Why Sellers Need An Attorney

Sellers sometimes ask us whether or not they need an attorney in order to sell their home.  In Massachusetts, it is standard for buyers to be represented by an attorney and is even mandatory when the buyer is taking out a mortgage.  (Technically, that attorney is representing the bank, but for the most part, the bank and the buyer are both “on the same side”.)  For sellers, there is certainly no law in Massachusetts mandating that they be represented by an attorney.  However, there are definitely seller obligations that are best handled by an experienced real estate attorney.  With such an important asset at stake, sellers would be ill-advised to “go it alone” or to believe that their Realtor can handle whatever comes up.

Below is a list of typical attorney services* that are provided by the attorney representing the seller:

  • Comprehensive review of Seller’s Title and Opinion of Title
  • Review of Offer to Purchase
  • Drafting, negotiation and finalization of Purchase and Sales Agreement
  • Closing Document preparation (deed, trustee certificate, release of homestead)
  • Obtaining seller’s closing documents (6D certificate, payoff statements)
  • Assist in the coordination of the closing and representation at the closing
  • Limited Power of Attorney
  • Attend the Closing & review all closing documents and explain their meaning and significance to the seller

Your Realtor will be involved with most of these steps as well, but does not replace the need for an attorney.  For a cost that is typically in the $800-$1300 range (depending on the attorney), it is well worth the peace of mind of having these important issues handled by a legal professional.

If you are thinking of selling your home, you should engage an attorney as early in the process as possible so that he or she can conduct an initial title search to be sure no unexpected problems arise that could result in a lengthy delay after you find a buyer.  Your Realtor should be able to recommend a good real estate attorney.  If you don’t have one, it would be my privilege to assist you in the sale of your Cape Cod home. Please contact me to get started.

* List of services courtesy of Cape Cod Title and Escrow.

Understanding the 1031 Exchange

While roughly 200,000 people call Cape Cod their year-round home, more than 500,000 are here in the summer months, meaning that many of Cape Cod’s homes are purchased for vacation or investment purposes.  If you own an investment property on the Cape or elsewhere, and have thought about upgrading to a nicer property – perhaps one closer to the water that will bring in greater income – then you should understand Section 1031 of the U.S. Revenue Code, more commonly known as the 1031 Exchange, which allows you to defer the capital gains tax on your current property and apply it to your newly purchased property.

Here are the basic rules that govern the use of a 1031 Exchange.

  1. It must be investment property. You cannot use the 1031 Exchange on your primary residence or even a vacation home that was not used for investment purposes. It is strictly for use with investment assets, including but not limited to real estate.
  2. You must engage a Qualified Intermediary. A Qualified Intermediary is a person or company that facilitates the 1031 exchange by holding the funds from the sale of your first property until they can be given to the seller of your new property. This person or company can have no other formal relationship with any of the parties involved in the transaction.
  3. You must be investing MORE money, not less.  You must must use ALL of your net proceeds from the sale of your property to purchase the new investment property (or properties).  You can invest more than that amount, but you cannot invest less.  Think of Monopoly.  To get a hotel, you need to exchange one or more houses plus some additional capital.
  4. Properties must be “Like Kind”.  The 1031 Exchange can only be used to exchange “similar types of investments”.  But pretty much all real estate is considered “similar kind”.  You can even exchange a commercial building for a rental home.  You can exchange a condo for an apartment building.  You can exchange a 2-family home for a restaurant property.  But you cannot exchange stock or a valuable collector’s painting for real estate.
  5. You can buy multiple properties. If you so choose, you can buy three investment properties in exchange for your original one investment property, as long as the net cost of the three new properties is greater than the net sale of the original property. Likewise, you can SELL multiple investment properties in exchange for one new investment property,
  6. There are time limits on the Exchange. In general, you must identify your replacement property within 45 days of the sale of your original property, and then close on the new property within 180 days of the sale of your original property.

These are the most basic and general rules associated with the 1031 Exchange option.  If you are considering a 1031 Exchange, you should speak with your financial/tax advisor(s) to fully understand all of the rules and to make sure it makes sense for your particular situation and portfolio.  For assistance in buying or selling an investment property on Cape Cod, please contact Marie.

Understanding the Cape Cod Real Estate Market

Whether you’re thinking of buying or selling a home on Cape Cod this year, it’s important to understand the overall Cape Cod real estate market to help you prepare for and negotiate your own transaction.

Recent History

Before the most recent real estate crash that affected nearly all US markets, the Cape Cod Real Estate market (as a whole) had peaked somewhere around the summer of 2006.* It took 10+ years for the median prices of Cape Cod real estate to return to their highs of that time, with the “bottom” occurring near the beginning of 2010. We have just begun, over the past 1-2 years, enjoying median and average sale prices that are higher than those of the 2006 peak. Compared to the consolidated Massachusetts real estate market, our recovery here on the Cape has taken longer and has not been as dramatic as the whole.

