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Three Tips to Help Buyers in Today’s Market

Navigating today’s tumultuous real estate market can be tough. But contrary to what you might hear in the news, buying property today is not impossible. It just takes a little added skill.

Here are three tips to improve your chances of buying successfully:

1. Know your budget with confidence

Most of us wouldn’t go to the store without knowing how much money we have to spend. And yet, it’s very common for buyers to start window shopping for real estate without really knowing what their true budget is.

If you intend to purchase property in this real estate market, it is crucial to know exactly how much purchasing power you have before you look at listings. For everyone except cash buyers, that means working with a mortgage broker who can take a look at your financial picture and tell you realistically what you can afford. Don’t just toss a few numbers into an online calculator and hope for the best. Talk to a real person and get an honest, comprehensive, and reliable assessment of your financial situation, along with recommendations of financing products you might qualify for and tips on how to improve your finances over time.

2. Know what you’re looking for and act fast

The real estate shows on television make it seem so simple: a buyer goes out with an agent, peacefully looks at a few houses, picks the one they like, and… voila! Unfortunately, in the real world, finding the home of your dreams isn’t always that easy.

One thing that can help is to have a clear picture of what you want ahead of time. There’s nothing wrong with browsing (in fact, it’s fun), but in a competitive real estate market it’s important to act fast and make quick decisions when needed. Having a good idea of exactly what you’re shopping for can help to focus your search for property and make you more nimble when you find what you want. And, be sure to either have your real estate agent along with you when you look at property, or have them on speed-dial so you can act quickly when you find something on your own.

3. Be ready to put it all on the table

As a follow-on to the two points above, buyers need to be ready to go all-in once they find what they’re looking for if they want their offer to be accepted. If you’re serious about buying a piece of property, be prepared to put your best foot forward and to make your best-and-final offer early in the process, if not right at the start. You’re likely to be up against stiff competition for property that’s truly worth it, so be ready to bring your A-game right off the bat.

There is never any recipe for guaranteed success in real estate, so even if you follow all these tips you still might face challenges buying property. But take our word for it, buyers who don’t follow these tips are already putting themselves at a serious competitive disadvantage in today’s market.

As always, the best advice is… give us a call! We’re here to help!

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What do rising rates mean for the housing market?

The talk of the real estate market these days is all about mortgage rates.

Even though mortgage rates are still way lower than they were back in the 1980’s, they are higher than they have been in recent years. In fact, rates have more than doubled over the past year, and according to the Federal Home Loan Mortgage Corporation (“Freddie Mac”), that’s the first time in history that rates have more than doubled in just a year.

Rising rates are intended to address inflation in the economy. Generally speaking, when it gets more expensive to borrow money due to higher interest rates, people will spend less because they have less money to borrow, and decreased demand tends to force prices down.

In the context of the real estate market, many home buyers would feel a sense of relief if home prices start to retreat from the high prices we’ve seen recently. But the trade-off is that rising rates reduce purchasing power for those looking to buy a home. Similarly, it can affect sellers because of the decrease in prices – and, of course, many home sellers are soon-to-be buyers themselves.

So, how do you navigate this real estate market?

If you’re a buyer looking to purchase this spring, it’s best to start talking to your financing agent as soon as possible. If you pre-qualified for a loan before, make sure you get your estimates updated so you are confident of your price range in today’s market. Also, you should ask your financing agent if there is anything about your personal financial situation that you should address before you buy to make yourself a better candidate for a loan and to thereby potentially qualify for a better rate or more-attractive loan program. The housing market remains very competitive for would-be buyers.

If you’re a seller thinking about listing, it is best to be realistic about pricing in today’s market. While prices are still strong in general, they have retreated modestly from the high points we saw in some markets last year. Make sure you’re dealing with updated information about the current real estate market when setting expectations for selling.

As always, if you’re looking for advice… feel free to reach out to us!

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What Inflation Means for the Market

We’re getting lots of questions from homeowners asking about whether now is the right time to get into the market and sell their home.

For sellers, it helps to look at what buyers are dealing with right now amidst high inflation.

Over the past year, mortgage rates have more than doubled. That means that the average monthly payment for a single-family home of median value in Massachusetts has gone from $1,695 to $2,716 in just twelve months. To put that in perspective, that’s an increase of more than $12,000 a year in mortgage payments, and it’s like having to make two mortgage payments a month from New Year’s through July compared to what you paid just a year ago. Looked at another way, for the buyer who can’t afford to pay more, it means having to reduce their budget for buying a home by almost one-third – in an environment where low housing inventory means prices are still high. And, of course, the cost of living generally (consumer goods, utilities, etc.) also has gone up.

