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Real Estate – Navigating Boston Property Taxes

Real Estate – Seller Beware

If contemplating sale, now is a good time to consider your options. We are heading in to a competitive Spring Market where prep and representation can make all the difference toward achieving your goals.

As a potential seller, there are more agents to choose from than ever before. We have seen the total number of licensed agents jump approximately 15% since covid struck (1,400,000 realtors in 2019 to over 1,600,000 in 2023!). This drastic increase in agent availability has created a more difficult field for sellers to navigate. The combination of total agents available + the major decrease of inventory since interest rate hikes, has created a far more desperate agent pool. If you don’t believe me… try posting “Looking for a realtor!” in any neighborhood Facebook group, and see what happens. 🙂

To compound the increase in available agents, social media has created a platform that can be incredibly misleading. Even for me it is difficult to figure out who is legitimate versus who simply “looks the part”. It is not until I speak with someone and/or see their performance through a transaction, that I realize who is informed and an asset to their client. Unfortunately, the last couple of years I have seen far more agents become client liabilities than assets.

The good news for sellers is the market is in your favor. With this advantage it is incredibly important you hire someone that is going to make the sale process seamless and ensure you receive top dollar. Hiring the wrong agent or someone not fully qualified can result in a significant loss that is difficult to recoup in other facets of life. I have recently seen seller’s (lucky for my buyer clients..!) undersell a home for $150,000+- less than what it was worth. Often times the seller does not even know this happened… they simply are unaware to the full scope of market conditions or procedural mistake(s) made by their agent. So, when looking for an agent please be sure to complete ALL diligence and educate yourself on who is the best fit to represent you and your property. Do not simply choose the most convenient option (a friend, family member; etc) or someone making more effort to look the part than truly learn the process. You deserve the best representation available.

Remember: real estate is not rocket science… but a small mistake can be incredibly costly. Seller beware!

Real Estate – Limited Inventory

 

The lack of supply within Boston, and all Metro Boston markets, has bottlenecked buyer demand. There is not nearly enough homes for sale to satisfy the number of buyers looking to purchase. This has been an ongoing theme since the drastic rise in interest rates. Rates are currently 2x+ what many home owners currently have on a 30 year fixed mortgage. This has all but eliminated any motivation for an owner to sell. After all, why sell a home that has a mortgage rate of 3% to buy something at 7%? Even if it is an upgrade. The financial discrepancy on cost is not being offset nearly enough by an upgrade of property quality, size, or location. Compounding this predicament is the fact inflation and cost-of-living has not gone down by any substantial measure. The whole intent of interest rates being increased by the Fed was to curb inflation. I think we can all say it has not yet worked… while creating collateral damage within the housing market (among others). This is going to have a generational impact as many younger people simply cannot afford to buy, leaving them void of a historically strong and stable asset as time goes on.

Real Estate – Prevent Frozen Pipes

  • Keep heat at minimum 60 degrees.
  • Open cabinets under sinks, especially if on exterior wall.
  • Set faucets to a steady drip, especially if on exterior wall.
  • Keep bathroom doors open at night as thermostats are usually regulating temp from far away. This can cause the temperature in bathroom/near pipes to be much lower if door is closed.
  • Make sure all windows are closed and locked to prevent drafts.
  • Know where your main water shut-off is located.

Real Estate – Shop for Insurance!

Real Estate – Shop for Insurance!

If you own a home, you should be well familiar with property insurance and what it covers. If not, you will want to make a priority to review your policy and determine if there are areas of coverage that should be increased. Our needs change over time and with that our insurance should follow.

Coverage aside, it is also important to review your annual insurance premium. Over the last few years we have seen a drastic rise in costs relating to repairs, materials, contractors; etc. Many insurance companies have passed these increases on to the consumer (us!!). So, what may have been a $2,000 annual premium may now be $3,000. You will want to take a close look at this and ask your agent pertinent questions that will help you understand the increase. Maybe even negotiate 😉

The good news, home insurance prices can vary wildly. I see it often in Boston due to age/nature of the homes. For example, if you use a company that does not work much in Boston they may charge much more than a company that specializes in the area. This is often related to the company’s fear of building age, shared walls between single families, no fire-walls between buildings, shared foundation, old wiring, old insulation; etc. They see this as higher risk, whereas a company that frequently works with these property-types may have a better understanding and/or a different business model. This can result in less money out of your pocket for the same coverage.

So, my suggestion is to ALWAYS shop insurance rates. I have seen/worked with hundreds insurance companies over the years and I can tell you for certain… They are not all the same. If you are interested in who I use personally, don’t hesitate to reach out!

Real Estate – Purchase Valuation

Purchase Valuation

One of the hardest things as a buyer is determining what a property is worth. This can be especially difficult if you are emotionally invested in a home that you saw. The process of valuation should rest on the shoulders of your agent. You should trust the information is accurate and do not hesitate to ask questions on how the suggested value (or offer price) was determined.

