Bid fast, bid smart
It’s as much a sign of spring as cheers bursting from Fenway and mobs of runners training on the hills of Newton: Open houses on Sundays are suddenly packed.
This year there’s a wrinkle. If you’re hoping to move in Boston or a surrounding suburb, good luck. Not only are prices high, but there just isn’t much out there. That low inventory means be prepared to act fast, but also be prepared to act smart. There won’t only be a lot of traffic at open houses, expect a lot of offers, too.
“If you’re going to buy, be prepared to offer to win,” said Gibson Sotheby’s David Bates, who is also the voice behind the Bates Real Estate blog. “We’re in a market that has a lack of inventory.”
He said the volume of available condominiums in the Boston area for under $500,000 today is about one-third the level of just two years ago.
“It’s overwhelming a lot of the buyers out there,” Bates said. “It’s the nature of the market right now.”
That lack of inventory combined with the brutal competition of shopping for a new home in neighborhoods considered up and coming can leave buyers with a sense of frenzy that can lead to a lack of judgment, or a rush to judgment.
Waiving home inspection costs, for example, in order to create a more enticing bid is asking for trouble, and so is bidding well over the asking price without knowing for sure that you’re not simply bidding against yourself. RE/MAX Destiny agent Josh Muncey recommends that buyers, real estate agents, and sellers do a lot of research to avoid overshooting.
“Buyers and realtors are always asking, ‘What’s the deadline for offers?’ because they don’t want to miss out on a property, and because it’s so competitive, they will frequently come in with an initial bid above the asking price,” Muncey said. “They’ll see tons of people at the open house, but they don’t ask how many other actual offers there are before they put in that bid. I’ve seen several instances where a buyer will make a bid tens of thousands of dollars above the asking price when they are the only offer.”
But will a seller actually release that potential price-driving piece of information? Have faith, says Muncey.
“It’s very common that they won’t tell you specific details,” he said, “but they’ll let you know how many [offers] they have and if they’re expecting others to come in.”
Another common place people look to cut corners are the various fees involved in buying a home.
“I don’t tell my clients to waive their home inspection fee, but I will sometimes tell them to waive a certain dollar amount on their home inspection,” Muncey added. “You can make your offer more competitive by saying, ‘I’m going to waive the first $9,000 worth of defects that will show up in a home inspection.’
“But let’s face it, this is Boston, and a lot of these homes are over 100 years old, and you’re going to have issues at any given property.”
Reducing the dollar amount, but not waiving the costs entirely shows the seller that you’re a buyer willing to look at the big picture.
“You’re letting the seller know you’re really concerned with material defects in the property, such as foundation issues, or the roof needs to go, or furnace is down, and you’re not taking the inspection down to nickel and dime with a loose door knob,” Muncey said. “That’s one way to strengthen your offer without waiving the home inspection.”
For those who have big city dreams, but find themselves stumped by the lack of availability in the condo market, Tom Acitelli, the editor of the Curbed Boston website, says buyers must start looking beyond the most desirable markets like Somerville and South Boston.
“At this point, Somerville’s denser [in population] than San Francisco,” he said. “To say places like that are up-and-coming is sort of like yesterday’s news. Yes, they’re up-and-coming as we speak, but in like a year it’s going to be over.”
What might be the next Somerville? Acitelli offered one possibility. “Waltham?”
“It’s sort of like the New York City phenomenon where gentrification and desirability, especially among first-time buyers, follows the subway lines into Brooklyn,” he said. “I see the same thing happening in [Waltham].”
Bates also threw Quincy and Roslindale into the mix, noting they are communities with comparable inventory that are often overlooked. Outside the metro area, he liked Stoneham for its “live, work, and play” experience and feasible commute.
“I think a good strategy for people with a lot of different price ranges is to consider the next market over,” said Bates.
For the purposes of choosing a neighborhood, Bates defines the Boston areas where he works into five market categories: enviable, established, emerged, enhancing, and other.
“Like, if you’re thinking Brookline, try thinking Jamaica Plain; or if you want the South End, consider South Boston. If you’re in Jamaica Plain and you’re still not getting what you want, try Roslindale.”
For many buyers, being hung up on location can stunt the search process, especially when the inventory is so low. Keeping an open mind and paying attention to the growth opportunities the state has planned may put you one step ahead of investing in the next Somerville.
“If you go into the search saying, ‘These are the specific neighborhoods I want to live in,’ you should really be thinking, ‘But what about five years from now?’ ” continued Bates. “In five years from now, there are a lot of different things that the Department of Transportation is doing and there are some neighborhoods that will completely change because of that. Look at the planned extension of the Green and Silver Lines and you may find yourself looking at a neighborhood you never considered.”
The Massachusetts Department of Transportation’s proposed Capital Investment Plan includes public transit additions to Medford and Somerville’s Union Square via the Green Line by 2020. Chelsea and East Boston will also see the benefits of a Silver Line extension, while long-neglected routes along the Red and Orange Lines will see improvements through increased train frequency.
The changes hint at real estate booms along the transit lines and close to the stations that will reap the benefits.
Looking farther out, train extensions beyond the T are causing buzz in real estate opportunities for those hoping to find a home in outlying suburbs. The most notable among the projects is the long-term South Coast Rail project, which aims to restore service to Southeastern Massachusetts, with stops in Taunton, Fall River, and New Bedford, with a South Station destination.
If buying right now just isn’t in the plan, however, and you just want to find a nice, affordable rental, don’t assume it will be any easier.
“There’s a trend in luxury buildings with high-end units, starting at $3,000 just for a studio, being built in the area,” said Raleigh Werner, founder of referral-based rental service Jumpshell.com. “It’s attempting to bring a new crowd of people in a sense, but it’s starting to create interesting results with middle-income folks having a hard time finding units. There’s such a high demand, but no new supplies in that space.”
Finding your dream home may take compromise, aggression, and possibly more money than you anticipated. But Acitelli offered a final practical piece of advice for buyers: “Be brutally honest with yourself with what you can afford and where you want to live.”