Prices are starting to moderate a bit, and inventory remains low, so buyers who remain ready, willing, and able to buy are starting to see some relief. Sellers who want to take advantage of relatively high prices and who want to get in before rates rise again may wish to act quickly. However, sellers also need to be realistic about pricing and time on-market given today’s buyer pool.

And, of course, since most sellers are also prospective buyers, it’s important to have a plan of where you intend to go once you sell. We are always happy to discuss your individual situation and help you decide what’s best for you.

What do higher interest rates mean for home buyers?

According to the National Association of Realtors [1], about 87% of home buyers use some sort of financing to purchase a new home. On average, they finance about 88% of the value of their home purchase (even more for first-time home buyers).

These statistics mean that the purchasing power these home buyers have – measured by the mortgage interest rate – makes a big difference.

According to the Federal Home Loan Mortgage Corporation (FHLMC, known as “Freddie Mac”) [2], here are the current national averages for certain mortgages:

As you will notice, these rates are up from the 2.66% rate measured at the end of 2021, which was the lowest since the organization began reporting in 1971. But, to put these rates into historical context, the highest rates observed by Freddie Mac were reported in October 1981, at about 18.63% (with 2.2 points). For the most part, mortgage rates have been at or below five percent for about the past decade.

Why does this matter? It matters because changes in the interest rate can make home buying more or less expensive. Take the following example.

The Massachusetts Association of Realtors reported that the median sales price of a single-family home in Massachusetts was $529,000 in April 2021 (a record high) [3]. At an interest rate of 3.0% and assuming a 20% down payment, the monthly payment on this loan (with no points or PMI, and not including escrows for taxes or insurance, etc.) would be $1,784.23.

If the interest rate were to increase to 4.0% — a big increase, but still a relatively low rate historically-speaking — the payment would increase $236.19 per month for the same loan. This presents the home buyer with one of two choices: pay more or get less.

If the buyer doesn’t change their buying habits at all and just purchases the same property at the higher 4.0% rate, they will end up paying back $85,030 more to the bank over the life of the loan. That’s about a surcharge of about 16% of the value of the home.

In order to avoid this surcharge entirely, the buyer would need to put down more money up-front. In this case, they would need to increase their down payment by about 9.35%, or about $49,462, to reduce the total amount financed and keep payments the same. That would bring the total down payment on this home to $155,262 (29.35%) — a lot of money.

Not all buyers can pay more. If the buyer is strapped for cash and wants or needs to keep both their monthly payment and down payment low, that means they will need to find a cheaper home. In this case, in order to still have a monthly payment of $1,784.23 at 4.0%, the buyer would need to spend a maximum of about $467,160 on a new home. That’s a decrease of almost $62,000 (12% ) of home value. Unless the buyer finds a deal, that is likely to result in a decrease of some desirable feature (fewer bedrooms or bathrooms, less back yard space, etc.).

These dilemmas all point to the need for close coordination between real estate agents and financing agents for home buyers in the current market, and for buyers to act quickly to buy available property before rates climb higher. Recent signals of higher inflation are pointing to the possibility of future rate increases, so if you are able to move, don’t wait to buy!


Note: The examples used in this article are based on national averages. Actual monthly payments vary widely and depend on many factors, including the lender and financing program, the buyer’s financial information, and the property being purchased. In order to find out more about your specific situation and purchasing power, it is recommended that you speak with a qualified financing agent.


[1] https://www.nar.realtor/newsroom/pandemic-caused-buyers-to-seek-multi-generational-homes-sellers-to-sell-faster

[2] http://www.freddiemac.com/pmms/ Primary Mortgage Market Survey® data provided by Freddie Mac. PMMS® data is provided “as is,” with no warranties of any kind, express or implied, including, but not limited to, warranties of accuracy or implied warranties of merchantability or fitness for a particular purpose. Use of the data is at the user’s sole risk. In no event will Freddie Mac or Lyric Properties be liable for any damages arising out of or related to the data, including, but not limited to direct, indirect, incidental, special, consequential, or punitive damages, whether under a contract, tort, or any other theory of liability, even if Freddie Mac or Lyric Properties are aware of the possibility of such damages. Lyric Properties makes no independent claims, representations, promises, or warranties regarding such data and is not responsible in any way for its use.

[3] https://www.wgbh.org/news/local-news/2021/05/18/median-home-price-in-massachusetts-hits-record-high-of-529-000

“Can I sell my home during a pandemic?”

