also plays a big role in the constant demand for housing: Boston is the location for 35 colleges, universities, and community colleges — there are about 152,000 students at Boston's institutions of higher learning, many of whom stay in the city over the summer months for internships and work opportunities.

 

Because of this consistent influx of individuals looking for housing, both the buying and rental markets have remained strong in Boston--even in times of economic downturn.  This creates a compression of inventory, and a steady increase in pricing. While Boston usually ranks as the 3-5th most expensive city in the United States, it still remains reasonably-priced on the global scale, so it makes for a great option for foreign investors to either park cash, or hold property as an income-generating tool.  

 

The city itself if comprised of 23 different neighborhoods, and the ones central to the city remain strong investment options--many foreign buyers favor Back Bay, Beacon Hill, and the Financial District as areas to hold cash for longer periods of time.  These neighborhoods are favorites of young, working professionals to rent in, and more established wealthy residents for permanent residence. The citywide median condo price in 2016 was $574,900, with Back Bay holding the highest median price of $1,050,000 and Mattapan holding the lowest at $185,000.  Brighton and Allston very good options for foreign buyers looking to hold a condo as a rental unit; these neighborhoods are heavily populated by students and tend to be less expensive than the neighborhoods named above. The median sales price for a condo in Brighton in 2016 was $408,750, and in Allston it was $429,000.  Investments in these areas also tend to require less attention as they will likely be rented by students. If you would like a nice balance between these areas, Fenway/Kenmore is a great option. Condominiums here tend to be accessible to both professional and student communities, and are closer into the “action” of the city. The median sales price for a condo here was $491,500.  Investors looking for good long-term growth opportunities are wise to consider neighborhoods on the outskirts of town, like East Boston, where the median condominium sales price in 2016 was $415,000. Areas outside of Boston proper, like Watertown, where the median price was $460,000 in 2016 is also an amazing opportunity for new buyers. This town is more commutable to Back Bay than many neighborhoods in Boston, and you get a lot more space for the money.

 

The most important thing to consider when making offers from overseas is that money has become considerably more difficult to move into the United States, especially from China. If you are considering buying in Boston, it is best to plan in advance to move money.  The market moves quickly and it is competitive; sellers like closings to happen within 35 days, so you will want to make sure that is financially feasible.

 

Boston has always been a good investment option, and it will likely remain as such for many years to come. If you want to start your overseas search today, reach out to us or start your search at krystynsellshomes.com/buy

April 12, 2018

5 Pieces of Research to Do when Buying a Home

It’s true that when you wander into an Open House or a showing that the listing agent on the sale of the home has a legal obligation to operate with transparency and truthfulness when speaking about the condition of the home.  Under Massachusetts-specific regulations, agents are required to disclose anything that would influence a buyer’s decision on whether or not to purchase the property.

 

While that sounds nice, there are a few small hitches--the first being, what is that standard?  An issue that might influence one buyer may be irrelevant to another. Obviously, big issues with the heating system, roof, foundation, and other major systems are clear instances needing disclosure.  But what about something like the age of the water tank? Agents are required to answer direct questions truthfully, and are expected to be up-front with major disclosures even when they are not asked directly...but what satisfies that criteria? And in an area like Greater Boston where the homes are often more than 100 years old, and agent could spend all week listing off little defects in a home. The second issue is that disclosure hinges on an agent’s awareness of a problem. Agents cannot disclose something they do not know about, and sellers have less incentive to be forthcoming about potential issues unless the agent has them fill out a “seller’s statement of condition”.

 

So, with that being said--you need to enter the market as an educated buyer, and you definitely need to enter the purchase process with an idea of of the due diligence you need to perform.  Keep in mind that any decent agent will take these steps, but if you end up represented by a sub-par agent you need to know what to look for!

 

(You could avoid all of the hassle and just work with me, because I always perform due diligence for my buyers.)

 

BUT, here’s what you need to know:

 

  1. Disclosures, Exclusions, & Representations: this one is pretty straightforward. Basically, your agent should be looking at everything that is put forth as fact in the MLS listing of a property, and cross-reference it with both the MLS Public Record AND the Assessor’s database.  In this, they are looking to make sure the Number of Rooms, Number of Bedrooms, Number of Baths, Square Footage, Lot Size, and Taxes listed are correct. They should also be making you aware of any disclosures or exclusions noted i.e. the seller does not want to leave the Washer & Dryer for the buyer, or they have a history of water damage in the basement.

  2. Lead Paint Presence:  this is an easy one that most agents miss.  In the state of MA, a seller has to disclose any history or presence of lead paint at their property.  Often, you will see the Lead Status listed as “Unknown” but there actually is a history of lead that either the seller never knew about.  There is a website your agent can go onto to see if there are, indeed, no records pertaining to lead paint at a home.

  3. Inspection:  Unfortunately with how competitive the market is in Brookline, Newton, and Boston, buyers often have to forego an inspection to get an offer accepted. But if you can, always do an inspection! There’s no telling what kind of unseen or unknown defects can be lurking in an older (or newer) home.  If you can’t inspect between your offer and P&S, see if you can do an “informational only” inspection after P&S. Even better, see if your agent can pair you with an inspector who will do a “pre-offer consultation” on the home. Knowledge is power--and no one likes an expensive surprise.

  4. Fire Department Premise Search:  the fire department in your town keeps records pertaining to all sorts of things, but the one you’ll want to check into is the oil tank history.  You are looking for records of any underground oil tanks on the property--and if one exists, you’ll want to make sure there’s a record of its removal as well.

  5. Building Permit Jacket File:  I always encourage buyers to go to the building department and fire department prior to signing a P&S agreement to review historical documents and if necessary, have a conversation with the town inspectors to answer any questions. The main goal of this sort of due diligence is to check and make sure that all permits have been filed properly and there are no outstanding issues with the property or open permits. A good agent should jump-start this process for you and help you make sense of the documents (because a jacket file can get quite cumbersome).

The caveat to this sort of research is that there can be inaccuracies, missing documents, etc. with the town departments, or you or your agent may just miss something despite best efforts. Regardless, it is important to gather as much information as possible about a property you intend to purchase; your Realtor should be able to help you with this, but if not, you’re now educated to do some of it on your own!