All Real Estate is Local

The Cape, also known as Barnstable County, is made up of 15 distinct towns and each one has their own unique real estate market. For 2018, the median sale price of single family homes in Harwich was $433,250 while right next door in Chatham, the median was $746,200. And it’s not just the prices. The number of new listings in Harwich in 2018 was up 10% compared to 2017, while in Chatham, they were down 8%.

The Data

We all understand the terms median price and average price, with “median” being the most commonly used to compare market prices in real estate. Other important data points include Closed Sales, Pending Sales, Days on Market (DOM/CDOM), and Inventory.

Closed Sales represent the number of homes that actually closed that month. Those homes most likely went under agreement 6-8 weeks earlier. So a better statistic to examine if you are wondering when is a good time to list your home for sale would be Pending Sales. This is when the home actually went under agreement. A high number of pending sales in a given month is likely an indication that a high number of buyers are looking at that time.

Days on Market (DOM) and Cumulative Days on Market (CDOM) are also useful measurements, but may not be as significant as you think. First, the difference between DOM and CDOM is that DOM reflects the most recent listing of the home, whereas CDOM includes past listings of the home when it did not sell. CDOM is generally the more relevant. Buyers often believe that if a home has been on the market for a long time, it must be substantially overpriced. While this is often true, it is not an absolute fact. Some homes that are priced correctly simply have a smaller pool of potential buyers due to some feature (or lack thereof), which itself influences the home’s market value, although not always. Also, markets can change quickly. A sudden shortage of inventory can cause prices to rise quickly and the home may suddenly sell close to its asking price. The best indicator of market value is the RECENT sale price of SIMILAR homes in the SAME or SIMILAR neighborhoods. But DOM/CDOM should still be considered, at least to understand why the home has not sold.

Inventory is a very important statistic for both buyers and sellers. Low inventory typically favors sellers and list prices are likely to be higher during periods of low inventory. High inventory favors buyers since sellers are competing against a large number of players for your dollars. Here on the Cape, inventory was historically low through 2017 and 2018. It is definitely on the rebound, although still somewhat low historically.

Relevant Timing

When Realtors are analyzing and estimating the market value of a home for either a buyer or potential seller, we generally compare the home to other homes that have sold only within the past 6 months. There are certainly exceptions to this rule, but that is a general rule of thumb. Sales older than that are oftentimes irrelevant because of changes in the market conditions since then.

For current Cape Cod real estate statistics at any time, view the County Report provided by the Cape Cod & Islands Association of Realtors. For a report of a specific town and/or specific time period, visit the Faststats main page and make your selections. And of course, always consult with a professional Cape Cod Realtor who can help you understand the data and provide information that is not easily available to the public. Please contact me, as I would welcome the opportunity to assist you with your buying and selling needs.

The Dos and Dont’s of Selling Your Cape Cod Home

If you’re thinking of selling your home in 2019, or even more importantly, if you TRIED unsuccessfully to sell your home in 2018, then this post is for you!

Let’s face it – selling a home is a hassle, PARTICULARLY if you’re living in it! Trying to keep it clean, accommodating last-minute showings, taking the dog to work so he doesn’t scare potential buyers. UGH! It’s exhausting just thinking about it. So the sooner the home sells, the sooner you’ll be able to resume your normal life and not have strangers parading through your home, passing judgement on your “priceless” snow globe collection!

If you want to improve your chances of a swift home sale, follow these 10 tips from our team of real estate professionals:

DO de-clutter the house. We’ve blogged about this before. Even if you do NOTHING else to prepare your home for sale, you should get rid of as much clutter as possible inside the home. Put away extraneous items on your kitchen counters, bath vanities, bedroom bureaus, etc. Invest in some inexpensive plastic storage containers and “hide” as many personal items as possible. Keep a few empty ones on hand for quickly tidying up for a last-minute showing.

DO have a professional-grade cleaning just prior to listing the home. Whether you do it yourself or hire a professional, be sure the entire home, especially the bathrooms and kitchen, are spic and span clean right out of the gate. Most interested buyers will come to see the house during the first couple of weeks that it is listed, so the initital cleaning is of utmost importance. You can keep on top of it more easily from there.

DO tidy up your landscaping and exterior. Many buyers do drive-bys before deciding which homes to visit. If your home doesn’t present well from the street, the buyer may never even see how wonderful it is inside. Consider a landscaping cleanup as well as an exterior wash if warranted.

