It might be your first weekend on the open house circuit, or your twelfth, but eventually you will find a property you’d like to own. The market in Arlington is, for most price points, in a word, fast. New listings typically come to market late in the week, on Thursday or Friday. There will be a few hours of Open House during the weekend, and then offers are due sometime between Sunday and Wednesday. Sometimes a property can even go under agreement before you knew it was available.
Be prepared to write your offer. On short notice.
We don’t advise you to be in a rush. You shouldn’t ever write an offer before you are ready and educated about the process, but when the property that works for you is available, be in a position to write your offer.
Making an Offer
Writing an offer will take an hour or two, bring a check book and think through a few of the main topics in advance:
- What due diligence do you need to do and when?
- How will you pay for the property? Do you need a mortgage?
- What price will you pay for this property? Where does this price fall in the spectrum of good, fair, reasonable, or crazy?
- How much of a deposit will you put down?
- Do you have specific requirements for a closing date?
When you write the offer you will specify the price that you are bidding, the deposits that you are making, the contingencies you’re asking for, and a timeline for the steps of the transaction from offer to closing. In a competitive bidding situation, all of these things are part of your strategy to present a strong offer. A winning offer is about more than just the price.
The first deposit, the earnest money deposit, is presented with the offer. Historically this deposit was almost always $1,000. Today this number varies a good bit with the location and price range of the property. $5-10k is a more typical number for most properties in Arlington, with higher deposits seen for properties that are more expensive.
It might happen that you get an accepted offer on your first property, but more often we’re seeing the process take 5-10 offers for most residential property searches. Your particular intersection of budget and requirements will make your search easier or more challenging, but we’ll be there with the relevant data to help you make good decisions through the whole process.
Once you have an accepted offer in hand, we will guide you through the process of getting your financing or financials in order and also making sure we look at every angle of due diligence to help you spot potential problems before they become your problem.
Purchase and Sale
Once you have completed whatever due diligence you have negotiated to perform, you will sign a Purchase and Sale agreement. This process is somewhat unique to Massachusetts and very unexpected for many buyers from other places. The offer that is written in the beginning of the transaction is expanded by the attorneys for the buyers and sellers (yes, you will have an attorney). With few exceptions, a Purchase and Sale is crafted individually for each transaction by beginning with a standard form and some standard addenda and then negotiating the result between the parties.
The item to note here is that a second deposit is due at this time. Historically, this deposit was 5% of the purchase price (minus any deposit already made) in most places. Today, these numbers have become substantially higher, and being able to make a significant deposit at Purchase and Sale is part of an offer strategy. We encourage our clients to expect to make a deposit of at least 10% at this point and 20-30% or more can be helpful.
After the Purchase and Sale
For the two weeks or so between the offer and the Purchase and Sale it can seem that buying this property is your new full time job. Now, you are mostly done and other people are working. If there is a lender, the lender is doing their due diligence—on the property and on you, ordering the appraisal and verifying your income and assets. The attorney is doing the title work.
This is where people get tempted to buy cars, pay for vacations, open a new charge card to save 5% at a store, open a line of credit to buy furniture for that new dining room, etc.. If you are applying for a mortgage, I strongly encourage you to not do any of these things before you close without consulting your lender first. It could cause your loan to be denied, or the terms of the loan that you are hoping to get to change.
People will often use this time to shop around for a mortgage at a different rate or terms. I cannot emphasize enough: do not change your lender at this point. Choose the lender in the beginning, before the offer, and stick with them. The lender is the lynch pin of closing your deal and protecting your deposits. You may have a deposit out there of $50k, $100k or more. Use a reliable lender, and stick with them.
Do get your home owners’ insurance, change the utilities to your name and schedule your move.
Because closing is not certain until it is actually complete, (closing dates change, things do happen) we encourage you to schedule your move for at least a few days after the proposed closing date and clearly understand the terms of the contract with your movers for cancelling or rescheduling.
If you are painting, having floors redone, or planning any other work, leave that window and give yourself a buffer before your move.
Closing is where you become the owner. Immediately prior to closing, we do a walk through to make sure that they property itself is the way that you last saw it, or that it is the way that it was promised. The walk through is making sure any promised repairs were made, looking for any damage since you have seen it, or seeing if the seller mistakenly took appliances or other fixtures that were to remain with the property.
From there you typically go to the Registry of Deeds or the closing attorney’s office to complete the closing documents. This can take less than 30 minutes for a cash transaction or about 1-1.5 hours for a purchase with a mortgage.
Bring three things:
- a photo id like a drivers’s license or passport
- a check book for small changes to the settlement amount
- a certified check (or send a wire) for the balance due
You become the owner when the property is “on record”, when the documents are recorded at the Registry. This can take from a few minutes to several hours depending on the line at the Registry. You officially own the property when it is on record and you are generally given the keys at that point.