When evaluating a property for a buyer the agent should factor in comparable sales, current market vs these comparable sales, quality of building/structure, quality of interior/finishes, forecasted improvements needed and when, condition/age of mechanicals, general maintenance, projected growth for given location, natural light exposure, ceiling height, layout, lot design and quality, exterior space or ability to improve such, general amenities such as sqft, beds/baths; etc. In order for a buyer to have a chance at securing a property (without over-paying) these contributing factors of value must be analyzed. If you do not have representation to effectively determine value, the chances of you making a bad investment and/or purchasing a property that has compounding costs are exponentially higher. It is essential that proper and detailed evaluation be completed prior to offer submission.

Additionally, I also caution buyers to not put much emphasis on estimates provided by Zillow, Redfin, or the like. These are often inaccurate and highly influenced by the asking price. I have seen many of these “estimates” on my own listings adjust to at/around asking price once a given property hits the market. So, by the time a buyer sees the “estimate” it may already have been influenced by the asking price. These website algorithms are impressive technology… but they are far from perfect and do not factor in many of the mentioned variables that can greatly impact value. This is especially true in areas such as Boston where the age, the style, and the location within a small neighborhood can vary wildly.

When making what is most often the biggest investment of your life, ensure you have the proper representation to eliminate costly mistakes. This will significantly increase the likelihood you have a strong return on investment when the time comes to sell.

Remember: a buyer agent only gets paid when you buy… so do your best to make sure your motives are aligned!

Real Estate – Winter Prep

As we get in to the colder months, here is a list of things to do prior to the deep freeze!

  1. Service HVAC or Boiler.
  2. Drain outdoor spigots.
  3. Install storm windows (if you do not have thermal layer windows).
  4. Service/clean fireplace.
  5. Cover wood store or keep in a dry place such as garage (if you have a wood fireplace).
  6. Clean gas fireplace (if it is not an enclosed insert).
  7. Check attic and basement for any holes created by animals. These can lead to drafts that can lead to freezing pipes and/or high heating bills.
  8. Clean gutters. This will help prevent ice dams.
  9. Put up reflector poles along driveways, walkways; etc. before ground freezes.
  10. Evaluate tree limbs around house that may fall/break under weight of snow.
  11. Evaluate roof to make sure shingles or rubber are not peeling. These are more difficult to repair in the freezing cold!
  12. Insulate any exposed pipes. Simple pipe insulation can be purchased at any hardware store. This most often applies to unfinished basements.
  13. Make sure any ceiling fans are counter-clockwise. They should be pulling air UP not pushing DOWN. This creates circulation throughout the room and distributing the warmer air that collects around ceiling.
  14. Test snow blower is BEFORE it snows.
  15. Stock essentials that may run low during a storm (non-perishable food, water snowmelt, shovels, candles, matches, flashlights, batteries, firewood, gas for snow blower; etc).

Real Estate – Who are rates impacting most?

Who is being impacted most by the rise of interest rates?

First-time-buyers.

There is no demographic of buyer that has been more affected by the national rate hikes than this group. It is unfortunate “collateral damage” to a large group of young-adults that are being all but forced into renting for the foreseeable future.

On the seller-side of things, these rate hikes have brought down their values. However, the reduced prices are not enough to off-set the monthly costs for young buyers. To compound this, many sellers of this product-type purchased during a lower rate environment. Leading them them to a “hold” position as they do not want to take a loss on sale. These seller’s monthly payments, even if they overpaid on purchase, are being covered by current rent values. We are seeing more 1 bedrooms (that would historically have been up for sale to take advantage of value-appreciation + capital gains exemption) be converted to rentals.

There is a good chance the above leads to higher rents in 2024. The backlog of would-be buyers waiting for rates to come down may start opting for a higher-quality apartment than a condo purchase. Leading to increased demand for rentals, pushing prices up.

Real Estate – Trusted Techs

Trusted Techs:

If you own a home, then you know issues with inevitably arise. This is an unavoidable consequence that comes with the territory of a “physical asset”. If you are unprepared, or do not have the right resources/vendors when an issue arises, it will compound the problem.

For example, losing heat in the winter = NOT FUN. But, losing heat in the winter + nobody will answer your call for help = EVEN LESS FUN. Having a trusted plumber can eliminate tremendous stress and headache during times like these. Not only will this plumber answer your call and complete the job in a timely manner, they will (usually) not overcharge you. I write “usually” this way because the cost of trade-work is at an all time high… so these days even the current market price can feel like you are being taken advantage of. One thing I will always suggest –> negotiate, negotiate, negotiate. Often times a vendor will reduce price if you ask the right way (hint: nicely!).

