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Buyer Beware! (Always do your due diligence.)

When you purchase a piece of property, there are always lots of factors to consider before you sign on the dotted line. You’re making a big purchase, so you want to make sure you’re properly protected from any (unwelcome) surprises later on.

For example, is the property you’re thinking of buying in good condition? How old is the roof? Does the heating system work? Does the property have a septic tank or a private well? Can you add on an extra room sometime in the future?

The process of answering these and many other questions is generally referred to as doing “due diligence.” In Massachusetts, much of this due diligence usually takes place during (or before) a ten-day window of time after an Offer to Purchase is accepted, and prior to a Purchase and Sale Agreement being signed. And, in almost all cases, the responsibility for doing due diligence rests solely with the Buyer individually.

Having said that, you need not feel that you’re alone. Many questions are best answered with the help of qualified professionals. For example, a home inspector can tell you lots of things you might not have realized about the condition of your property and the major systems within. A visit to the code enforcement officer can tell you about zoning and other property features. If you’re buying a condo, you probably also want to check with the homeowner’s association to review applicable rules and financial information.

Other questions require a little more legwork. For example, you might want to find out if the property you’re purchasing is in a flood zone or historic district. That could become a financial burden or limit what you can do with the property. You might wish to know more about local schools, if that’s important to you, or the proximity to other nearby amenities. You might also want to know more about whether there is a lot of crime in the local neighborhood, or if any sex offenders live there. The list goes on and on.

Your real estate agent can help to guide you through the process and make suggestions. But, remember: since you’re the one spending the money, it’s up to you to make sure you do the research you need to satisfy yourself with the quality of what you’re buying. In fact, in many cases, ethical and legal rules limit or prohibit your real estate agent from answering these questions on your behalf. It’s also your responsibility to make sure you find out all the answers you need in a timely manner — usually, not later than the expiration of the period for inspections stated in your Offer to Purchase (assuming you reserve this right for yourself in your Offer — usually a smart consideration!), and sometimes before you even submit an Offer to buy the property. If you wait too long, you might jeopardize your ability to cancel your intended purchase or possibly obtain a reduction in the purchase price to cover needed repairs.

As the saying goes, “Buyer Beware!” Always make sure to do your due diligence before you buy property, and make sure you answer any questions about it before you commit yourself.

The spring market is coming. Thinking of getting in? How to decide if you’re ready.

Although parts of Massachusetts are still blanketed in snow, the calendar says spring officially kicks off this week. Along with (hopefully) better weather, that also means the spring real estate market will start showing signs of life.

If you’ve been toying with the idea of selling or buying a home, you might be wondering if now is your time to take the plunge.

Entering the market is a big decision, one that we know is not taken lightly. Not only are you dealing with a huge transition from one living space to another, the process of selling or buying a property is a pretty big commitment. You’re looking at keeping your house tidy for showings and open houses (as a seller) or giving up some nights and weekends to tour homes and put together offers (if you’re the buyer).

Here are a few questions to ask yourself when deciding whether this is the spring you’ll make your move:

What’s your local market look like?

We always recommend contacting a local real estate agent in your community or the community you’d like to move to in order to get a full picture of what’s selling and what’s not at this moment in time.

When buyers or sellers approach us, we get information about the size, style and design of their house or desired house and then run a report using the Multiple Listing Service (MLS) to see what comparable homes are selling for and how fast they are going under contract.

For a deeper dive on this, please check out our post on an important market factor known as the “absorption rate.”

What’s going on in your life right now? CAN you make a move?

Even if the market where you live or want to live is going gangbusters, it still may not be YOUR time.

Shopping for a house or offering your home for sale is a big deal. Even if your real estate agent (and we definitely strive for this) makes the process as smooth as possible, there’s still a lot for you to do.

If you’re buying, you’ll be spending a lot of time shopping around, attending open houses and showings. You’ll potentially be working with a mortgage company to get approved for a loan, which requires pulling together a lot of information about your personal financial history. You may also be rushing around to put together offers with your agent if a home you want is also wanted by a bunch of other buyers.

If you’re selling, you’re potentially looking at making repairs or cleaning out your house to get it ready for sale. You’ll need to be ready to get out of your house quickly when a potential buyer wants a showing, or be prepared to be away all morning for an open house. If you’re moving to a new property, you may also have all the work of being a buyer at the same time.

Again, at Lyric Properties, we totally get this and try to assume as much of the load as possible, but there are some thing that only you can do. If you know that your personal circumstances will make all of this impossible or too much of a burden, you may want to consider waiting until later in the year to make a move and enter the market.

Are there repairs you want to make before you sell?

