Sudbury Real Estate SoundBites

Agency, Smagency!

2008-05-09T07:28:00.000-07:00

When I first meet buyers I am obligated by state real estate licensing law to present a Mandatory Agency Disclosure. My spiel usually goes something like this:

“Before I can show you this property, I am required to present you with an agency disclosure. At this point I don’t represent anyone, I am a facilitator. I don’t represent the seller, but I don’t represent you either. I’m a neutral party. If at some point in our relationship you would like representation, I could work as your buyer’s agent.”

Around this point I usually get one of two responses; either the buyers don’t want to sign anything or they don’t want any commitments and happily check off “facilitator”. But as we proceed through the property they will inevitably ask me one of the following questions:

Why are the sellers moving?
How does the price of this house compare to similar properties?
Will the sellers negotiate?
Can I add on to the property?
Why hasn’t this house sold?

I then have to explain that these are the type of questions that a buyer’s agent can answer and they immediately think I’m trying to sell them something. You see entering into a buyer agency contract requires commitment on the part of both parties and most buyers want my full commitment, but aren’t ready to commit to me.

In Massachusetts buyers can work with one of three types of agents:

Facilitators are just as I described before, neutral. They show properties and serve as go betweens. If a buyer wants to submit an offer with a facilitator, they must make all decisions on their own, without the full knowledge and expertise of the agent. As a facilitator, I cannot give an opinion about the value of the property, nor can I share information I have about the financial motivation of the sellers. Conversely, I cannot share information I have about the buyers with the sellers or the seller’s agent.

Seller’s agents (and Sub-Agents) work for the seller. They are usually the listing agent. Buyers may submit an offer with the seller’s agent, but why would they want to? Any information that a buyer shares with a seller’s agent (intentionally or accidentally) must be shared with the sellers if it’s relevant. For example, as a seller’s agent, if a buyer tells me that he loves the house and is willing to spend up to $525,000, but wants to start the negotiations at $500,000, I have to share this information with the sellers. In this situation the seller is obviously going to hold out until the negotiations reach $525,000.

Buyer’s agents work for the buyer. Just like a seller’s agent negotiates and works on the seller’s behalf, buyer’s agents work and negotiate on the buyer’s behalf. As a buyer’s agent I can provide my buyers with a market analysis, research building restrictions, provide the names of home inspectors and contractors, etc.

Buyer agency sounds great on the surface, where buyers lose interest is with the contract. Most agents will only work as a buyer’s agent with a contract. This contract will typically outline the agent’s responsibilities AND bind the buyer to the agent by outlining their responsibilities, including the commission due the agent. I always stress that in 99% of all transactions, the buyer’s agent fee is paid by the seller. In my market, all fees paid to cooperating agents by the listing agency are disclosed on MLS (multiple listing service). If a contract states that a fee of at least 2.5% of the sale price is due the buyer’s agent, I will know quickly if the commission for a particular property will not cover my fee and we can discuss and potentially negotiate the fee with the seller. The most common case of the fee not being covered will occur when a buyer is interested in buying a property directly from sellers, or a For Sale by Owner. Even in this situation, the buyer’s agent can negotiate the fee with the sellers and most often they will gladly pay a small commission to sell their house.

I always encourage buyers to work with a buyer’s agent – even as a seller's agent when I stand to lose large amounts of money by making the suggestion. Why would you not want someone working on your behalf when you're making one of the most expensive purchases of your life? Buyer agency is not a scam, it’s a benefit to anyone wishing to buy property. The key is to open up a dialogue with your agent and gain a full understanding of how it benefits you as a buyer.

It’s not easy going green…. Or is it?

2007-12-06T06:34:00.000-08:00

If you’re like me, you’re constantly trying to reduce your carbon footprint and dependence on oil and other non- renewable energy sources. I drive a hybrid, am slowing converting all my incandescent light bulbs to CFL bulbs, recycle as much as possible and use water bottles instead of buying bottled water. Needless to say these are small steps and I often wonder if I could be doing more – much more.

As a realtor I tour homes every week in which the builder or homeowner has spared no expensive to upgrade the kitchen and baths, finish the basement, add decorative moldings, plant expensive landscaping, install automatic sprinkler systems, etc. But rarely do I see a home with an alternative, eco friendly heating and cooling system.