On the Real Estate side, this type of trusted network is something I provide to all my clients whether you bought/sold last week or 10 years ago. Having vetted dozens of vendors in each trade through my 20+ years in real estate, I have intimate knowledge of who is reliable. When a situation arises for a client, my first step is to always ask questions to understand the issue. Then, if any basic troubleshooting can be applied I make suggestions. If this does not work or it is not a potentially “simple fix”, then I provide my vendor contact. I also notify the vendor with name of the client reaching out and outline of issue. This helps them be prepared and ready to respond. *Note: I never accept kick-backs from any vendors I recommend. All I ask is they do a good job and charge fair market.*

Long and Short: whether it be a plumber, electrician, handyman, roofer, painter, flooring; etc – having a rolodex of people you can rely on will be a tremendous relief when in a pinch.

Real Estate – Selling and Selecting

@ sellers!

If you are considering selling your property, PLEASE research who is the best fit to represent you. There have never been more options to choose from on an agent front, so you need to be more careful than ever. Part of the issue with real estate as a whole is the very low barrier to entry. The simplicity of getting a license makes it really difficult to determine who is qualified VS. who simply “looks the part”. Real estate is not an overly complicated business, but small mistakes can lead to tens-of-thousands in dollars left on the table, if not more. Remember: real estate is most often the largest investment someone owns… so be sure to treat it that way!

Here are a few things to think about when interviewing:

  • Does the agent know my market? Often sellers know more about the market than the agent they hire! The agent should be a wealth of knowledge/insight on the area.
  • Do they have knowledge of construction/property maintenance? Questions always come up from buyers about the property  (material quality, age/type of mechanicals, flooring, electrical, windows, roof, appliances, foundation, water entry; etc). An agent being able to succinctly answer questions often leads to a buyer waiving a home inspection or, at the very least, a higher level of comfort for the buyer.
  • Do they know the points of differentiation from your property and others that have sold? Buyers often know the market really well, especially these days with sites like zillow, redfin etc that are full of information. If the agent isn’t familiar with the other sales in area they can’t effectively promote your home.
  • Do they have an eye for decor and property prep? Often agents leave prep to the seller without guidance. This leads to the property selling for less than it could/should. If the home’s first impression online isn’t great there is a good chance buyers will not take the time out of their day to view in person.
  • Review the agents past listings to see the quality presented! History repeats itself, and the internet is forever. 🙂
  • Ask agent for their Average Days on Market AND Average Sale Price vs Initial List Price. These two measurable’s will give you historical representation of what to expect. This will also help you understand if the price agent suggests is accurate or inflated to simply “get the listing”; which often leads to price reductions or sale well below original price.
  • Ask agent if they pay for extra marketing materials such as 3d Tours, floorplans, mailers, online ads; etc. Your agent should be putting you in best position possible, on all fronts.
  • Is the agent your primary point of representation? Or, are they just the name on contract? With the growth of “team” models the last few years, you need to be really careful here. Often a seller may think an agent is representing them when in reality they are having an inexperienced team member do the leg-work/representation. *Of course an agent can’t be everywhere at once, so there are times a member or assistant hosts an open house, covers a showing; etc. But this should not be the norm if you are paying someone to represent you (imo).*
  • Don’t feel pressured! If an agent approaches you aggressively question their motivation. Remember: they don’t get paid until a deal closes! So, unless it is coming from someone you genuinely trust, always question the advice you are getting.

In short: With the high interest rates there are less buyers… and less buyers = less room for mistakes when selecting an agent!

Real Estate – Navigating Boston Property Taxes

Navigating Boston’s real estate taxes can be complex, but it’s essential for property owners and investors in the city. Understanding property assessments, tax rates, and available exemptions and abatements is crucial for managing your tax liability. If you have questions or concerns about your property tax bill, it’s advisable to seek guidance from the City of Boston’s Assessing Department,  your Realtor, or a qualified tax professional. Staying informed about Boston’s real estate tax policies can help you make informed decisions, and ensure compliance with the city’s tax regulations.

Tax Exemptions and Abatements

The City of Boston offers various exemptions and abatements to help alleviate the burden of property taxes for certain individuals. Here are a few common examples:

  1. Residential Exemption: This exemption is designed to provide relief to Boston residents who use their property as their primary residence. It reduces the taxable value of a property, effectively lowering the property tax bill for eligible homeowners. This amount is approximately $3,500 off your yearly Real Estate Taxes.
  2. Senior Citizen Exemption: Boston offers tax relief to eligible senior citizens. To qualify, the homeowner must meet specific age and income requirements.
  3. Veterans Exemption: Veterans who own property in Boston may be eligible for a property tax exemption. The amount of the exemption depends on various factors, including the veteran’s service-connected disability.
  4. Community Preservation Act (CPA) Exemption: Boston adopted the Community Preservation Act, which imposes a surcharge on property taxes to fund affordable housing, historic preservation, and open space. However, certain low-income homeowners may be eligible for an exemption from this surcharge.

Tax Rate:

The tax rate is set by the city government and is expressed in dollars per thousand dollars of assessed value. This rate is then applied to the assessed value to determine the annual property tax bill. It’s important to note that different areas within Boston may have varying tax rates. The current tax rate for fiscal year 2023 in Suffolk County is $10.74.

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