Maybe you were planning to sell your home this year, long before COVID-19 was in the headlines. Or perhaps being stuck in your house due to quarantine and social distancing has demonstrated that your current home is not the right fit for you and your family.

But is it now the right time? Can you actually sell your home during a pandemic?

YES. The answer is absolutely yes.

Although the process is slightly different, we have had clients successfully sell AND buy new homes this spring.

Despite the restrictions in place to prevent the spread of the virus and even in the face of massive unemployment, there are still many, many qualified buyers in the market. And because there are not many homes for sale right now (an inventory shortage that began long before Coronavirus), bidding wars are still occurring, which often results in sellers getting their asking price or ABOVE for their home.

So how can you successfully navigate the sale of your home right now?

First, find a real estate agent who pays close attention to federal and state rules on safely conducting open houses, inspections, and other aspects of the sale.

At a recent open house we hosted, we allowed only one group of buyers to tour the home at a time and we offered hand sanitizer and masks to buyers who did not bring their own supplies.

We also had the home professionally cleaned after both the open house and home inspection to help protect the homeowner.

In our opinion, now is not a great time to attempt to sell your home on your own. There are many potential liability, health and safety minefields to navigate. Moving can be stressful on it’s own; let your agent assume responsibility for making sure the sales process complies with all the rules and regulations.

Second, ask your agents about their technological capabilities and if they can provide virtual home tours as part of your listing.

Sometimes, a buyer will request a showing and find out immediately once inside that the layout doesn’t work for them. If they can virtually tour your home first online, you might cut down on unnecessary in-person tours of your living space. While we never mind conducting showings, the nature of a pandemic definitely favors having LESS people in your home.

Third, be sure potential buyers are qualified.

Due to the current unemployment numbers and shakiness in the economy, many mortgage lenders are requiring applicants to make a larger down-payment and have higher credit scores than usual.

While it is more difficult to obtain a mortgage right now, we have found that there ARE buyers out there who meet this threshold. Be sure to request that buyers have a pre-approval letter to submit along with any offers to purchase.

Be prepared to pass papers/close on your home without being in the same room as the buyers.

Due to social distancing guidelines, some real estate closings are taking place with the buyers and sellers in different rooms while attorneys handle the transfer of papers. While this isn’t necessarily a bad thing, it’s a change from past practices you might be familiar with.

Bottom line: if you are ready to put your home on the market, don’t let COVID-19 steer you off your personal path. It’s still possible to sell your home and sell it successfully.

Please reach out to us to talk through any concerns you may have. We’ll work with you to come up with a plan that makes you feel safe and comfortable throughout the entire selling process.

Send us an email using our Contact Form, or give us a call at 978-494-4450. In addition to answering your questions, we offer a free estimate and consultation of how you might price your home in the market.

Covid 19 and Real Estate

The recent outbreak of Covid 19 is having a profound effect on the real estate market across the country.

Here in Massachusetts, recent government orders have significantly curtailed real estate open houses and other social gatherings. In addition, inspections of smoke and carbon monoxide detectors normally required prior to a closing may be deferred if the buyer contractually assumes responsibility for installing the detectors and the subsequent inspection happens within 90 days of the conclusion of the COVID-19 emergency.

For our part, due to the Governor’s advisories, our business office at 145 South Main Street in Bradford, Massachusetts will be closed to the public until further notice. However, we are actively advising clients (long-term and new ones!) on the real estate market via phone and e-mail. So, if you have any questions you’d like to talk about, please feel free to contact us. We look forward to hearing from you!


Five tips to make buying a home less “haunting”

Let’s face it – the process of buying a home can be intimidating sometimes. But there are things you can do as a consumer to help put your mind at ease. Here are our top five tips to make buying a home less of a “trick” and more of a “treat”:

1. Get pre-approved for financing.

It takes money – usually, lots of money – to purchase property. Sellers know this, so they often ask potential buyers to provide evidence of their financial ability before accepting an offer. To help improve your chances of getting an offer accepted – and to avoid pitfalls later in the process – do yourself a favor and get this evidence up front. Most commonly, this involves getting a pre-approval letter from a mortgage lender to purchase a home within a certain price range and according to certain terms. If you’re a cash buyer or using other funds (ie. a gift, inheritance, etc.), you can obtain certification from your financial institution that those funds are available and sufficient to cover a purchase. If you are able to, it’s always best to get this documentation before you start looking at houses to buy. Getting pre-approved doesn’t guarantee financing, but it does avoid lots of unfortunate entry-level decisions and help you focus on properties within your purchasing power.

