Episode 4 – Home Buying Advice and Tips from Rich Rosa with Buyers Brokers Only
This is Listen Up home Buyers. The only podcast offering Home Buying advice and tips from true buyer agents and now here’s your host, Victoria Rae Henderson.
Victoria Ray Henderson 00:10
Thank you for joining me for Listen Up home Buyers. Today’s guest for the podcast is the co-founder and co-owner of Buyers Brokers Only. It’s an Exclusive Buyer Agent, real estate firm with offices all around the Boston area. He’s been quoted in many national publications, including the New York Times Boston globe and the Boston Herald to name a few. It is a real pleasure to have attorney Rich Rosa on the podcast today. Welcome, Rich.
Rich Rosa 00:36
Thank you for having me Victoria.
Victoria Ray Henderson 00:38
Rich, could you start us off with telling us about what marking conditions are in the Boston area? And I know that includes suburbs and city. That’s a broad question. So go ahead and break it down for us and tell us what summer of 2019– into the fall of 2019 has been like for you.
Rich Rosa 00:55
So on a statewide basis, prices have been going up, and inventory continues to go down. Every city or town is a little bit different. Some have seen bigger increases, some have seen less of an increase in prices. With regards to inventory in Massachusetts, the number of houses on the market has declined 89 over the last 90 months.
Victoria Ray Henderson 01:19
What is going on? I mean, what is your take on why the market conditions are doing this?
Rich Rosa 01:25
I think it’s a combination of things. I think for some people, they’re getting priced out of the market and so I think people are maybe just on the sidelines and that’s having some effect with sales. Sales are also been down a bit over the summer, primarily because of the lack of inventory. But also, I think because its prices have gone up with regards to the lack of inventory. I mean, sellers certainly know they could sell their house very quickly if they want to, especially if they price it right and their house is in decent shape. I think part of the problem is with move up sellers, where they want to buy maybe a bigger house or move to a different neighborhood or city. But they’re hearing that their house will sell in three days, but it might take them three months to find a place and I think for a lot of people that’s a little scary. So I think we’re in this catch 22 where people may want to move, but they’re not pulling the trigger, so to speak, because they are afraid that their house will sell very quickly and they won’t be able to find something.
Victoria Ray Henderson 02:36
Yes and you just answered what I was thinking would be my next question, which would be why in the world wouldn’t a seller love this. But that seller quickly becomes a buyer and has to experience what it’s like to have a lack of inventory lack of choice? How do you prepare your home buyers for this kind of a market? Because they’re obviously competing. Walk me through that process a little bit?
Rich Rosa 02:57
I really like to talk a lot of my clients about their m mortgage options. You know, I find that especially a large portion of my clients are first time homebuyers and I find that there’s a lot of misinformation, or just the lack of information with regards to mortgages. So first, I want to make sure they understand that there are a lot of mortgage options, and not every lender provides every option.
So they should learn about it and find out who provides what mortgage might be best for them and then with regards more specifically to your question, I think it’s just a matter of being prepared and ready to put your best foot forward and that means not just getting a pre-qualification, but making sure that you’ve given the lender: tax returns, pay stubs, W -2’s, other bank records, and so that the lender has all the information they need and that they could say that in a pre-approval or pre-qualification– and be able to say that they’ve checked your tax returns, they’ve reviewed your W-2’s and your pay stubs and your bank records and your credit score, so that we can say to a seller, “You know this buyer is well qualified”
Victoria Ray Henderson 04:09
So tell me just about maybe one or two of these mortgage options that you’re talking about just to give a first time Home Buyer and an idea of what’s available.