Here in Massachusetts about half of all homes are heated by oil. According to the National Energy Assistance Directors' Association costs for heating a home by oil this winter are expected to increase by 47.3% from last winter. Projected increases for natural gas and electricity are less shocking, 9.2% and 8.6% respectively. Given these high costs you would think that more consumers would be going green and turning to alternative sources of energy, such as geothermal or solar, for home heating and cooling. Apart from the very progressive developer or builder, that’s just not the case from what I see in my day to day adventures in real estate.

Many people are under the impression that 1) eco friendly systems for heating and cooling are too expensive install and/or 2) not possible without the perfect climatic conditions. These systems can be more expensive, but as the technology improves the price will and has decreased. There is also the additional offset of long term savings on heating and cooling costs. In regards to the second issue – geothermal and solar systems can be installed almost anywhere. Germany, not exactly the sunniest of locations, uses more solar energy than any other country in the world. Even in New England the ground is sufficiently warm enough to produce geothermal heat. Case in point – Monarch Lofts in Lawrence is installing a geothermal system to heat and cool 202 residential condo units.

Granted going green does often increase costs, at least in the short term, but should home heating costs continue to escalate, I’m sure consumers will begin to demand homes with alternative heating sources and other eco conscious features. Recent surveys have shown that buyers are willing to pay extra for a new home with eco friendly features.

Of course in the interim there are options for those of us wanting to do our part for the environment, but unable to build a new home.

Remodeling? Incorporate some green or renewable materials such as bamboo flooring, low toxic finishes, low flow toilets and showers, countertops made from recycled glass, etc. For inspiration and materials check out Ecohaus.
Install programmable thermostats, compact fluorescent light bulbs (CFL), and solar or on-demand water heaters.
Pay attention to the Energy Star ratings and buy energy efficient appliances.
Install energy efficient windows and insulation.

By doing what we can now and demanding alternatives in the near future, perhaps we can make a difference in preserving the planet for our children and grandchildren.

New Inventory Needed!!!!

2007-10-31T09:00:00.000-07:00

During this period of projected gloom and doom, I’m finding a serious lack of inventory in some price ranges. In the last couple weeks the phones have been ringing, but when it comes down to finding the “right” house, there’s not much out there to look at. This is especially true in the $800,000 to $1 million price range. In this price range one will typically find homeowners already living in Sudbury looking to trade up, but this can’t happen until the “right” house comes along. The key word is “right”. This means a house that is well priced and a decent value for the money. Maybe it’s got the square footage, the type of neighborhood and/or the upgrades that a buyer finds desirable. Sometimes the “right” house has all these things, but homes in this price range are lacking.

Currently there are 19 properties active on MLS between $800,000 and $1 million in Sudbury. Of those properties, 3 already have accepted offers and 2 are located in an adult community (for residents 55 years of age and older). So realistically there are only 14 properties available. This number shrinks dramatically for families searching for homes within specific school boundaries!

Inventory is low in other price ranges too. This is especially true when looking at newer inventory. Much of what is available has been on the market for more than 3 months and has already been viewed by the qualified buyers actively seeking a new home.

So if you’ve been thinking about selling, but are scared by what you’re hearing on the news, call me up. I may already have someone seriously looking for a property just like yours….

Should you buy a house now? Response to Jim Cramer on TODAY

2007-10-18T17:31:00.000-07:00

Recently Jim Cramer of “Mad Money” and “The Street” came out on the TODAY show and said that “no one should buy a house now” given recent changes in the real estate market. In response, Charles McMillan, National Association of Realtors (NAR) President-elect, went head-to-head with Cramer on a subsequent TODAY show segment. Needless to say, given Cramer’s showmanship – that is what he’s best known for – made McMillan look weak in contrast. But that is not to say that McMillan did not have several good points, no matter how blandly they were communicated.

First, let’s start off by saying that homeownership is the primary goal for most consumers looking to purchase real estate. Jim Cramer seems to be under the impression that most people looking to buy real estate are doing so for investment purposes – looking to make a buck down the line. But there are still potential buyers out there looking to buy their first home or a home to better fit their needs. He cannot possibly think that first time homebuyers should not buy a home now?! Does he truly believe that one is better off renting than buying a home in a depreciating market? I think even the real estate novice can see the benefit in buying a home and building equity, even without appreciation.

