In this Boston Real Estate Blog post we’ll discuss the best methods on both submitting the best Offer and on the flip side how to select the best Boston condo for sale best offer.
Let’s start with submitting the offer.
There are steps you need to take even before you start your downtown Boston condo search is to find out how much home you can afford.
First, you’ll need a lender’s pre-approval for a mortgage to know the price range you can afford on a Beacon Hill condo or highrise condominium. A pre-approval letter from a lender will let you know how much a bank will actually lend you, and a best practice for any homebuyer who wants a seller to take them seriously.
Second, take some time to understand the downtown Boston real estate market. You don’t want to get drawn into a bidding war if you can avoid it. When you know the price range that homes are selling for, you’ll be able to dial in your offer when the right house hits the market. With this information in hand, you’ll be set to start looking for your dream home, and a real estate agent’s expertise can be very insightful at this point.
There is as much art as there is math in putting together an offer on a Boston home. The seller has three possible responses to your offer: accept it, counter it, or reject it outright. When the seller accepts or rejects your offer, you have a final answer and can move on to the next step by either proceeding with the purchase of the home or moving on to look at other houses listed for sale. However, when the seller makes a counteroffer, this is when a negotiation between you and the home seller takes place.
If you are making Boston real estate offers you or your broker should put together a very specific offer letter.
An offer letter should include a few specific items regarding how you’re financing the home and the expected timeframe in which you hope to close. Your offer letter should include:
- your down payment amount
- the amount of earnest money you’re putting down on the condominium,
- a copy of your pre-approval letter from your lender
- it should also show a breakdown of the closing costs and who is responsible for paying each one
- and the offer’s expiration date
You may also have contingencies on your offer that you need to specify in the offer letter as well. Contingencies give you a way to back out of your offer if certain conditions are not met. It should come as no surprise that sellers prefer offers without contingencies, so use them sparingly, but include some necessary ones to protect yourself.
- Appraisal: The lender’s appraiser must agree that the house’s value is equal to or greater than the sales price. Lenders can refuse to lend if the property appraises for less than the loan amount.
- Home inspection: A home inspection will provide a report about the condition and safety of the home at that point in time, plus any repairs that should be made. Should that report reveal major unforeseen issues with the home, you can reconsider your offer. (See what fixes are mandatory after a home inspection)
- Financing: The lender will go through the final approval process to ensure nothing in the buyer’s finances have changed before approving your mortgage loan.
- Selling a house: If you need to sell your current home before purchasing the new house, you’ll need to add this contingency as well.
- Clear title: As the homebuyer, this provision gives you the option to walk away if there are any problems with the title, such as judgments or liens against the property, rather than moving forward and taking on any contested ownership claims.
- Insurance: You should apply for property insurance as soon as you make the offer. If for any reason you can’t get insurance, you can walk away. For example, any previous claims for an old roof or mold can make a house difficult to insure.
- Final walkthrough: It’s common practice to take a final walkthrough the day before closing. Be sure to bring a final walkthrough checklist to check on any repairs that were supposed to be completed and ensure there is no major damage from the move-out process. If anything about the property has materially changed, you can back out of the deal or negotiate to have it fixed.
- Attorney Review: You may want your attorney to review the contract before closing on the home. The attorney can make sure nothing has been removed or added to the contract without your knowledge.
The offer you make should be competitive for market conditions. This is where your market research comes into play, as well as your pre-approved loan amount. There are circumstances where it can make sense to offer an amount above or below asking price, and others where you should meet the asking price. Do your research and learn more about how much to offer on a house for your market’s conditions.
When you make your offer, it can also be a nice touch to include a letter to the home seller on why you’d like to buy and what purchasing the home means to you. This will help you stand out from other buyers in a competitive market.
Negotiating Boston Real Estate
Depending on how the seller responds to your offer, you may have some negotiating to do. If you are working with a real estate agent, their expertise will be invaluable to effective negotiation. It’s important to know what points in your offer you are willing to bend on and which are non-negotiable. Approach this dialogue with the seller with a respectful and cordial attitude. Just remember that they want to sell and you want to buy, but there may need to be some give and take from each of you to reach an amicable agreement.
Once the seller accepts the offer, you’ll want to schedule the home inspection, home appraisal, and have an attorney review your final contract. These steps protect both parties from major issues with the house. They also protect the lender from approving a bad mortgage.
The attorney will have your best interests in mind as a buyer and help you understand all you have agreed to and the seller’s responsibilities before closing. Your attorney’s review could close the deal for you.
Closing on a home
As part of the closing process, the title company will review all the public records for the property. They will double-check that all past taxes, utilities, and any liens against the house have been paid. If not, they will document outstanding items to settle before closing to ensure the property deed can change ownership.
When all the contingencies have been met and financing is ready, the closing can proceed. Your lender will transfer your funds to the attorney or your title company to finalize the house’s purchase.
Everyone’s talking about the Downtown Boston condo market, whether its Boston Beacon Hill condos for sale or Boston Midtown condos for sale. If you’re a seller and priced at or below market value, there is a good chance of receiving multiple offers on your Boston condo for sale in this market. Before you commit and accept an offer on your home, read our frequently asked questions below about handling multiple-offer situations.
An offer is not the same thing as a sale. For the purposes of your contract with your listing agent, your home can only sell once, but many parties may offer to buy it. It is common knowledge among real estate agents that getting an offer is only half the job. The other half is turning that offer into a final sale.
