In Potential, Potential, Potential Rona Fischman examines this very issue. As many neighborhoods are up and coming in the greater Boston area, are buyers better off paying more for an established location and perhaps sacrificing home size, or is your dream home in a less than desirable location worth the risk?

Location, Price Point, and Sacrifices

In each instance many variables apply and as Fischman points out, you can generally tell what to expect from a property by examining what the developers have left behind. Case in point, the examples Fischman gives of a modest ranch home in Newton and a fixer upper in Somerville.

The modest ranch in Newton, an affluent Boston suburb, is surrounded by homes that have been developed and turned into multimillion dollar investments. Why was this house the one stone unturned? Digging deeper, the lot on which this house is situated was not quite big enough and would not permit a two family townhome (as the developer would want to build), in fact the lot permitted the modest type of home it already housed, revealing that the maximum possibilities, (and earning potential) for this home have already been reached – this also serves as a reminder to perform ample due diligence during the purchase process.

Potential, Maximize Your Dollar, Forfeit Curb Appeal?

In her second example Fischman discusses a home in Somerville, a suburb of Boston that is evolving into a desired area, for among other reasons, expected updates to public transportation. Many homes in this area are old, run down and need extensive work. Because of the foreseeable convenience of public transportation, new schools are being built and people are beginning to move into the area. Though the location is not yet comparable to Newton, Wellesley or any other established area, the potential is building, and is far from reaching its limit.

Ask Your Realtor

There are many questions buyers must ask themselves before buying their first home. Know yourself, know your bottom line, and most importantly, know a good realtor. For some, the risk of buying a home in a growing neighborhood is not worth the safety of living in an established locale. For others, a beautiful home in a slightly less affluent area is more desirable. A good realtor familiar with your market can help you and your family find the right balance and maximize your investment.

1. Gold Standards, for the tried and true real estate hot spots in Massachusetts
2. Bangs for your buck and worthwhile investments are considered to be Best Values
3. Opportunity Knocks sheds light on the communities that have major selling points but have yet to reach their full potential on the popularity scale, largely for first time home buyers looking to settle in an up-and-coming spot

By showcasing towns based on these criteria, Boston Magazine has put together a veritable guide to Massachusetts for those taking the first steps in buying a house and those selling homes in Boston and beyond.

Real estate riches in Massachusetts: Winchester, Westwood, Brookline, Hingham, Manchester-by-the-Sea and Concord.

The cities and towns dubbed Golden Standards by Boston Magazine have been so for years for their excellent school systems, staggering property values and countless perks in the form of restaurants, theaters and historic landmarks. Buying a home for the first time in these towns can be pricey, but deals can be found amongst the property listings even if home sales statistics have dropped considerably in these areas over the past few years.

Best Values for First Time Home Buyers in Massachusetts: Jamaica Plain, Norwell, Essex, Natick, Burlington and Foxboro.

With the tax credit for home purchases inspiring house hunters to seriously consider putting a payment down, communities boasting numerous perks with low living costs are a natural fit for first time home buyers. Jamaica Plain was the city pick as one of the most desirable places to live in Massachusetts for its vibrant artistic community, sprawling green spaces and neighboring proximity to Boston proper. For those selling homes and looking to move to the suburbs, Burlington, Foxboro and Natick all made the cut as fantastic values for their affordable prices, notable local attractions and easy accessibility to major highways and public transit.

Selling Homes in Massachusetts’ Up-and-coming Communities: Watertown, Pembroke, Melrose, Hamilton-Wenham, Sharon and more.

Steep tax rates, administrative tiffs and mediocre locations have these towns listed as up-and-coming communities for their potential and their tradeoffs: Owners are selling homes at reasonable prices, great school systems and lively restaurant and seasonal scenes are the big attractions when it comes to those towns in the Opportunity Knocks category. First time home buyers shouldn’t shy away from towns like Watertown, Pembroke and Sharon without carefully examining the pros and cons, as the benefits of living in one of these communities on the cusp of trendy could far outweigh the pitfalls depending on what you’re looking for.

