Boston condo buyers: How to win in a competitive market

Brace yourself for another competitive Boston condos for sale market in 2022.

Home sales are expected to grow 6.6% in 2022, a 16-year high, according to Realtor.com. The typical winter lull isn’t even necessarily happening. Home prices actually accelerated from November to December, said Danielle Hale, chief economist at Realtor.com.

While Realtor.com is forecasting prices will rise 2.9%, the pace is slower than last year. Inventory will remain limited, but is expected to rebound from 2021 lows.

The bottom line is that Boston condo buyers need to be prepared before they start shopping around.

You’re going to have to act quickly when you find a Back Bay home or Boston Seaport condo when you want to purchase.

Here’s what you can do now to put yourself in the best position to find your new home this year.

Boston Condo for Sale Buyers: Check Your Credit Report

Your credit score is an important factor in getting a mortgage to purchase a Boston condominium, and the type of loan you’ll get. It also impacts the interest rate you’ll receive and potentially how much money you need for a down payment.

By checking your credit score ahead of time, you’ll know whether you’ll need to make any changes to try to increase that number.

Also, get a copy of your credit report to check for any errors or unpaid bills, which may also affect your credit score. Consumers can get their credit report up to once a week for free from the nation’s three largest credit reporting firms

Boston Condo Buyers: Manage Your Debt

Lenders will also look at your debt-to-income ratio, which is the amount of debt relative to your income, when determining your loan. If you have debt, try to pay it down before you start house hunting, suggests Jessica Lautz, vice president of demographics and behavioral insights at the National Association of Realtors.

Consider using any year-end bonus money or cash gifts to pay it off. If you don’t have debt, put that cash into savings to help with your down payment.

Boston Condo Buyers: Contact a Mortgage Lender

Reach out to a lender as soon as possible, at least to ask questions and find out what they need from you in order to preapprove a mortgage, said Kevin Parker, vice president of field mortgage at Navy Federal Credit Union.

A mortgage application form with keys to new house

tattywelshie | E+ | Getty Images

You can use online calculators to figure out what you can afford and whether it makes sense to buy or rent. You’ll also want to know how much money you’ll need to bring to closing, since there are fees — known as closing costs — that are due in addition to your down payment.

You can also get preapproved for a mortgage before you start Boston downtown condo hunting, since you’ll need it before you submit a contract for a condominium.

Boston Condos for Sale and the Bottom Line

Doing your research beforehand can help you to buy a Boston condo in 2022

Boston condos
Boston condos for sale 2022

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Updated: Boston Real Estate 2022

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One thing is for certain if you expect to write a competitive offer in the Boston condo market: Obtain a preapproval for a loan before you start hitting the Sunday Open House Boston condo market

Prospective Boston condo buyers would traditionally chat with a lender rep, get an idea as to what they could afford based on basic financial details and then submit all the financials after getting into contract.

However, that won’t fly in the  Boston condo market these days. Limited inventory and high-buyer demand translate into routinely competitive, multiple-offer situations that require short (or no) loan contingency timeframes. Winning offers rarely happen for buyers who need a loan contingency timeframe that accommodates underwriting review of their financials after they go into contract.

So if you’re a serious Boston condo buyer, suck it up and get your financials together for underwriting approval before you start making appointments with your agent to see properties. Here’s a list of the docs you’ll most likely need to pull together:

1. Two most recent paystubs

2. W-2s for last two years

3. Two most recent statements for all checking, savings, CD, money market and/or securities brokerage accounts

4. Most recent statement for all retirement accounts (IRAs, SEP-IRAs, 401ks)

5. Most recent statement of stock options, employee stock option purchase plans, etc. if part of the down payment or closing costs of a purchase

6. 1040s for last two years (federal tax returns, all pages)

7. Mortgage, real estate tax and insurance premium statements for all properties currently owned

8. Leases on all rental properties you may own

9. Divorce decree and settlement statement, if applicable

10. Name, address and phone number for your landlord covering past 24 months

11. Twelve most recent cancelled rent payment checks or bank statements if your landlord is a private party

12. Copy of your state-issued driver’s license or passport and your date of birth

13. Copy of current mortgage statements on all outstanding mortgages.

Your lender will submit your docs to underwriting, leaving your future purchase contract subject only to property-related details. You’ll then know how competitive you can be when it comes to the loan contingency.

If you’d like to talk more about the process or need local lender recommendations, give me a shout at 617-595-3712 and I can point you in the right direction.

Contact me to set up an appointment to start your Boston condo buying process.

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