Rich Rosa 04:19
Well, I think, every state has some of their own first time Home Buyer programs in Massachusetts, we have something called Mass Housing. It allows Home Buyers to put down as little as 3% and they actually have a new program that started maybe a little less than a year ago, where you could put down 3%, but then we’ll give you another loan for the 3%. So it’s basically;
Victoria Ray Henderson 04:41
Putting down nothing-
Rich Rosa 04:42
-Putting down nothing [crosstalk 04:44] credit scores. It’s not that everyone’s not going to qualify for the program, you have to have a certain credit score, you have to serve certain debt to income ratio and for that particular program with the down payment assistance, your income has to be no higher than 100% of the meeting area income and then for the other programs, you can make a little bit more money and still qualify for the 3% down. That’s one program, then we have another one called the one mortgage, which is a program where it’s again 3% down. However, if your income limits are lower, but the interest rate is typically below market rate, and you do 3% down with no PMI, no mortgage insurance.
Victoria Ray Henderson 05:27
That is great. OK, and real quickly tell somebody what PMI is?
Rich Rosa 05:32
PMI stands for Private Mortgage Insurance or sometimes just referred to MI and when a buyer buys a home with less than 20% down, they typically will pay Mortgage Insurance and it’s insurance that protects the lender in the case of a default.
Victoria Ray Henderson 05:49
That would increase their monthly payment?
Rich Rosa 05:51
It will increase their monthly payment. The good news is, Mortgage Insurance is a lot cheaper than it was about 6 or 7 years ago. I don’t know the specifics but I’m told that there’s just more competition in the market and I remember, maybe 10 years ago having clients with Mortgage Insurance that was, approaching $300 a month, I rarely see it more than like 150 a month.
Victoria Ray Henderson 06:13
That’s terrific. So you’re saying that one mortgage would actually waive that PMI for the people who qualify?
Rich Rosa 06:21
Yes, the PMI in addition, depending on where your income is, they even do some down payment assistance.
Victoria Ray Henderson 06:29
So when I was doing my research on you, Mr. Rosa, I know you have a lot of first time homebuyer classes. It sounds like you’ve got a lot of good information to share. Do you have any that are coming up now that people could prepare for?
Rich Rosa 06:40
None scheduled right now, but we hope to have one or two scheduled for the fall pretty soon.
Victoria Ray Henderson 06:45
OK, and they would find this information on your website
Rich Rosa 06:48
Yes, we usually have it posted on our website, we’ll usually put out a press release on our website. Sometimes we mentioned it in our blog, people are on our email list, and they’ll get an email at some point as well.
Victoria Ray Henderson 06:59
Okay and I’ll be sharing that on the podcast so people can know where to go, if they want to come to your class. Here in the Washington, DC area. I’ve noticed as I’ve been doing these podcast interviews, we do things differently than people do in other parts of the country, when it comes to sitting down and putting together the contract. For one thing, we actually assemble the contract. You know, I’m an Associate Broker with Buyers Edge and in the Maryland DC, Virginia area, I write or put together, I should say I fill in the blanks on that contract. Walk me through what that’s like where you are in Massachusetts, do you do the same thing?
Rich Rosa 07:32
So in Massachusetts, it’s a two-step process. Some states I know start the process with the purchase and sale agreement, we actually start the process with what’s called an offer to purchase contract and with similar to what you’re saying we’re filling in a standard form, there’s a couple of different standard forms. We have the Massachusetts Association of Realtors Offer Form and then there’s a Greater Boston Association of Realtors Offer Form we actually use the Massachusetts form, because home inspection contingency is more buyer friendly.
Victoria Ray Henderson 08:05
Yes, we do the same thing where we are. We use one instead of the other but go right ahead.
Rich Rosa 08:09
Yes, so similar to you, we fill that out and make an offer and just so people understand when they’re when we’re saying fill it out. Typically, in my case, I am an attorney. But typically real estate agents are attorneys and the reason why they’re filling it out as opposed to making it up as they’re going along is because they’d be practicing law. If they were writing a lot of language into a contract.
Victoria Ray Henderson 08:32
And that’s illegal.
Rich Rosa 08:34
Yes… That’s the first step in our process. So usually, the offers made, the offer is accepted. The first deposit is made, which is typically around here about $1,000. Although there’s no– it doesn’t have to be that amount.