If you live in a community governed by a Homeowners Association (HOA), be certain that your lender has a copy of the HOA insurance policy covering the home exterior. Reminder: you will still need your own insurance to cover the interior and contents of the unit.

It is important to determine that you have sufficient insurance to cover any and all losses before a problem occurs. You should also be sure to ask if you need special coverage for items like jewelry, art, antiques, computers and the like.

While your home should be insured, the land it stands on is typically not since the majority of home disasters will not affect the land. Be sure to subtract the value of the land when working with your insurance agent to calculate premiums or you will be paying premiums that are too high and not necessary.

“Replacement” coverage will provide sufficient insurance to rebuild your home and replace all its contents. If you opt for “Actual Cash Value” coverage, even though your premiums will be less costly, you will receive only enough to cover what the property is worth at the time of the disaster which equals depreciation for wear and tear plus your cost of the property.

You may be eligible for discounts if you are either a long term customer of the company or are a senior over age 55. Some safety features in the home may also qualify your policy for lower premiums such as smoke detectors, security doors and alarm systems, dead bolt locks, etc.

HGTV is looking for fun, high-energy people who are just starting the home-buying process for their first place and would like to share their story with HGTV. Their goal is to capture all the trials and tribulations of looking for, bidding on and buying a first place.

Taping takes place spring and summer 2010. Ideal candidates will be enthusiastic buyers with a great story to tell and a desire to share their experiences. Singles, couples and families are all invited to apply!

Candidates (including Realtors) who complete taping of a My First Place episode will receive a DVD copy of their show so that they can relive their first-time home buying experience for years to come.

Request an application to be on HGTV My First Place Boston by emailing cbaggish@highnoontv.com or calling Cindy Baggish at (303) 712-3093.

The HUD-1 Settlement Statement, which is commonly referred to as the HUD or the Settlement Statement, is a standardized form which provides a line item detail of all of the charges associated with a residential real estate transaction (i.e. a purchase or refinance).

The Real Estate Settlement Procedures Act (commonly known as RESPA) requires the use of the HUD-1 Settlement Statement for transactions involving a federally related mortgage and in which there is a Borrower and a Seller. However, the industry standard is to use the HUD-1 for cash deals and refinances as well.

How is the Settlement Statement Read?

Page 1 of the Settlement Statement identifies the loan type (e.g. FHA, VA, conventional), the Buyer/Borrower, the Lender, the Seller, the Settlement Agent, the property location, and the settlement and disbursement dates. In addition, the first page provides a summary of the transaction with the Buyer’s side of the transaction documented in the left column of the Settlement Statement and the Seller’s side recorded in the right column. If the transaction is a refinance, a summary of the Borrower’s transaction will appear in the left column and the right column will be left blank since there is no Seller.

Page 2 of the Settlement Statement provides a line by line accounting of the various settlement charges with the Buyer’s fees again accounted for in the left column and the Seller’s charges listed in the right column. These settlement charges are grouped by type. For example, Items Required by the Lender to be Paid in Advance (e.g. prepaid interest, mortgage insurance premium, hazard insurance premium) can be found in Section 900 of the Settlement Statement. All of the individual settlement charges are then totaled at Line 1400 of the HUD (titled Total Settlement Charges) and recorded again on Page 1 at Line 103.

Download a sample HUD-1 Settlement Statement (1.34 MB PDF)

Summary of the HUD-1 Settlement Statement

The HUD is a standardized form which provides a line item accounting of the transaction. It is commonly used for both purchases and refinances, although it is only required by RESPA in transactions involving a federally related mortgage and in which there is a Borrower and a Seller.

In preparing for a real estate closing, be sure to review the HUD before arriving at the closing table (presuming of course that time allows for the circulation of the final HUD in advance of closing; in practice this does not always happen as oftentimes there are last minute adjustments). Do not presume that the HUD is perfect. Although the settlement agent should thoroughly review the HUD prior to circulating the final version, it is entirely possible that a mistake was made while entering the data. If you have questions, consult with your attorney and real estate agent. By reviewing the HUD and addressing any issues in advance of the closing, you are setting the stage for a smooth and successful closing.