2. Get a home inspection.

It’s unlikely that even a savvy home buyer can pick up on every potential defect in a home during a quick open house visit or a private showing. Plus, most of us aren’t professional contractors, so there are things we might miss or that might be difficult to find. That’s why it’s always a good idea to hire a home inspector to check these things out and advise you on potential issues before you sign a purchase and sale agreement. In Massachusetts, inspections usually must be conducted during a ten-day period between an offer to purchase and the signing of a purchase and sale agreement, or they are waived (note: these deadlines can vary based upon your sales contracts, so be sure to consult your agent and/or attorney).

3. Know when to go beyond a home inspection.

There are certain things a typical home inspection might not cover, such as septic systems, private wells, swimming pools, and contamination by lead paint, mold, radon, asbestos, or pest infestation. The list goes on. Sometimes you need to ask to add these items on to your typical inspection order. Other times you need to hire a specialist to look at them separately. Be sure to ask up-front and get the advice you need in a timely fashion.

4. Resolve complex issues early on.

Depending on the property you’re buying, strange issues can pop up. For example, maybe there is a question about boundary lines or easements on the property. Maybe the person living there has unsatisfied liens on the property, or owes back taxes, or doesn’t yet have the legal right to sell (such as if an estate is trying to sell property before getting court approval). If you’re applying for a mortgage on the property, sometimes these issues will be identified by your bank. Even so, it can be wise to consult an attorney to answer any questions about a property and to get these issues resolved before the closing.

5. Educate yourself about the area.

It’s important to remember that we refer to a “piece” of property because land is part of a bigger puzzle, be it a neighborhood, or a region, etc. No home is an island in and of itself (unless you’re actually buying an island). Before you buy, ask questions about the surrounding area to make sure it suits your needs. Is it noisy? How is traffic? Do these factors vary on weekdays, weeknights, and weekends? Is there a lot of criminal activity in the area? Is the property convenient to shopping, highways, etc. If you have children, how are the schools? Is the property zoned for whatever you intend to do with it (or if you want to do additional work)? Is it in a flood zone, and if so, do you need to buy flood insurance? Are there any other hazards nearby? If it’s a condominium, what are the association’s rules, and how are the finances? Asking these and many more questions is usually referred to as doing “due diligence,” and it’s an important part of the home buying process. Make sure you do as much research as you can before you buy to avoid surprises later.

When it comes to buying property, don’t be haunted by problems! Ask your real estate agent for advice and guidance throughout the process.

Seller Alert: Keep an eye on proposed transfer tax hikes

Seller alert: there are some proposals floating around Beacon Hill right now that could make selling your home more expensive.

Gov. Charlie Baker has proposed increasing the housing transfer tax to pay for climate change initiatives. This tax is a burden Massachusetts home sellers must pay when transferring ownership of their home to a buyer. For every $500 of your selling price, the state of Massachusetts charges you a $2.28. Baker wants to increase this tax to $3.42, and housing advocates are looking to DOUBLE the tax to $4.56.

Here’s a breakdown of how those proposals would affect your sale:

Say you’re selling your home for $350,000:

  • Under the current real estate transfer tax of $2.28, you’d be responsible for paying $1,596 to the state.
  • If Gov. Baker’s proposal for $3.42 is approved? You’d pay $2,394.
  • If housing advocates have their way of doubling the tax? Your tax burden goes up to $3,192.

When selling your home, every dollar counts. Even if you support the initiatives this tax increase would support, you’ll want to know your bottom line when it comes to your financial picture in a real estate transaction. That’s why we’ll be keeping a close eye on the Legislature as they work to wrap up their business for the year. We’ll keep you posted!

How solar panels can affect a home sale

You see the solar energy sales reps going door-to-door on your street, and maybe your neighbor recently had solar panels installed on their roof. It sounds like a great deal (for your wallet and the environment), but how will it affect your ability to sell your home in the future?

According to the U.S. Department of Energy’s Office of Energy Efficiency & Renewable Energy, a recent study found that home buyers have been willing to pay a premium of about $15,000 for a home with an average-sized solar array.

However, not all home buyers feel this way. Some people don’t like the look of the panels on their roof. Others may not be happy with the contract you signed with the solar company that installed your system.

We’ve seen this come up while house hunting with our buyer clients. Often, the sale of the home does not end the contract with the solar company. The buyer is either required to take up the already existing contract, or pay to have the panels removed. In those cases, the buyer might decide not to pursue purchasing your home.

If you decide going solar is worth it to you, just be sure to carefully read the sales contract so you know what to tell potential buyers if you ever decide to place your home on the market.