It’s important to have a basic understanding of how your basic needs and wants line up with the reality of the market.
A Beginner's Guide to Buying a Home in Boston
A vibrant economy, prestigious universities, easy walkability, stunning architecture — is it any wonder Boston continues to loom large in the imaginations of strivers, adventurers and potential transplants?
If you’re dreaming of making Beantown your town, here’s a roadmap to help you successfully navigate the city’s red-hot, ultra-competitive real estate market.
Know the market
According to Zillow, the median home value in Boston is $455,600 — that’s more than twice the national median of $217,300. In addition, there are seven cities within the Boston metro area where the median home value tops the $1 million mark. And two more are expected to join the list by mid-2019.
What’s at the heart of this boom?
With its large number of prestigious universities and a strong presence within the financial community, Boston has long attracted large numbers of both young and seasoned professionals on the hunt for easily commutable homes in the most desirable areas closest to the city center where they both work and play. In recent years, an increasing number of large employers — General Electric, Amazon, Reebok and several cutting-edge tech upstarts among them — have also established a Boston-based presence, boosting those numbers of that population further. At the same time, retired Baby Boomers are trading in their large suburban homes for upscale, downtown condominiums. This steady stream of prosperous potential homebuyers has driven up real estate prices and demand.
Be aware of existing challenges
A tight real estate market means crowded open houses. Homes will often sell much faster than many new home shoppers would expect. Multiple-offer scenarios and biddings wars are frequently a normal part of the process — sometimes while the buyers are still touring the home in question.
In this type of buying environment, it’s important to have a basic understanding of how your basic needs and wants lineup with the reality of the market. You always want to leave some flexibility in your plans for unexpected finds and pleasant surprises. Generally speaking, however, the more you’ve narrowed down your list of must-have amenities, preferred neighborhoods, and price-point ceiling, the more efficient you’ll be in your search — and the faster you’ll be able to act when you find yourself standing in front of an abode that fits the bill.
Unsure of your “musts”? Don’t fret. That’s perfectly natural — and one of the major reasons many real estate professionals suggest buyers attend many open houses early in the process. You won’t only get a feel for what’s currently on the market, but also have the opportunity to think about what does and does not work for you in a non-hypothetical, real house setting.
Still, even if you know the market, competition for a highly desirable home can be fierce — even for those who feel they’re prepared. Tight market bidders often offer more than asking price. More established buyers can skip bank financing and purchase a home with cash, allowing them to waive their right to an inspection or appraisal. While these waivers could make a bid more attractive to a seller, it can also create severe long-term problems for a new property owner who may be unaware of an unseen termite infestation or a lower-than-expected property value. While it’s worth knowing that you could lose a potential property to a more aggressive bidder, some oft-used strategies are not often to the buyer’s advantage.
Be prepared with a strategy
Whether you’re looking to live in East Boston, Dorchester or anywhere in between, it pays to have a solid strategy in place. Taking the following steps before you step foot in your first open house can help you set yourself up for success:
Get pre-approved. Many first-time shoppers erroneously expect to leave this step for after they find their dream home but the sad reality is that many real estate agents won’t consider one a viable buyer unless they have a preapproval letter in hand, before they go shopping. The good news is that many reputable lenders can conduct an introductory interview, pull a credit report, help you select the most effective mortgage type and quickly have a letter available.
Engage a buyer’s agent. Ultimately, a buyer can benefit by working with a responsive agent who is intimately familiar with the areas most desirable to the buyer. The right agent will know the ins and outs of an area, including available inventory but also likely homeowner’s association (HOA) fees, realistic commuter times and even what’s available in the area for fun, when the work day is done.
Know your budget. Up-and-coming areas and those farther from the financial district are more likely to be more affordable. South Boston or Dorchester may be a good fit for those on a tighter budget while Back Bay and the South End will attract buyers with higher price points. Knowing what you want — and what you can afford — can help you more swiftly zero in on the home you ultimately want to buy.
Have a 20% down payment. Twenty percent is often the minimum for a buyer to be taken seriously in an exceedingly tight real estate market. Also budget for high closing costs, which can often take new homebuyers by surprise.
Finding the right property can be a challenging goal but it can be an attainable one for the prepared homebuyer. Take the time to know what homes are available, what challenges you may need to be overcome, and what steps you’ll need to take. Then be prepared to move quickly, when the right property becomes available.