There are many factors that will determine whether or not your Boston Midtown condo will enter into a multiple offer situation. But, the short answer is no. Taking a sample of all the Boston condos for sale in 2018, the average time to get an accepted offer was over 40 days the first few days or at least the first week of the listing, not three or four weeks later. Certainly, some downtown Boston neighborhoods have more multiple offers than others, but there is not a neighborhood in downtown Boston that averages over 10% multiple offer situations in a given calendar year. Your Boston listing agent needs to know your area, the season, the inventory, the correct pricing, etc. Many, if not most Boston real estate agents will get you excited into thinking your Beacon Hill home will go multiple (for sure!) and all of those same Boston real estate agents have an average time to sell their listings at 31 days on market. Beware the hype. Now, on the other hand, my team performed 81 multiple offer situations last year, so I know when to expect them, it is just not all the time. Not every house, not every neighborhood, not every month of the year.
Good question. A Boston Beacon Hill home offer has many components. Here’s a shortlist:
- Price. Obviously, a key part of a real estate offer. In Boston right now, because of the winter selling season, many (but not all by a long stretch) offers come in at the asking price (the price you and your listing agent agreed to list the home for) or more. When calculating the offer price be sure to subtract any costs the buyer is asking the seller to play like a home warranty or the buyer’s closing costs.
- Financing. Only a few Boston Beacon Hill home buyers offer cash, and those are typically investors, not regular home-buying families or single persons. Of the 4052 Portland home sales in the last six months, only 829 were cash (roughly 20%) and again most of those Portland cash buyers are investors. Unless your home is a fixer or a teardown, it is unlikely an investor will want it. The loan may be FHA, Conventional, (Freddie Mac or Fannie Mae), VA, or another unconventional loan from a bank or direct mortgage lender. It is important your Boston Midtown condo listing agent is familiar with all of the local and national banks and loan programs and which of those are more or less likely to cause problems in your upcoming transaction. Of course, the offer will also help you understand how strong a financial position the buyer is. If the buyer is putting down 20%, they are less like than a buyer putting down 3% or 5% from having a sale fail due to their inability to finance. Even though home buyers make offers with pre-approval letters or pre-qualification letters (it does not matter) they may be barely qualified or overly qualified and the buyer’s side does not have to share that with you. Even though they are not sharing that information with you (typically) look at the downpayment amount for a good clue.
- Earnest money. In real estate transactions, the earnest money is the deposit placed by the buyer to back up a purchase agreement. In our area, it is typically 1% of the offered price. It is held in a neutral escrow account until the deal closes. If the deal doesn’t close, and the buyer pulled out for an inappropriate reason, you get to keep that money. Read our blog post on earnest money here.
- Accessories. The buyers may have fallen in love with your dining room set and want it to be included with the sale of the home.
- Inspection terms. The most common terms let the buyer test the home for just about anything they want over a two week period (ten business days) and then they can (and almost always do) ask for repairs. The seller can agree to some, all, or none. The seller can also offer monetary compensation instead. If the buyer and seller don’t come to terms then the buyer can walk and get their earnest money back (in most contracts).
- Closing date. Cash offers close more quickly, but the buyers will still need to give two to three weeks for the inspections and title transfers to go through. Lender-financed offers can take one to two months to close, so the closing date is usually determined by financing. The average time to close a sale in Portland right now is roughly 45 days. Of course, the seller can always request a different closing date in a counter-offer.
- Other provisions.
No need to panic. A good listing agent will be able to negotiate between the potential buyers and help you select the best possible offer for you and your situation.
The best thing to do from the sellers’ standpoint is to be solid in your needs and priorities. Is the price is all that matters, you may select the highest priced offer, knowing that it may fall through and you might start the process all over again.
Why would it fall through? Buyers offering any amount above the listing price run the risk of having their financing revoked from the lender. Usually, it depends on the appraisal. If the Boston Beacon Hill home does not appraise for the amount the buyer wants to offer, the lender may say “no deal”. At that point, the buyer can back out and get their earnest money back (or the seller can reduce the price to match, or the buyer and seller can agree on something in-between with the seller dropping the price and the buyer bringing extra cash to close). On the other hand, if there is an offer at or near the listing price that is all cash, most sellers would be advised to accept that offer over a higher-priced offer. Cash deals are the most likely to succeed.
Yes, in Massachusetts. However, be sure your real estate agent has experience with this practice because it can be tricky. Making more than one counteroffer at once can result in multiple legitimate contracts for the sale of your Boston Beacon Hill condominium.
It really depends on what you need as a seller. Smart sellers will place importance on the likelihood of the deal closing, over getting the highest dollar amount for their home. The reason is that if the deal falls through, the home is going to spend a longer amount of time on the market and the longer it spends on the market the harder it is to get a great price for the home.
Have an excellent real estate agent who will go over the offers with you. Sometimes a high offer may include a clause that the buyer will actually pay more than what the home appraises for (up to a certain amount). Some buyers will write in non-refundable earnest money after the inspection period. Some buyers will waive the appraisal contingency altogether.
The Boston real estate market is moving quickly. Buyers and sellers alike can benefit now more than ever from the services of a highly qualified agent. Do your research so that your real estate transaction is smooth and easy, no matter how many offers you receive — you’ll be glad you did!