DO let there be light! You may love dark rooms, but most buyers do not. Be sure all of your light bulbs are working and that your curtains and blinds are wide open for each showing.

DO be as flexible as possible regarding showings. As much as we try to tell buyers to plan their showings in advance, they frequently request last-minute showings. You should accommodate as many showings as possible, even though it may be an annoyance to you. You never know which buyer will be “the right one”.

DO hold your Realtor accountable to produce a good listing. Realtors cannot guarantee that your home will sell. And they cannot promise a particular price. But they CAN put time and effort into creating a professional-grade listing with good pictures and a compelling description.

DON’T be present for showings. You will make the buyer uncomfortable and the showing will be regrettably brief. Brief showings don’t sell homes.

DON’T ignore buyer feedback. If 3 buyers all complained of a musty smell in the basement, chances are there is a musty smell in the basement. Take buyer feedback seriously and take steps if possible to address it.

DO understand market value. If you have an unrealistic idea of the value of your home, you are setting yourself up for frustration and failure. Remember that how much you paid for your home has very little to do with its current market value. Only current market activity is relevant. Before choosing a Realtor, be sure to get at least 2 and possibly 3 pricing opinions. Once your home is listed, speak to your Realtor periodically about the price and whether or not an adjustment is warranted.

DO consult with a real estate attorney early in the process so that (s)he can review the title and be sure that you are “good to go”. There’s nothing worse than having the house packed up and being just days away from closing, and finding out that a major title glitch has sabotaged the sale. You know what they say about an ounce of prevention…

If you are thinking of selling a Cape Cod home in 2019, it would be my privilege to assist you. Contact me soon and I’ll help you get the ball rolling. Happy New Year to all!

If You’re Selling – Better Start Packing!

If you’re planning to list your house in the near or even distant future, the time to start packing is NOW! Why? Because your house will show better and sell faster, and you’ll have a head-start when moving day is REALLY breathing down your neck!

Face it – most homes are cluttered. Too much stuff in the closets, too many knick-knacks on the mantel, too many products in the bathroom, too many appliances on the counter tops, and too much of EVERYTHING in the garage and basement. If you’re planning to sell your home, you’re probably wondering how to stage it. By far, the best and cheapest staging tip is to get rid of as much visible clutter as possible. That, alone, will make the house photograph and show better, resulting in the best possible price and the shortest days on market.

Before listing your home, consider ordering a small dumpster from a local waste management company. If you live on the Cape, Nauset Disposal in Orleans is a good bet. Go through the house, garage and basement, and get rid of as much junk as possible. If there are items that you no longer use but that are in good condition, consider donating or selling them. By getting rid of unwanted items in advance, not only will your house show better, but you’ll have much less to move to your new house. If you wait until the last minute to purge, you are likely to become stressed and move EVERYTHING to the new house rather than take the time to figure out what you should keep and what you should toss. For best results, make these decisions when you’re not under pressure.

For items you are keeping, purchase some large, plastic tubs from Home Depot or Ocean State Job Lot and put away as many non-essential items as possible. By doing this BEFORE you list your home, you will have a head-start on your packing while making your home look neater and larger at the same time.

Once your home is firmly under agreement, you can start packing what is left and planning your move. You’ll be glad you began purging and packing in advance because there is ALWAYS more to pack than you imagined. When you think you’re almost done, you’re probably about half-way there. Seriously!!

Closing day sneaks up on you and there is so much that needs to be done in just a few weeks. Don’t wait ‘til the last minute. You’ll get a much better start in your NEW home if you planned a smoother ending to your old one. For a complimentary analysis of what your home is worth in today’s market, please contact me and I will be happy to assist you. Happy purging and good luck!

Thinking of Selling? Be Prepared!

If you’re planning to sell your Cape Cod home in 2018, the time to start planning is NOW. 2017 was marked by historically low inventory in the Cape Cod real estate market. Many buyers never found the home of their dreams, meaning there is pent up demand going into 2018. Sellers will likely benefit from this in the form of higher sale prices and fewer days on market. In 2017 (through November), median sale prices of single family homes rose 6.1% to $398,000 and average days on market dropped by almost 20% to 111.

So if you’re thinking of selling, here are some general tips to help you get ready.

Understand Pricing

The right list price is the most important factor in selling your home for the highest possible price in the shortest amount of time and without leaving money on the table. But it’s a difficult parameter to nail because in the end, the sale price is dictated by the buyers (or “the market”), not by the seller and not by the listing agent. What you paid for the home, how much you owe on it, and how much you have invested in it are largely irrelevant facts. The listing agent makes a pricing recommendation based on the recent sale prices of all similar, nearby properties, nicknamed “the comps”. The more recent, the more similar, the more nearby, and the more shear number of comps, the more credible the recommended price is likely to be. But in the end, the home will sell for whatever the highest bidder is willing to pay, assuming the seller agrees to the price.