Second, while it is true that the mortgage industry is in a state of transition, mortgages are still available for qualified buyers. Jim Cramer said that “nobody can come up with the down payments” now needed for a mortgage. Is he serious? Are we in such a bad economic state that nobody has money in the bank to buy a house? Buyers can still buy with 5% down and in some cases less. The key is to work with an experienced mortgage professional. We can all agree that gone are the days when banks will give money to anyone with a pulse willing to buy a house, but mortgages are available and the rates are relatively low. I think we can all remember mortgage rates in the double digits…..

Finally, the conditions in the real estate market are regional and, many times, price range specific. For example, here in Sudbury the higher end ($1 million +) has been doing very well, while the lower end (under $600,000) seems to be struggling.

In conclusion, the safest bet is to consider real estate a long term investment. If you’re considering buying real estate in order to make money in the short term, i.e., the next two or three years, I would agree with Jim Cramer, don’t buy now. There are no guarantees in real estate. We cannot predict what will happen next year or three years from now, but in general, over the long term – 10 or more years (I know this feels like an eternity in this age of instant gratification) – real estate is a great investment.

Now is the time to find a moderately priced home in Sudbury!

2007-06-11T08:47:00.000-07:00

In my daily conversations with friends and family, I often hear that Sudbury is too expensive for most first time homebuyers or those looking for a moderately price property. They are often shocked to learn that Sudbury currently has 38 homes on the market for less than $500,000! Inventory in the lower end of the market is high and NOW is the time to find a home in this price range.

These properties may not be a buyer’s dream home – most are smaller houses, are typically not colonials, or may require significant updates – but many of the properties are wonderful homes with great potential. My advice to buyers looking for a moderately priced home? If you can’t find it now, maybe you need to re-evaluate your expectations….. Finding a 3000 sq. foot, 4 bedroom, 2 ½ bath colonial complete with a granite kitchen and an acre lot on a side street for less than $500,000 in Sudbury is almost an impossibility, even if the real estate “bubble” bursts.

Question: Why should I buy a house now when home prices may drop in the future?

2007-05-05T14:12:00.000-07:00

This is a great question. The media have generated so many stories about the “declining” real estate market that some consumers are concerned about buying real estate. Despite what you’ve read in the newspaper or heard on the national news, there are many reasons to buy a house now rather than later.

Who knows what the future holds? No one can predict with certainty whether prices will fall, remain steady, or rise. In many markets, the inventory is up with properties on the market for longer periods of time, but the prices are still not decreasing to the degree predicted by some analysts.
When you buy a home you get to build ownership in a property. If you’re paying rent, all that money goes into someone else’s pocket, instead of equity in a property you own.
Interest rates are relatively low right now – you may not want to risk a rise in interest rates. Did you know that for every point the interest rate increases, you have to buy 9% less house to keep your payment the same? For example, if you were to borrow $600,000* at 6.25%, your monthly payment would be $3694. If you borrow at 7.25% your payment would increase to $4093. At 7.25% you would have to purchase a house for $58,500 less than at 6.25%. Do you want to settle for a cheaper house? Or the house you really want?
With a professional real estate agent who understands then negotiation process, you can get great deals – perhaps significantly below the asking price. This is especially true when your offer is the only one on the table.

So don’t wait for the real estate bubble to burst – that time may have already passed. If you’ve been thinking about buying, NOW may be the right time.

*For a $750,000 priced home with 20% down.

Spring Market Update

2007-05-01T10:46:00.000-07:00

The spring market is well underway. NOW is the time to get your house on the market if you’ve been thinking about selling your home.

After a quiet spring market in 2006, the 2007 market is showing improvement in terms of both the number of properties sold and pending sales. Between January 1st and April 30th in Sudbury 87 single family properties went under agreement (UAG) and 59 homes sold*. During the same period in 2006, only 59 single family properties went under agreement and 37 sold. This is a 43% increase in UAGs and a 59% increase in the number of properties sold! Most certainly the signs of an improving market.

Inventory levels are also down since one year ago. Today approximately 135 single family homes are on the market, down 16% from 160 on May 1, 2006. This means less competition for sellers and, coupled with the increase in sales, a more positive future market outlook.

*Data Source: MLS Property Information Network, Inc.