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Home-buying chat transcript

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April 11, 2008

Bill Mullen, an attorney, broker, and licensed real estate instructor chatted Friday about the home-buying process. Bill is also general counsel for the Greater Boston Association of Realtors.

Bill Mullen: Thanks and Good Day to all our guests

jesseca80: Hi ! I'm a first time home buyer and I'm meeting with an agent tonight. What questions should I be asking?

Bill Mullen: Good Question - You should always do some homework before you hire an agent

Bill Mullen: Ask about the agent's experience, the current market conditions and how the agent can help you through the home buying process

Bill Mullen: as well as what would be the plan to the home search to fit your wants, needs and particular lifestyle

remorse: I own a condo and I'm always thinking about what I need to do to it before I sell it, probably in 5-7 years. I'm curious: In a bad market like this one, which upgrades should owners make to compete for buyers' attention?

Bill Mullen: The old adage is the you fix up kitchens and bathrooms first

Bill Mullen: According to Remodeling Magazine's "Cost vs. Value Report" for 2007, a minor kitchen remodeling proect recoups 87% of the cost at resale.

Bill Mullen: Other projects that return 80% or more include an attic bedroom remodel, deck addition, replacement of wood windows, replacement of siding and major kitchen renovations.

Billy: What is happening with prices around Boston? Despite all the bad news I'm not seeing any reduction in prices in many towns.

Bill Mullen: You are correct that in the Greater Boston area, prices have remained stable over the past year. The median price of single family homes was unchanged

Bill Mullen: That being said, RE markets are local and prices have adjusted somewhat in a number of communities. To view price changes over the past year in Greater Boston, visist our website: gbar.org and click on the RE rewind Report

Meri: I'm a first-time home buyer and my rental lease ends the end of October... When would you say I should kick the home search into high gear?

Bill Mullen: I would start to do your homework now, get an idea of what you can affford by talking to a lender, and research the areas you desire to reside in.

Bill Mullen: I would also talk to your landlord about the possibilty of moving earlier if you found the house of your dreams.

tree: I am a married student going to attend professional school in Boston, I would love to live in a house that is a quick commute to the Back Bay area, is it risky buying a house in today's market or should I rent? (Keep in mind that I would be selling in 4 years time)

Bill Mullen: Housing is a sound long term investment and decisions should be based on lifestyle and your needs

Bill Mullen: You need to carefully analyze your situation, but the rule of thumb in a changing market is that you want to remain in the house for at least 3-5 years. Renting it after that time may also be an option you should consider.

Bill Mullen: Data shows that the personal net wealth of renters is $4000 whereas home owners have an average net wealth of $184,000.

Bill Mullen: And home ownership provides additional tax advantages, and a sense of security and independance that renting does not.

Tom: As a 1st time home buyer, I am going to an OH on Sunday to view a home I am VERY interested in...i don't have a buyers agent and was considering using Redfin - but as a new buyer not familar with the process - I am uncertain if I should contact an agent before the OH this w/e.

Bill Mullen: My opinion is to always seek professional assintance, a REALTOR, in the home buying process. I would start interviewing agents earlier than later if you are a motivated buyer. See above for questions to ask.

cshen: Do I need to have a buying agent if I find the target home by myself?

Bill Mullen: The home buying process is substantially more complex than just identifying the home you desire. I always recommend using a REALTOR buyer agent to protect your interests and represent you exclusively.

guest First time buyer financing question. What would you advise, cash out all our stocks to make a 20% down and not have PMI or put 10% down, pay PMI and have that bit of cushion? What would lenders view more favorably in today's environment. Husband and I have middle FICO scores 700 and 747.

Bill Mullen: On Monday John O'Hara will be leading a disucssion. He is branch manager for Sherwood Mortgage who is better able to answer your question.

bri: If I finish off a room in the basement, is it considered more sq. footage or just added space?

Bill Mullen: If it is considered living area, buyers may consider that as additional square footage. However, the town you're living in may also consider additional living area for tax and assesment purposes. However, local town ordinances and state regulations should be researched before moving forward.

enginekeg: Is now a good time to sell WITHOUT using a realtor

Bill Mullen: In my opinion I'd say no. The latest home buyer and seller profile report shows that homes sold with the assistance of a real estate professional sold for 15.5 percent more than homes sold by its owner. Today's market requires effective strategies and guidance to market the property for its maximum exposure.

vern: Would you suggest investing in single or multi family homes right now?

Bill Mullen: Any investment in real estate at this time will provide a healthy return on your investment over the long term. However, a single-family or multi-family purchase needs to be geared toward your housing needs and personal lifestyle choices.

readytobuy: Do you have a sense if sellers are accurately pricing their homes too high still or are they more realistic with the current market? Also, are there some $ ranges in which home owners are better/worse at pricing their homes?

Bill Mullen: The data clearly shows that prices have been adjusted to reflect the current market conditions over the last 18-24 months. In my personal observation, that sellers recognize that today's market is not the boom market of 2004-05. In addition to being more realistic in their pricing, many have made improvements to their properties so that many are in much better condition today in order to attract the appropriate buyer interest.

SJM: When determining an offer, is price per sq foot a good rule of thumb?

Bill Mullen: Price per square foot is just one of the many factors that you want to consider when making an offer on a property. Neighborhoods, schools, area, assessed value, access to shopping, highways, and other services should also be part of your evaluation process.