This is a decision you can make with your real estate agent once they give you their opinion on what price you might want to list your house for. It could be that your home DOES need repairs, but you’d rather not put any more work into your property and perhaps you’re willing to sell for a little less to compensate for that. Maybe that means that you’re ready to plant a For Sale sign on the first day of spring.

However, if you feel you might be able to list for more, but you need to first repair your fence/upgrade your bathroom/put in newer kitchen appliances, how much time do you need to get that done? If you want to take advantage of the spring market, you probably want to start making those changes NOW.

For more information on how much value you might be able to get from making certain repairs in your home, check out this post.

Finally, does it really matter what the calendar says? What are YOUR goals?

There’s no doubt that the market dips and rises throughout the year. But we’ve sold houses in every season, from the middle of winter to the height of summer. The most important thing we’ve seen for buyers and sellers is entering the market is taking the plunge when it’s PERSONALLY RIGHT for them.

If you’re still not sure, we’re more than happy to talk it through with you and even help you make a list of pros and cons, if that’s helpful. If you run into an agent who is pressuring you to sell RIGHT NOW, question it. (And then call us. Ha ha.)

For an analysis of what your home might be worth in the current market, please contact us online or call us at 978-494-4450. We’ll be ready to go when YOU are.

The one thing that everyone wants to know about the real estate market

We talk about real estate with lots of people every day. Inevitably, unless we’re talking about a specific property, the conversation usually boils down to one simple question: “How’s the real estate market these days?”

Agents at many real estate brokerages are trained to give a canned response to this question. Namely, something like, “It’s always a great time to buy or sell!” That’s trite, but not very helpful. As real estate professionals, we aim to dig a little deeper.

There are several ways to look at market performance. In many cases we use a metric called the “absorption rate” to advise our clients on market trends.

Simply put, the absorption rate looks at how quickly the inventory of properties for sale in a given area is being consumed (or “absorbed”) by buyers. This statistic is generally expressed as a number, representing the number of months it likely would take for all the properties for-sale right now in a given market to be bought by buyers (theoretically, on average, and assuming that recent sales trends were to continue). An absorption rate of six (ie. it would take six months for the current inventory of homes for sale to be consumed, on average, given recent market data) is generally considered to be a “balanced” real estate market. Absorption rates below six are generally considered to be favorable to sellers, since lower rates mean properties are selling relatively faster than in a balanced market. Absorption rates over six are generally considered to be favorable to buyers, since relatively slower sales mean more available inventory to shop.

Here’s an example. According to MLS-PIN, during 2018 the absorption rate for single-family homes in Haverhill, MA was 1.08. That figure tells us that (on average) there were enough houses on the market at any given time to satisfy the interests of available buyers for a little more than a month (ie. 1.08 months). In 2017, the absorption rate was 1.53. So, generally speaking, the real estate market for single-family homes in Haverhill became slightly more favorable to sellers from 2017 to 2018.

Now, in the real world, it gets a little more complicated. Yearly municipal averages are informative, but if you’re buying or selling a home, you might want to know more detailed information. For example, maybe you’re looking for property in a specific neighborhood, or price range. Maybe you want to know more more about how market performance changes from season to season, or month-to-month. And, since statistics like the absorption rate are just theoretical averages, maybe you want to know how what market trends might mean for your specific property.

As real estate professionals, we have access to all of this information and more, so that we can provide our clients with timely and informative data specifically tailored to their individual needs.

If you’re interested in knowing more about how the real estate market is performing in your area, please sign up to receive market updates from us.

“Should I remodel before I sell my home?”

One of the questions we get asked the most by people who want to sell their property is whether they should make any repairs/upgrades before they sell, and if so, whether it will increase the sale price of their house.

According to a recent “Remodeling 2018 Cost vs. Value Report” (www.costvsvalue.com) [1], the answer depends a lot on what type of work you’re thinking of doing.

The report analyzed a wide range of possible upgrades, everything from smaller projects (like replacing a front entry door) to large-scale renovations (like adding on a master suite addition). Based on its findings, virtually every upgrade studied would increase the resale value a homeowner could expect to receive by selling their home. However, the value of that increase depends a lot on the financial outlay the homeowner would have to make to do the work. Some projects, like a mid-range patio installation, would allow homeowners to recoup only about 48% of the cost of the renovation. Others, like major kitchen and bathroom remodels, could result in much higher amounts of costs recouped (in the 75-90% range).

Ultimately, the number one repair for Boston-area homeowners turned out to be the replacement of a garage door with an upscale remodel. According to the report, homeowners could expect to receive a return of 104.5% for any investment made to make such a repair, resulting in a net profit of about $200 upon sale, on-average.

