When I first meet with a buyer who’s new to the Boston condo buying process, we discuss the realities of the Boston real estate market. Because, unless you have a full understanding of our high prices (compared to rest of the country) and the size and quality of what to expect in your price range, you could spend months wasting time—and not getting what you really want.
The market has been pretty consistent in the last few years, with high demand and insufficient inventory and of course high prices. I don’t expect that to change in 2018, even with the new republican tax plan where we can no longer deduct property taxes (over $10K) and have a cap on mortgage interest deductions. So here are the things you need to know and navigate in order to be a successful buyer in 2018:
Don’tbe suprised to offer over asking price for a Boston condo. This is a very hard concept for some folks to comprehend, but in many cases especailly under $500,000, offers over asking price is very common. In one of my ealrier blog posts I noted 11 properties in Back Bay that sold n December 2017, of which almost half were over asking price. Unless a property—whether it be a single-family home, condo, or multi-unit building—has been sitting on the market for three weeks or longer, you can sometimes submit an offer for less than asking with some possibility that the seller will budge.
Boston condos sell quickly. Many Boston condominiums with all the amenities or which are desirable and is in a great location may only be on the market for a short period of time, less than a week. So if you miss the first open house, it’s critical to work with your agent to schedule a showing as soon as possible so you have time to review disclosures, comparative sales and make sound decisions. Recently, I’ve been advising buyers to view the property before the open house if possible. Many times the condo is gone even before the first opn house.
It’s tough to compete with cash offers. Recently I’ve noticed an increase in cash offers, many times from foreign buyers. Agents in some Boston neighborhoods claim its up to 10% of properties sold have been cash offers. So if you’re heading into an extreme multiple-offer situation , there’s a good chance one of those offers will be for cash.
Cash offers doesn’t equal discounts. A cash offer won’t mean you’ll necessarily get a property at a discount. What it will mean is that you’ll get a call back from the listing agent if you’re in the ballpark on price, particularly if you don’t have any contingencies. But if you write a lowball offer for cash and there are several other offers involved, it’s likely you’ll have to come up in price.
Boston cash buyers are waiving inspection contingencies. The current market is a challenge for first-time home buyers who aren’t familiar with property ins and outs and are greatly relying on a home inspection professional to evaluate the home. Competition rears its head from buyers who have purchased homes previously and are familiar with the fundamentals, or from buyers willing to rely on inspection reports provided by sellers. Other buyers are conducting pre-inspections so they can be comfortable waiving inspections in a contract.
Cash buyers are also waiving appraisal and loan contingencies. Buyers with hefty down payments (30%+) may be going into competitive situations willing to waive an appraisal condition. This means they’ll be willing to kick in extra money if their appraisal comes up short on the value they’re paying. And they also may be waiving the loan condition if their file has already been approved by an underwriting team and they have absolutely no reservations about their financial documentation (or property details).
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Updated: January 2018