Victoria Ray Henderson 08:48
OK, somebody asked when you say first deposit, are you referring to the earnest money deposit?
Victoria Ray Henderson 08:48
OK, go ahead.
Rich Rosa 08:53
Rich Rosa 08:55
We don’t refer to it as that. But yes, that’s exactly what I mean.
Victoria Ray Henderson 08:58
Rich Rosa 08:59
And then typically, a buyer gets 10 days to do a home inspection and if that goes well, and they’re going to continue on, then we sign a purchase and sale agreement, that is typically put together and reviewed by an attorney.
Victoria Ray Henderson 09:13
Before it’s submitted to the listing agent or..?
Rich Rosa 09:16
Well, the listing agents already received the offer already, their seller has already accepted the written offer. Our offer form is only a couple pages long, and then once that’s agreed to, and the first deposit is made and the home inspection is complete, then we sign a purchase and sale agreement and make a [crosstalk 09:37] deposit.
Victoria Ray Henderson 09:17
Rich Rosa 09:17
At that point, a lawyer is involved, it should be involved anyway, we always encourage our clients to have a lawyer, review and edit the purchase and sale agreement. Now that’s how it is in Massachusetts. We’re licensed in New Hampshire and in New Hampshire, the offer was made with the purchase and sale agreement.
Victoria Ray Henderson 09:56
Yes, that’s the way we do it in the DC area. Very interesting. So, anytime anybody’s moving to a new part of the country, they really should educate themselves about how to buy a home because it’s not the same everywhere.
Rich Rosa 10:09
No, it’s not and in fact, Massachusetts is one of– I think it’s 13 states, I could be wrong on the number but a dozen or more states, that requires that an attorney do a closing. So we don’t have title companies in Massachusetts. Attorneys must do the closings, as opposed to New Hampshire where, you know, title companies can operate in New Hampshire.
Victoria Ray Henderson 10:31
Yeah, we often recommend a settlement attorney for our buyer clients with Buyers Edge, but we also use title companies that don’t have attorneys. So we have both happening, we cover a very big area that with Northern Virginia, DC and Maryland, and we’ll go up to Baltimore and all that surrounding area as well. So it’s a large area we cover and I know you do the same obviously covering New Hampshire and Massachusetts, or the greater Boston area. So tell me a little bit about your office. I mean, how many people are with Buyers Brokers Only?
Rich Rosa 11:02
So besides myself and my business partner, Dave Kres. As of right now, there’s 27 of us.
Victoria Ray Henderson 11:09
And you’re pretty busy. You said this summer,
Rich Rosa 11:10
Yes, it’s not bad. I August was a little less bus but August has been a little less busy the last couple of years for us, I don’t know, beginning of August till about first, second week of September, has been slower the last few years. Not sure why that is. But it’s been consistent the last 2 or 3 years.
Victoria Ray Henderson 11:28
Walk me through a little bit about the home inspection. Are you with your client when you do a home inspection? And what are you looking for when are walking right with them and the home inspect?
Rich Rosa 11:36
Yes, I go to all Home Inspections with my clients and so to all my associate brokers, you know, what I try to do is when I do a showing, I try to point out some of the things that I think are obvious that a home inspector is going to point out. Obviously, I’m not doing a home inspection, I make it clear to my clients, I’m not a home inspector, and I’m not doing a home inspection. But if there are things that I know that the home inspector is going to point out, I’m going to mention them to my client and just say, “You know, the home inspector is likely to talk to you about this or that”. In my opinion, I don’t think the Home Inspection should be a complete surprise every step of the way. I’d like to point out some things during showings so my clients are aware of some of the things that might come up.
Now, that said, at the home inspection, I like to leave that between my clients and the home inspector. That’s their time, I’m certainly willing to speak up and help out if they want me to, but I feel, I walk with them step by step, but I’m letting them ask the home inspector questions, letting the home inspector say what he has to say, and let them do their thing. One of the things I do try to do at the end of a home inspection is, if my clients don’t ask the question, I always ask the question to the home inspector, what are the 1 or 2 or 3 priorities here that you think the buyer should be focused on or get fixed or get improved when they buy the house or before.