We are intrigued by the information in the report, and we find its conclusions to be very interesting. But, in the end, we also think that the topic of home repair is very subjective, depending a lot on the individual characteristics of a specific property and the market in which it will be sold. Every home is a separate case. As real estate agents, we have experience advising homeowners on such matters and providing them with localized information about how home repairs could benefit their chances of selling their home. If you’re interested in finding out more about how such changes could improve your home’s value, please contact us.

[1] “Remodeling 2018 Cost vs. Value Report”, (c) 2018 Hanley Wood Media, Inc. Complete data from the Remodeling 2018 Cost vs. Value Report can be downloaded free at www.costvsvalue.com.

Just Sold – 32 Tyler Park in Haverhill

Lyric Properties is happy to announce the recent sale of its exclusive listing at 32 Tyler Park in Haverhill.

“We are thankful for the participation of everyone involved in this transaction, and we congratulate the buyers on their new home,” said Fred Van Magness, Broker.

“This property was a special one, having been built and owned for many years by the same family,” said Van Magness. “Some of its notable features included a large basement, attached single-car garage, and a kitchen with nice views of the backyard.”

The property sold for $285,000, and was on the market for 41 days. Denise Olivares of Coco, Early & Associates represented the Buyers.

Just Sold – 94 Salem Street, Reading

Frederick Van Magness, Jr. and Meredith Landrum are pleased to announce that Lyric Properties JUST SOLD its listing at 94 Salem Street in Reading, Mass. (MLS#72008435) for a sale price of $732,500.

"We're thrilled for the buyers and sellers of this home, and we congratulate everyone involved in the transaction," said Frederick Van Magness, Jr., Broker.

According to Van Magness, the sale price of this property ranks it in the top-20 single family home sales in Reading so far in 2018.

"There was so much for buyers to like about this property," said Van Magness. "Built in the late 1700's, this Colonial had features like wide-plank floors, eight fireplaces, and interior shutters that are not seen in many modern homes. It had a very stately appearance outside, situated at the top of a hill on a corner lot near the center of town. We had lots of interest in the property along the way."

Are you interested in buying or selling property in Reading? If so, give Fred Van Magness and Meredith Landrum a call at (978) 494-4450, or contact us here.

Fed Raises Interest Rates

The Federal Reserve board recently raised its benchmark interest rate one-quarter point, with signals that further rate increases could be on the horizon.

Whenever the Fed increases interest rates, the cost of borrowing money rises. That means the monthly mortgage payment goes up for people who are buying a new home, and the total amount that needs to be repaid subsequently goes up.

Are you in the market to buy a new home? In terms of mortgage rates, now is still a great time to buy! Give us a call today to see how we can help.

Just SOLD – 2BR Reading Condo

We’re proud to announce that we have just SOLD 5 Washington Street, Unit A2 in Reading, MA.

This cozy two-bedroom condo listing was located conveniently in the vicinity of amenities such as Reading’s commuter rail depot, downtown shopping, and restaurants. And, once people saw all of the terrific improvements that were made to the interior of this unit, they didn’t want to leave!

Congratulations to the new owner of this property, and to the seller.

Are you considering selling property in Reading or elsewhere in eastern Massachusetts? If so, contact us so we can discuss how to make your real estate transaction a success story!

5 Things You Need to Know About Real Estate Appraisals

When someone buys real estate and needs a loan to pay for some or all of the purchase price, it's common for the lender to order an appraisal of the property during the closing process.

Here are five things property buyers need to know about real estate appraisals.


1. We already agreed on a purchase price. Why do we need an appraisal?

When a bank loans you money to buy property, your obligation to pay back that money generally is secured by a mortgage. The mortgage is an agreement that gives the bank the right to foreclose upon your property and sell it to somebody else if you default on the loan. If that were to happen, the bank would use the sale proceeds to pay itself back, and you would end up pocketing whatever is left over.

From the bank's perspective, the mortgage process only works if the value of the property is at least as much as the value of the loan they're writing for you to purchase it. (If the property is worth less, the bank would lose money if it ever needed to sell.) Most banks also want some additional buffer to account for fluctuations in the real estate market. To assure themselves of this value, banks want an objective opinion from a professional who's not actually involved in the transaction itself. That's where an appraiser comes in.


2. What happens during the appraisal?

During an appraisal, a licensed real estate appraiser will visit the property and conduct an analysis to determine its market value. This process is similar in some ways to how a listing real estate agent might do a comparative market analysis to suggest a list price for a property, but it's more sophisticated. Generally, the appraiser will compare the subject property to other similar properties that have been sold recently in the same area. Or, in the case of rental property, the appraiser might look to what similar properties are renting for in the same area to estimate the property's value. Unlike a listing appointment or a home inspection, the buyer usually is not present at the property for the appraisal.