Genesis: If I decide not to use a realtor to purchase a home...can I use the 2% given to them for my closing costs?

Bill Mullen: A real estate listing contract is between the seller and the listing agent. Buyers formulate their offer based on what they believe the value of the property to be, and they are willing to pay for it. Any commissions paid should not factor into your decision to make an offer or closing costs. Please be advised there is no standard commission amount, and all commissions are negotiable.

IrishFan: I closed on my first condo in the fall. I'm still curious whether I needed to buy that title insurance through my attorney. What do you think?

Bill Mullen: Whether or not to purchase title insurance is an individual decision, however if a title issue ever arose, most insurance title policies would protect your equity in the property, and defense costs.

Larry: Given that even a buyer's "agent" is paid through the commission on the sale, if you find a home yourself, isn't it sufficient to hire a real estate attorney who is paid to represent your interests, with no apparent conflict of interest?

Bill Mullen: You cannot make the assumption that the buyers agent will be paid through the commission. That said, there is a lot more to the buying process "finding a house youself" such as home inspection, mortage contingency, purchase and sale agreement, mortage loan conditions and preparing for the closing.

Bill Mullen: Each professional in the home buying process oversees and watches out for your best interest in their particular area of expertise. As such, a buyers agent does one job and an attorney does another while your loan officer does another, and I'd recommend you seek help in each of these areas independently.

CinBoston: When can you count a space a bedroom, does it depend on the town? Does it need a closet, 2 egresses if it?s on the 3rd floor, heat, etc? The space in question is in the attic (3rd floor of a 2-family house) and our agent said it probably wouldn't meet code for a BR since there is only one window and the stairs leading up to it are steep and has low clearance - about 5'8'' high, meaning I have to lower my head. The sellers in the original listing counted this as a 3rd BR, but now that we?ve agreed to purchase the condo, they refer to this as a playroom in the finalized floor plan. Due to 1st time jitters and other factors, we applied for mortgages at two different local banks and subsequently got two different appraisals. Both appraisals counted this space as a 3rd BR, but appraisal #1 didn't count the space in the total sq. footage of the condo due to lack of heat. I'm trying to clear this up so when it comes time to sell in 5-7 years, we'll know.

Bill Mullen: Dear CinBoston, you've asked a series of intriguing questions which each needs to be responded individually. The best approach for you to contact a local REALTOR and run this series of questions by him or her. And yes, communities do have different standards on how they view real property in their community.

Bostondotcom Hi chatters -- we only have Bill for a few more minutes, so get your last questions in.

CopperTunes: Hi Bill. Do you recommend that buyers have an attorney involved when going through real estate transactions? I understand it can be a good idea, but as an attorney, how necessary do you feel it is?

Bill Mullen: I firmly believe that buyers should seek the advice of counsel, a REALTOR, a home inspector, a mortage lender, and any other professional that is required to assist you in the home buying process. The transaction today is far more complex than in past years for most to proceed without effective expertise in these areas.

Recent_Home_Buyer: Hi There, my husband and I bought a home in Wellesley MA in August 2007. Now, we are left feeling we should have waited. Do you have figures around percentage decline in specific areas around Boston?

Bill Mullen: In some communities prices are up and in others prices are down. Pricing will also vary by neighborhood within communities. One source to check for pricing changes over the past year is our association's Real Estate Rewind report available on gbar.org. One can also consult a local REALTOR.

mike: Should you consult an attorney prior to signing an offer sheet?

Bill Mullen: Getting the attorney involved in the process as early as possible is always to your advantage. Please understand that an offer is a legally binding contract, which may result in damages if you breach it.

buyingpower: what is the average % between single home asking price and selling price (i.e. 5% less?)

Bill Mullen: There is a difference between asking price and sales price in most instances, but it is tracked by listing services (MLS) by each individual community, and by price range and type of property. In order to get that specific information you should contact a REALTOR and ask their specific opinion for that area.

Potential_Buyer: What information is the seller required to dislcose when selling a home?

Bill Mullen: The Commonwealth of Massachusetts is not a mandatory disclosure state, that said, I always believe that sellers giving full disclosure of the condition of their property has an advantage in the selling process. However, many attorneys may have a different opinion than mine in this matter. But Massachusetts does require disclosure of the existence of lead paint on any house built prior to 1978. Again, you can consult a specific REALTOR in your area to fully explain the lead paint laws.

Bill Mullen: Further, you may find helpful the fact that there is a property condition disclosure statement, which can be used by sellers to provide an overview of the property condition for potential buyers. But it should be reviewed carefully and verified by your home inspector.

Bostondotcom That's all the time we have. Thanks to everyone who wrote in questions … there were many that Bill couldn't get to in time, but thanks for sending them in.

Bostondotcom And thanks, Bill, for doing the chat today.

Bostondotcom If you’re interested in a free workshop for buyers and sellers tomorrow in Norwood, check out the link on the right.

Bill Mullen: Thank you for taking the time to be with us today. Best of luck in your home search - I look forward to meeting many of you that will attend the home buyer and seller workshops tomorrow morning in Norwood and would be happy to answer some of the questions we were unable to get to today.

Bostondotcom And be sure to check out The Big Move on Sunday in the Globe and online at Boston.com.

Bostondotcom Also check back Monday at 1 p.m.for a chat with John O'Hara, who works in residential lending at Sherwood Mortgage Group. John will chat about navigating the mortgage maze.

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