Claudette's Blog

Several years ago developers were putting the finishing touches on their plans to build 215 luxury condos adjacent to the Neiman Marcus and Nordstrom department stores which were already under construction in Natick.  The single-level condos would be priced in range from $379,900 for an 800-square-foot unit to $1.5 million for 2,200 square feet. 

It was all part of a plan to transform the Natick Mall to a shopping and living Mecca which would include 65 new stores, four restaurants, two twelve-story living towers and a world class fitness center.

The $170 million Nouvelle in Natick is now set to be an all-inclusive club with a luxury atmosphere and upscale amenities including video security monitoring, guest reception areas with fireside seating and a 1.2 acre rooftop garden.

The concept of an integrated housing and shopping center has caused some people to ask, "Why would you want to live at the mall?" 

Proponents say they like the idea of city living while still being in the suburbs.  Life at the Nouvelle offers convenience and close proximity to restaurants and shops with everything you need within walking distance.

But, downtown life in a city usually includes the closeness of cultural offerings like museums and theatres.  Apart from the General Cinema Movie Theatre, there is nothing cultural about the commercial Route 9 area and the scenery surrounding the area is anything but pretty.

The stores at the mall, now called "The Natick Collection," have been suffering under these troublesome times.  Also, a recent article in the Boston Business Journal reported that General Growth Properties, Inc, the developer of the Nouvelle, is in financial difficulty.  Of the 215 units planned only 31 have been sold or reserved showing some trepidation from the buying public.

In all fairness, buyers who look at properties like the Nouvelle have a vision of a hassle-free lifestyle that includes the benefit of luxury accommodations along with easy access to all of life's necessities.  There is some appeal for those who can comfortably afford the high unit price tag along with condo fees that start at $600 per month.

It is just my take that, given the current economic climate and the potential instability of this project that would-be condo buyers should proceed with an abundance of caution before making the leap to a life at the mall.

Copyright 2009 - Claudette Millette, President, TheBuyersCounsel -  800-392-1446, E-mail    

Learn More about Massachusetts Home Buyer Representation - Greater Boston and MetroWest Massachusetts -  Serving Massachusetts Home Buyers Since 1992 

  Ashland, Holliston, Hopkinton, Natick, Newton, Northborough, Framingham, Sherborn, Southborough, Sudbury, Wayland, Westborough 

I received a call last week from an investor seeking advice on a property he had purchased several months earlier in Massachusetts.  It was a multi-family and he had been in the process of getting ready to find tenants when he discovered that the entire building had been wired improperly.  It was so blatant a violation that it would have been posed a significant risk of fire.

After asking him the obvious questions about whether or not he had the building  inspected prior to purchase I discovered that he had done everything the right way.  Fortunately for him, he had been successful at getting the home inspector to settle with him for most of his out of pocket expense for the wiring replacement.  After I congratulated him on this feat, he told me that he was also seeking damages from the listing broker since he felt she knowingly had perpetrated a fraud.

It was then that we had a lengthy discussion about property disclosure and his prospects for sucessfully suing the broker. 

Property Disclosure in Massachusetts

During the home search process, whether it is through open houses or agent accompanied, you will notice that on the dining room table along with brochures and listing sheets, there will often be a copy of a "Notice of Property Disclosure."  It will cover title, zoning, system utilities, building and structural information as well as water drainage problems.   As previously stated, they are often available, but not always.  This is due to the fact that unlike many other states, in Massachusetts property disclosure statements are not mandatory. 

When a broker takes a property listing, if it is the custom of his brokerage, he will have the seller fill out the disclosure form answering each question to the best of the owner's knowledge.  It is during this process that the agent learns as much information about the home's condition as humanly possible.  A broker will also do due diligence at the local town hall to further discover whatever else he can about the home. 

Chapter 93A - The Consumer Protection Act

In 1968 Massachusetts adopted Chapter 93A which provides greater protection for consumers.  With regard to the sale of real estate, the Regulations of the Attorney General state that an unfair or deceptive act is committed if a broker "fails to disclose to a buyer or prospective buyer any fact, the disclosure of which may have influenced the buyer or prospective buyer not to enter into the transaction."

This means that if a broker has knowledge of problems such as roofing issues, wet basements, zoning violations, unpaid betterment charges, underground oil tanks or any structural problems these must be disclosed in the listing.  However, there are limitations to this law:

1. Where a broker makes no representation but has knowledge of a problem, the broker will be found liable for failure to disclose the problem, but,
2. Where a broker makes no representation because he has no knowledge of a problem, he will not be found liable if the problem is one which a judge decides that a "reasonable" broker should not have known.

While my investor was correct in going after the home inspector since he missed the wiring problem in his inspection, the question of the listing broker's culpability was yet another matter. 

Previous court cases have exonerated brokers where there is no proof that they had knowledge of a problem or if the judge ruled that there is no evidence that a "reasonable" broker should have known the specific facts.  