Before you go house hunting in earnest, choose a Realtor^® with an ABR^® designation next to his or her name. This highly qualified real estate professional is specifically trained to represent you, the buyer. Since buying a home is probably the single most expensive and significant purchase you will make throughout your lifetime, it’s essential to have a top guide who will be your “project manager” to handle the many behind-the-scenes details through the closing process and beyond.

Working with an ABR gives a buyer a second set of very objective eyes. A buyer can easily fall in love with a property and unwittingly become blind-sided to its shortcomings. However, when an ABR takes a buyer out for private showings, he or she uncovers the not so obvious pros and cons of each property by posing a series of focused questions to the listing agent. Knowing the right questions to ask gives the buyer important information that can make the difference between buying the right home – versus making a significant, regrettable mistake.

An ABR’s services also include researching the prices of comparable properties to determine whether a home is overpriced for current market conditions – which have been rapidly changing rapidly throughout the past few years – month by month! An ABR then negotiates a purchase price in your favor, coordinates a thorough home inspection (sometimes leading to additional negotiations), assists in finding an attorney, facilitates financing through a reputable lender, and handles every last detail to ensure that all goes smoothly toward a successful, on-time closing. Success is carefully planned!

Bottom line: you wouldn’t think of going on a safari without a guide. The same holds true for house hunting. Because it’s often the “unseen things” that cause the biggest problems, it’s smart to have a great guide who knows what to look for every step of the way.

• A person is considered a first-time buyer if he/she has not had any ownership interest in a home in the three years prior to the day of the 2009 purchase.

• The amount of credit is determined by: (i) the purchase price (credit = 10% of purchase price); and (ii) the buyer’s income level (individual buyers with an income of $75,000.00 or less and couples with a combined income of $150,000.00 or less are eligible for the full tax credit).

• The credit is then phased between $75,000.01 and $95,000.00 for single taxpayers and $150,000.01 and $170,000.00 for married couples filing a joint tax return.

• The credit does not have to be repaid provided buyer occupies the home for 3 years or more.

• The credit is a “refundable credit” – if the purchaser’s total tax liability in the given year is less than $8,000.00, the IRS will send a refund for the balance (If, for example, the purchaser’s total tax liability = $7,000.00, the purchaser would receive a check for $1,000.00)

• A 2009 purchase may be claimed on the purchaser’s 2009 return or in the alternative, the purchase may be treated as if it occurred on December 31, 2008 thereby giving the purchaser the option of filing an amended 2008 tax return (see Form 1040X at www.irs.gov).

Unfortunately, many home buyers and sellers do not realize that with the acceptance of the Offer to Purchase, Buyer and Seller may very well have entered into a legally binding contract. Where the following three (3) elements are met, Buyer and Seller have entered into an enforceable contract: (i) the Offer to Purchase includes all of the essential terms of the contract; (ii) the Offer to Purchase is in writing and signed by the parties; and (iii) the parties intend to be bound by the Offer to Purchase.

Moreover, the general conception appears to be that any errors or omissions in the Offer to Purchase can be rectified in the more formal Purchase and Sale Agreement (the “P&S”). However, this is somewhat erroneous as it is the Offer to Purchase that sets the outer parameters for the P&S. For example, should the Offer to Purchase fail to include a mortgage contingency, it will be extremely difficult to convince the Seller to agree to such a contingency in the P&S. Why? Because the Seller has based acceptance of the Offer to Purchase on the terms presented in said offer. To change the terms after acceptance is to change the rules of the game. This is not to say that additional terms and contingencies are categorically denied during the negotiation of the P&S. They are not. However, to ensure the inclusion of these contingencies, the Buyer will want to be absolutely sure that they are addressed in the Offer to Purchase.

To best achieve a properly structured Offer to Purchase, the Buyer should consider having their real estate attorney review the offer prior to transmitting it to the Seller. Most real estate attorneys will include this service as part of their flat fee, which has become the industry standard. Likewise, the Seller would be wise to have his attorney review the Offer to Purchase prior to the Seller’s acceptance.