The thoroughness of the appraiser's analysis can vary and usually depends on lender requirements and the type of loan product. Typically, the appraiser will do a basic walk-through of the property, making notes of important features and taking a few photos. This allows the appraiser to get a general feeling for what features might add to or subtract from the property's value, and it also allows them to better compare the property to other properties within the market.

However, sometimes the appraiser's inspection of the property is more rigorous. For example, if a borrower needs FHA financing (where loans are being back-stopped and loan-to-value ratios are very high), the appraiser may be asked to verify that the property is in excellent condition and that it doesn't have condition issues like peeling paint. On the other hand, there are certain cases where the lender only wants a rough estimate of value, allowing for a so-called "drive-by appraisal" where the appraiser doesn't even enter the property. But, this is not typical in today's market.

Sometime after the appraisal, the appraiser usually issues a written report back to the lender. This report documents the appraiser's observations of the property, explains the research and rationale that they used in their analysis, and sets forth their estimate of value. The thoroughness of this report generally varies in the same way as the appraisal itself, but most reports are fairly detailed and comprehensive.


3. When does the appraisal happen?

Usually, the appraisal is scheduled after there is a signed Purchase and Sale Agreement between the buyer and the seller. That's because most lenders don't start the formal underwriting process for a property until they know there is a solid legal agreement in place. The appraisal usually takes about a half hour of time, and a report is usually available within about a week.


4. Who pays for the appraisal?

The buyer customarily pays the fee for the appraisal. This fee usually ranges from about $300 to $500, depending on the lender and appraiser. Sometimes the fee must be paid out-of-pocket by the buyer up-front or when services are rendered, as with a home inspection. But it's common for the lender to add the appraisal fee to the costs the buyer funds at closing (which may be paid out-of-pocket by the buyer, with or without contributions by the seller, or rolled up into the amount of the loan).

The buyer usually does not have much control over the selection of the appraiser or the fee they charge. That's usually up to the lender. However, it's always a good idea to ask your lender up-front about how the process will work, what you're being asked to pay for, and when you're being asked to pay it.


5. What happens if the appraisal report comes back and it's too low?

Lenders typically don't provide a copy of the appraisal report to their clients automatically. Therefore, the first step is to ask your lender for a copy of the written appraisal report.

Take a good look at the report and make sure that all of the information about your property is accurate. Appraisers are human, so it's possible for a mistake to be made. If you think there's something wrong, don't hesitate to ask for the error to be corrected and factored back into the analysis. It's also acceptable to – respectfully – challenge the more subjective analysis that's contained in an appraiser's report, particularly if you think there is an observation or comparison that's truly unfair. Most appraisers have done their homework and have a good reason for the analysis they provide, but it's always possible that there's something they overlooked or didn't factor appropriately. In rare cases, the report might be redone or a new report might be ordered.

To avoid issues later on, it is appropriate to provide an appraiser with helpful information about the property, or even the local real estate market, during the appraisal process. That's especially true if that data isn't readily apparent or if the appraiser is unfamiliar with the area. For example, if there are some really important features about the house that you're afraid the appraiser might honestly miss, it's fine for your agent to bring these features to their attention. Likewise, if there is something unusual about a recent sale in the area that would make it a bad comparison, it's fine to let the appraiser know that, too.

However, be careful about overdoing it. After all, appraisers are professionals, and you should trust in their basic ability to observe the property and factor it into the local market. You don't want to look like you're trying to sway the appraiser's professional opinion, which is never appropriate. (For example, it's not o.k. to say, "Hey, I really need this property to appraise for $500,000, so do what you can to hit that number.") When in doubt, just let the appraiser do their job and trust that they know what they're doing.

One common problem these days is the fact that the real estate market is competitive. Situations like 'bidding wars' tend to push prices up, up, up. The end result could be a price that the buyer and seller accept between themselves, but which isn't really defensible within the context of the real estate market. If an appraiser concludes as much, the only alternative might be for the purchase price to be altered, or for the buyer to bring more cash to the closing table to make up the difference. In rare cases, when faced with an inadequate appraised value and unwillingness/inability to address the situation between the buyer and seller, the deal could fall through. That's why it's always a good idea to make sure that the offer you place for a property is realistic within the scheme of things, and to make sure that your offer has financing contingencies in place.


Appraisals are a necessary part of the real estate financing process, and they can provide helpful information to a buyer and a seller beyond their subjective agreement. But, buyers should always be sure to ask a lot of questions about the process to satisfy themselves with the result of the appraisal and their subsequent ability to qualify for a mortgage.