BJ Ray Boston Real Estate

I was recently speaking with a client, for whom I work as a buyer agent.  She told me that a co-worker of hers was also looking for property but had opted not to use a buyer agent.  This past week the co-worker bid on a property for which there were other interested parties and lost.  For one, losing a property for a first time buyer can be heart-breaking.  And two, it can be frustrating and lead to an over-bid the next time around.  This is a story I have heard from more than a couple of my own clients who, before contracting me as an agent, were involved in a bid, improperly gauged the offer and consequently lost out.  I certainly couldn't say that having an experienced buyer agent to represent you will result in winning every bid.  However your chances will increase dramatically.  It is important to remember that, like selling property, there is a strategy involved in purchasing property.  Each phase of the process involves some form of data collection, analysis, strategy, and execution.  Buyer agents, whether it is me or another qualified agent, collect this data, make these analyses, and formulate the best possible strategies for our clients every day!  We help our buyers make educated decisions.  Our clients do not always heed our advice. We do make mistakes too, but any good agent will learn from his/her mistakes and know, from experience, how to avoid this pitfall the next time around.  

Many folks feel that buyer agents are "glorified chauffeurs" or custodians for property.  Many don't realize how helpful a really good buyer agent can be.  I am not actually on a crusade to right this mis-guided myth, but I thought it a good topic for a blog today.  Since the current market price trends and the attractive interest rates are making home purchase, especially for the first time home buyers.  First time buyers aren't encumbered with another home to sell before making another purchase, and their would-be buyers aren't needing to sell their home to purchase, and so on and on.  First time buyers can best that part of their competition.   Getting back to de-bunking the "buyer agent as custodian" myth:  Anyone can send you links to properties, anyone can set you up with an IDX (internet data exchange) listing page for you to peruse and hi-light properties of interest.  A good buyer agent will do this too, but a good buyer agent does so much more--having an experienced agent's eyes, ears and insights will be invaluable to you in your search.  Knowing that your agent is working in your best interest, that you can trust him/her to shoot you straight and separate the sales pitch from the facts will alleviate so much stress and worry and ultimately save you time and money too.  My next blog will outline some of the more important points of buyer agency and how it actually works.  Gotta run to a showing in the North End right now! 

Fannie Mae, the privately owned financial service company responsible for facilitating home mortgage loans nationally, has put some new regulations regarding condominium purchases.  Christine Dewolfe, a loan officer at my office, listed the new guidlines in a recent newsletter (these guidelines generally apply to investment (non-owner occupied) purchases and purchases where the loan will exceed 90% financing): 

New Attached Condominiums:

• Must be substantially complete (cert of occupancy issued).
• 51% must be under contract to owner occupied/second home purchasers
• Budgets must be reviewed for the following:
• Income meets proposed expenditures
• 10% of total budget dedicated to replacement reserves
• Adequate funding for insurance deductible
• No single entity (other than the developer during the initial sales phase) can own more than 10% of the total units
• Commercial space cannot exceed 20% of the total square footage of the project

Established Attached Condominiums (owner occupied/second home):

• Must be 100% complete
• Budgets must be reviewed for the following:
• Income meets proposed expenditures.
• 10% of total budget dedicated to replacement reserves.
• Adequate funding for insurance deductible.
• No single entity (other than the developer during the initial sales phase) can own more than 10% of the total units.
• Commercial space cannot exceed 20% of the total square footage of the project.
• Condo fees over 30 days delinquent cannot exceed 15% of the total units in the project.
• IF PURPOSE OF LOAN IS TO PURCHASE/REFINANCE AN INVESTMENT CONDOMINIUM, THEN 51% OF TOTAL UNITS IN THE PROJECT MUST BE SOLD TO OWNER OCCUPANTS/SECOND HOMES.

2-4 Unit Condominium Projects

• No single entity may own more than one unit within the project.
• All units and common elements must be 100% complete
• All but one unit in the project must have been conveyed to owner-occupant Principal residence or second home purchases

The important question is how this will affect condominium buyers and sellers.  Obviously whenever any restrictions are placed on the home buying/selling process, it means that more research will need to be done in advance (more legwork) and the buyer pool, especially for new developments, will shrink and make for tougher sales and likely, as the laws of supply and demand would have it, lead to more competition among new developments and investment condominium sellers.  It's certainly not the end of the world for condo investment opportunities, but it will encourage a more qualified buyer.

If you haven't been pre-approved recently (e.g. since November/December), it is probably a good idea to contact a mortgage broker for a new one.  If you haven't settled on a mortgage broker, I've listed my top 3 below.  Remember that everyone's financial situation (credit history, savings, employment) is different as is the property they will eventually purchase and their plans for the purchase (are you buying for investment?  how long will you be at this location?  will you occupy, then rent?  are you looking to make improvements or buy (and keep) as is?  and so on).  The end result of this multiple of variables is a surfeit of mortgage packages that would dizzy even the most stalwart home buyer.  A good idea is to talk to a mortgage person who can analyze your situation and provide you with the best options available.  Here are three mortgage specialists I HIGHLY recommend:

• Joe Ray, NewFed Mortgage, (781) 241-1271, jray@newfed.com.  Aside from the fact that he's my father, he's got over 30 years experience in the industry from all sides (agent, broker, MLS president, franchise owner, developer, manager, and mortgage broker) and will use that to give you well-healed advice.  He is a straight shooter and, when it comes to getting his client's needs met, doesn't mess around. 
• Eric Kamen, Guidance Mortgage, (617) 267-5787 ext 14, ekamen@guidancemortgage.com   Eric is a longtime member of the JP community, a classical and jazz pianist,  restaurateur, music teacher, and a very talented mortgage broker.  He's extremely honest, well-informed and employs a creative approach that is incredibly rare in this profession. 
• Christine Dewolfe, Coldwell Banker Mortgage, (781)-684-6300, Christine.DeWolfe@NEMoves.com  I have only known Christine for a brief while, but after hearing her speak, seeing her credentials and reading her newsletters I am pretty convinced she's ahead of the curve compared to your average mortgage specialist.  It was Christine who provided the information listed above. 

So the announcement of these new rules is also significant because it won't only be the investment condominium market that Fannie Mae's regulatory statutes will influence.  Things are tightening up across the board.  Sure it will have an immediate effect on the supply/demand cycles, but at the end of the day the qualified buyers will be rewarded with a little more leverage on the buyers' side and a greater peace of mind with their loan package. 

Here’s an interesting blog (a bit outdated) with a different perspective of Fannie Mae.

Any ideas, thoughts or questions for topics will be openly considered so please don't let this be a one-sided conversation.