With a properly structured Offer to Purchase and acceptance of that offer, the Buyer and Seller will have identified the terms of the agreement and thereby established the expectations of the parties; a critical first step in what is often one’s single largest investment.

One of the “ups” of a transaction for a Buyer is immediately following the signing of an Offer to Purchase.  Maybe there was a hard fought, but fair, negotiation that got the Buyer truly vested into the property, or perhaps it was an all cash transaction with little back and forth between Buyer and Seller.  Regardless, following the excitement of having a signed contract, a Buyer needs to mentally prepare for the various steps in the transaction process that are soon to follow, one of those being a property inspection.

Accompanying almost all Offers to Purchase real estate in Boston is a contingency that allows the Buyer to, at their own expense, conduct a property inspection.  A property inspection is one of several items of Buyer due diligence that is conducted between signing the Offer to Purchase, and execution of a Purchase and Sale Agreement.

A home inspection is typically performed by a Home Inspector that is licensed in the state of Massachusetts (see the Home Inspector Fact Sheet for more information about Home Inspectors in Massachusetts). It is beneficial for the Buyer to attend the home inspection in person, as this gives the Buyer the  opportunity to be in the property for an extended period of time, and get a true feel for the ins and outs of the unit, and the common amenities of the building. While the Buyer is still riding that “high” of having a signed Offer on the unit and moving forward in the real estate transaction, the property inspection has the potential to put a damper on the situation.

The Property Inspector will more than likely generate a “punch list” of items (be that small or large) that need attention in the unit. Seeing a list of items that are “wrong” with a condo can oftentimes intimidate a Buyer, and can move the transaction into one of the “downs” that we talked about earlier.  However, if expectations are set up front with a Buyer that no condo is perfect, seeing a list of items that need to be fixed may not be all that shocking.  As well, there are multiple ways to respond to such a situation.

At this point in the transaction, all parties should be moving forward in good faith, so unless there are “deal breaker” items on the list, it’s in the best interest of everyone to try and work things out.  Following the inspection, essentially, there is another round of negotiations that take place whereby the Buyer and Seller agree on a means to appropriately address and/or correct the punch list items – be that with immediate repair, or a credit at closing for instance.

A Buyer should feel comfortable giving the Seller an opportunity to respond to items that arise from a property inspection. Bear in mind, the Seller has taken the unit off the market, and all marketing activity for the property has been significantly dialed back.  That said, the Seller, if faced with reasonable requests, will want to come to an amenable solution to the situation in order to see the transaction continue, rather than putting the unit back on the market after having lost viable “selling time”.

Armed with this information, and realistic expectations that no condo is perfect, a Buyer can more easily traverse some of the ups and downs that are an inevitable part of a real estate transaction.

Move-in ready condos (in the sense that a Buyer can move in immediately versus simply being in good physical condition) are typically only found in new condo developments that have completed construction (a certificate of occupancy has been issued), and there are available units in the building still owned by the developer.  In situations like this, the only thing between you and sitting down in your new home is a Purchase & Sale Agreement, and financing if it will be a part of the transaction – essentially, any roadblocks and/or delays that would be due in part to (traditionally) dealing with an individual unit owner are removed, and the Buyer is the only party that is truly throttling the speed of the transaction.

There are over 100 either new, or relatively new, condo developments in downtown Boston, however, the list of truly move-in ready developments (as described above) is significantly shorter.  We’ve assembled the below list of the top move-in ready Boston condo developments.  Contact us using the link at the top of this page for more information about available inventory in each building.  Click on any of the developments below to get more details (including a google map) of the property.

• Lofts at 36 A (South Boston)
• 285 Columbus Lofts (Back Bay)
• Meads of Commonwealth (Back Bay)
• Broadluxe (Financial District)
• Macallen Building (South Boston)
• 700 Harrison (South End)
• The 1850 (South End)
• Penny Savings Bank (South End)
• D4 Police Station (South End)
• Claflin Building (Beacon Hill)
• Intercontinental Residences (Waterfront)
• FP3 Boston (Seaport District)
• Allele (South Boston)