Unless the seller is desperate to sell their home quickly, most sellers opt to list their homes a little higher than the price they expect to receive. This leaves some wiggle room for negotiation and also addresses the reality that most buyers expect to pay a little below asking price for the home. It also leaves open the possibility that the perfect buyer will surface who really loves the house and appreciates its full value. But it’s important not to list TOO high or you will likely miss the market and find yourself reducing the price repeatedly. In 2017, homes on the Cape sold on average for 96% of their list price and 94% of their ORIGINAL list price

In short, pricing is not an exact science. Your listing agent makes a pricing recommendation based on intelligence they gathered regarding the market. The market can change quickly for many reasons. The old adage “Don’t count your chickens before they’re hatched” applies to selling your home. Nobody can know for sure what the sale price of your home will be until it is sold. Sellers are wise to consult with 3 different reputable listing agents and to question them about how they arrived at their pricing recommendation.

Consider Your Presentation

How your home shows itself, both in pictures and “in person”, is critical to attracting the maximum number of prospective buyers, which is the key to obtaining the highest possible price. The first and most important step to effective presentation is to de-clutter the house. Even if you do NOTHING else to prepare your home for sale, you should get rid of as much clutter as possible on both the inside and outside of the home. Put away extraneous items on your kitchen counters, bath vanities, bedroom bureaus, etc. Invest in some inexpensive plastic storage containers at Home Depot and “hide” as many personal items as possible. Keep a few empties on hand for quickly tidying up for a last-minute showing. Nobody will know that the neatly stacked storage containers in the closet are actually filled with today’s pile of laundry, a mountain of paperwork that was on the dining room table, and all the dog toys in the family room. But your home will show better as a result.

Cleaning is equally important – especially in the kitchen and bathrooms. Even if these are old, they can sparkle. Most buyers can see themselves doing updates, but they will be inclined to leave a dirty, cluttered home quickly and not want to return for a second look.

Your listing agent may recommend some furniture staging if the home is empty or if the existing furniture should be rearranged to promote better flow and/or make the rooms appear larger.

As for repairs or renovations, you should carefully consider whether or not you will recoup your investment at the time of sale. Addressing critical home repairs such as a broken front step or extensive exterior rot might be worthwhile to make your home show better and eliminate items that will inevitably show up on the buyer’s home inspection report. Fresh, neutral-colored paint can also be a cost-effective “win” when selling, especially if you save money by doing it yourself (assuming you can do it well). Updating a kitchen will undoubtedly make the home show better and will also fetch you a higher price. But how much higher? Will it be enough to recoup your investment, not to mention the time and inconvenience of it all? These are important issues to consider and discuss in advance with your listing agent.

Know Thy Title

As the seller, it is your responsibility to deliver to the buyer a clean and marketable title at closing. If there are title issues with your property, it would behoove you to know about these sooner rather than later. Involving a real estate attorney BEFORE you have a signed offer is recommended so that he or she can uncover any title issues in advance.

Other Recommendations

  • Assuming you have a septic system, have it tested immediately so that you know whether or not it passes Massachusetts Title V inspection. If it doesn’t, you may need to repair it or even install a new one prior to sale. This is information you’d be better off having BEFORE you price and list the house. Your listing agent can recommend an appropriate septic inspector.
  • Read the Massachusetts Smoke Detector Law and know whether or not your smoke and CO2 detectors are in compliance. The laws differ depending on the year your house was built. A passing smoke certificate will be required from your town prior to sale and the onus is on the seller to obtain this. Your listing agent should be able to assist you with this.
  • Some sellers bring in their own real estate appraiser and/or home inspector before they list so that they will have an idea of how the home might be appraised by a buyer’s bank. The home inspection can reveal a number of issues that the seller could easily and more cost-effectively address themselves, rather than have the buyer try to renegotiate the price after their home inspection. Your listing agent can give you names of appraisers and inspectors.
  • Be prepared for your home to be shown at any time. Sometimes showing requests are last-minute and while this can be annoying, you should try to accommodate them. The more your home is shown, the more likely you are to find the best buyer and realize the highest possible price.
  • Most importantly, be prepared to be patient and practical. Unlike some other real estate markets such as the current Boston area market, most homes on the Cape do not sell the first weekend. Nobody knows for sure when your home will sell. If you really need to sell quickly, be sure it is priced realistically, not optimistically.

If you are thinking of selling a home on Cape Cod, I would be happy to provide you with a free, comprehensive, comparative market analysis (CMA) of what your home is worth. Please contact me for immediate service.