Brokers rely mostly on the information given to them by the seller and a seller's only obligation is to disclose the presence of lead paint and urea formaldehyde foam insulation.  However, when specifically asked, a seller cannot misrepresent the facts about his property. 

With this in mind, if you are in the process of purchasing a home and have any specific questions, you should directly pose those questions to the seller or the listing broker.  In this case, both the seller and the broker must provide you with accurate information.

However, proving that a listing broker had prior knowledge of a poor electrical wiring system may be too high of a burden. 

Related Posts:

Home Warranties, Are They Worthwhile?

Real Property vs. Personal Property - What is Included in a Home Purchase?

Assessing the Value of a Home

Copyright 2009 - Claudette Millette, President, TheBuyersCounsel -  800-392-1446, E-mail    

Learn More about Massachusetts Home Buyer Representation - Greater Boston and MetroWest Massachusetts -  Serving Massachusetts Home Buyers Since 1992 

  Ashland, Holliston, Hopkinton, Natick, Newton, Northborough, Framingham, Sherborn, Southborough, Sudbury, Wayland, Westborough 

 Until quite recently, home buyers had been treated to a myriad of low down and no down payment options for financing their home purchases.  With easy credit came less stringent requirements for loan qualification.  This included interest only loans, Option Arm's, 50 year loans, No-Doc loans (no documentation or verification of assets) and what some bankers referred to as NINJA loans, which was slang for No Income, No Job and No Assets. 

These banking practices along with a deregulatory frenzy have helped to set up the currently fragile state of our economy.  Foreclosures are at a record high and we are in the midst of a serious recession.  Because of this, banks have been forced to turn back the clock when it comes to down payments.

The practice of granting a mortgage without a down payment had its inception between the years of 2000 to 2006.  Prior to that, if you wanted to buy a house, you had to come up with at least 5, 10, 15 or 20% of the purchase price, so the "no down payment" environment has not really been with us for very long.

LOW DOWN PAYMENT OPTIONS

Although no money down programs have pretty much vanished, you can still get a low down payment mortgage if you qualify.

Here are some options:

FHA Loans

Congress is strongly encouraging lenders to grant FHA loans to tap into their loan-guarantee reservoir and the limit that borrowers may borrow is currently scheduled to rise in January. 

FHA loans were originally created to help first-time homebuyers but they are also available to others who qualify.  The government insures the loan, therefore limiting the lender's risk and this is further encouragement to banks which are now issuing these loans.

As a borrower, you must be able to show sufficient income to be able to pay the mortgage and have a credit score of 600 plus.  However, the credit guidelines are more relaxed allowing a bankruptcy discharge of 2 years ago and the use of alternative credit history (utility payments, car insurance, child care, and store and furniture accounts.) 

The current down payment requirement for an FHA loan is 3% and is scheduled to go up to 3.5% on January 1, 2009.

Credit Score of 720 or Higher

If you have a high credit score you should be able to qualify for a 5% to 10% down payment.  Some lenders will consider those with credit scores as low as 620, but to qualify at that score, you will have to show some additional assets such as an IRA or savings account.

Borrowing Less Than $417,000

To borrow less than a jumbo loan amount, you may still be able to qualify for a down payment program of 5% to 10%.

Not Buying in a Distressed Market

If you are buying in an area that the government does not currently consider a distressed market you may also be able to get away with a 5% to 10% down payment.  There are about 9600 zip codes in 34 states that are on various lists that are considered distressed.

These loan programs will vary from state to state and among lending institutions.  Also, a great deal of weight hinges on whether or not the property you are purchasing is in a declining market.

Everyone knows how difficult it is to come up with a large amount of cash, particularly when buying your first home.  However, if you can possibly do it, there are some very sound reasons for disciplining yourself to put down a substantial down payment.

• Building equity in your home is the first step toward wealth building and that is critical to your financial well-being.
• Putting more money down will you a lower monthly payment.
• Putting 20% down will allow you to escape the payment of PMI (Private Mortage Insurance.)
• Being able to put more money down will get you a larger loan from the bank, allowing you to purchase a better home.
• Statistically, you are less likely to lose your home to foreclosure if you have more money invested in it.  (See Denver study.)

It just may just bear out that, in the long run, a return to the down payment method of buying a home will be good, not only for the economy, but for anyone who wants to own a home and also have a stake in their own future.

 Copyright 2009 - Claudette Millette, President, TheBuyersCounsel -  800-392-1446, E-mail    

Learn More about Massachusetts Home Buyer Representation - Greater Boston and MetroWest Massachusetts -  Serving Massachusetts Home Buyers Since 1992 

  Ashland, Holliston, Hopkinton, Natick, Newton, Northborough, Framingham, Sherborn, Southborough, Sudbury, Wayland, Westborough