Victoria Ray Henderson 13:02
Yes, and you sum it up for them? Because a lot of times, you know, we have buyers who won’t speak up, because they don’t know what they don’t know if that makes sense and after that experience, and they might be a little intimidated by what they’ve just learned or overwhelmed, it is good to sum up and say, OK, what do you think of the house overall, and like you’ve mentioned, we go on hundreds of home inspections, and we’re not home inspectors, but we sure learn a lot from that experience. So walking up to a house, we should be able to say, that roof looks like it’s in good condition or not. There’s water in the basement — You know, things that we need to bring up. But certainly not during the home inspection. I agree with you about that. That’s the relationship between the buyer and the person, they’ve hired the professional.
Rich Rosa 13:48
Right and, of course, I’m sure you know, there’s times that the home inspector is saying something and you could tell that your client has no idea what he’s talking about. At that point, you might chime in and say, Do you understand what he meant by that? This is what he meant, or have him explain what when that. So there’s times like that. So it’s not like I’m just sitting quietly here standing quiet at time, but I try not to inject myself too much into it unless necessary.
Victoria Ray Henderson 14:15
Yes, you know, we have a home inspector that we recommend, and we’ve used him for years and in the beginning, he’s excellent at what he does, but getting him to speak and explain what he’s seeing became a little bit of an education process on our side. So we would turn to them and say, “Now, what did you just see? Would you like to tell our client about that?” And after that process, a little bit came around and was like, “Yeah, I think this develops a better relationship”. We’re like, “Yes, it does”. Communicate what you’re seeing as you go along.
Rich Rosa 14:45
And what I find and I tell this to my clients, especially the first time Home Buyers is that, a home inspection is not just about telling you what may or may not be wrong with the house, but it’s also about Educating a first time Home Buyer on becoming a homeowner. Saying things like, this is how you’re going to maintain this when you own the house and something you should look into and this is something that you should do differently, and things like that. There’s a lot of– I mean, good home inspectors, I think have a lot of really good information about being a homeowner, not just about in addition to inspecting the home.
Victoria Ray Henderson 15:23
Yes, what you need to call where the main water valve turn off is why you want to turn off that hose bed in the wintertime. All of these kinds of things should be coming up in that home inspection.
Rich Rosa 15:35
Victoria Ray Henderson 15:36
So Rich, what’s coming up in the Boston area that would make people excited to live there?
Rich Rosa 15:40
Well, I think what’s exciting, what’s bringing a lot of people to the Boston area is I think, our high tech economy or whether it’s computer software, whether it’s biotech, obviously we have a lot of well-known hospitals, so there’s a lot of people moving for the medical field. So those are the things that are driving people here. Those are the industries that we see most of the people that are relocating to the Boston area. Boston is one of those cities that if you’ve been here– You know, one of our bigger cities in the country, but yet it has a kind of a small town feel to it. There’s area is not enormous. Boston’s made up of a lot of neighborhoods and then the greater Boston area is sort of compact as well. So it’s a great place to live and it’s a great place to work with the exceptions. We have a lot of traffic.
Victoria Ray Henderson 16:31
Yes, you do. But you know we do as well in the DC area. Halloween is the next big holiday coming up. What’s it like in Boston?
Rich Rosa 16:41
Not– nothing in particular. But we have a small city just outside of Boston called Salem, Massachusetts.
Victoria Ray Henderson 16:48
Rich Rosa 16:49
You may have heard of the Salem witch trials. A couple 100 years ago or so. A little more maybe, they make a really big deal out of Halloween. It’s like a month long celebration in Salem. It really is. That’s a pretty interesting place to be around Halloween.
Victoria Ray Henderson 17:08
Rich Rosa, the co-founder and co-owner of Buyers Brokers Only in the greater Boston area. Thank you so much for joining me it has been great having you.
Rich Rosa 17:17
Thanks very much for having me.
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