Feb 14, 2025 | Buying Real Estate, Consumer Tips, Home Buyer Tips, Home Buying Tips, Home Mortgage, Home Mortgage Tips, Home Seller Tips, Home Selling Tips, Home Tips, Housing Market, Investment Properties, Mortagage Tips, Mortgage, Mortgage Lenders, Mortgage Tips, News, Real Estate, Real Estate Agent Information, Real Estate Tips, Real Estate Trends, Realtors, Selling Real Estate, Selling Your Home
Below is our summary of significant legislative development that impacts our industry. The Massachusetts General Court has introduced a bill titled “An Act protecting consumer rights in purchasing safe and habitable homes.” This bill, presented by Representative Brian M. Ashe and others, aims to enhance consumer protection by ensuring that buyers have the right to conduct home inspections when purchasing residential properties. Below, I have provided a detailed summary of the key provisions and implications of this bill for real estate professionals.
The bill aims to ensure that buyers have the right to home inspections when purchasing residential properties, including houses and condominiums.
An inspection involves a licensed home inspector evaluating various components of the property, such as heating, cooling, plumbing, electrical systems, structural components, foundation, roof, and more.
- Buyers have the right to have the property inspected within 10 days of the seller accepting their offer, unless a different period is agreed upon in writing.
- Sellers cannot condition the acceptance of an offer on the buyer waiving their right to an inspection, except in certain cases like auctions or sales to close family members.
Every offer to purchase must include a clause informing the buyer of their right to an inspection and the conditions under which they can revoke the offer if significant defects are found.
- Sellers must comply with the inspection rights and cannot accept offers that waive these rights unless specific exceptions apply.
- Violations by sellers can result in damages to the buyer and civil penalties.
An inspection involves a licensed home inspector evaluating various components of the property, such as heating, cooling, plumbing, electrical systems, structural components, foundation, roof, and more.
This bill is designed to protect consumers by ensuring they have the opportunity to identify any significant issues with a property before finalizing the purchase.
The legislation has several implications for for real estate agents, brokers and Realtors:
Disclosure and Compliance:
- Real estate agents must ensure that all offers to purchase include the required language informing buyers of their right to a home inspection.
- Agents must be aware of the 10-day inspection period (or longer if agreed upon) and ensure that this is communicated clearly to both buyers and sellers.
- Agents cannot advise or encourage sellers to condition the acceptance of an offer on the buyer waiving their right to an inspection, except in specific cases like auctions or sales to close family members.
- They must ensure that sellers do not accept offers from buyers who indicate an intention to waive the inspection right, unless the exceptions apply.
Legal and Financial Implications:
- If a seller violates the provisions of this bill, the real estate agent could be implicated in any resulting legal actions or penalties. This includes potential civil penalties and damages to the buyer.
- Agents need to stay informed about the legal requirements and ensure their practices comply with the new regulations to avoid liability.
- The bill enhances consumer protection, which may increase buyer confidence in the real estate market. Agents can use this as a selling point to assure buyers that their rights are protected.
- Agents should be prepared to guide buyers through the inspection process and help them understand their rights and options if significant defects are found.
Overall, real estate professionals will need to adapt their practices to ensure full compliance with the new regulations, prioritize transparency, and protect the interests of their clients. This may involve additional training and adjustments to standard operating procedures.
Statutory Offer to Purchase Language
According to the bill each offer to purchase a residential structure or residential condominium unit shall include the following language:
“Buyer is entitled under section 115 of chapter 93 of the General 33 Laws to choose to have the premises inspected at Buyer’s expense within 10 days, or longer as Seller and Buyer may agree in writing, of Seller’s acceptance of Buyer’s offer to purchase. Unless one of the exceptions in said section 115 applies, neither Seller nor Buyer may make acceptance of this offer to purchase contingent upon waiver, limitation or restriction of Buyer’s right to choose to obtain a home inspection. Should Buyer choose to have the premises inspected, if it is the inspector’s opinion that the premises contain serious structural, mechanical or other defects and if the repair of such defects would cost Buyer in the aggregate more than the amount indicated by the Buyer herein ($________), then Buyer shall have the option of revoking this offer to purchase by written notice to the Seller or Seller’s agent within 5 business days of the date of the inspection, or longer as Seller and Buyer may agree in writing. Such notice shall be accompanied by a copy of the inspector’s opinion and a copy of cost estimates obtained by Buyer.”
Understanding and complying with this new legislation is crucial for all real estate professionals. By staying informed and adapting practices, we can better serve our clients and uphold the integrity of our industry. If you have any questions or need further clarification on this bill, please do not hesitate to reach out to one of our Real Estate Attorneys.
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Jul 9, 2024 | Homeowner Tips, Mortagage Tips, Mortgage Lenders
In real estate transactions, the use of a power of attorney can be a critical tool, especially when the principal is unable to be physically present to sign documents. Understanding the nuances of power of attorney in real estate transactions is crucial for all parties involved. Here, we delve into the intricacies of power of attorney, shedding light on its types, considerations, and potential pitfalls.
Types of Power of Attorney
There are different types of power of attorney, each with its own implications. A general power of attorney grants broad authority to the agent, allowing them to act on behalf of the principal in almost all regards. On the other hand, a limited power of attorney is specific to a particular purpose or transaction, providing a narrow grant by the principal to an agent. Additionally, the durable power of attorney allows the agent to continue acting on behalf of the principal if they become disabled or incapacitated.
Key Considerations
When dealing with power of attorney in real estate transactions, specific granting clauses and signature blocks are crucial. It is essential to ensure that the power of attorney is durable to be valid for current transactions. Reviewing the entire document is also emphasized to ensure it grants sufficient authority for the intended actions.
Recording Requirements
Recording requirements for power of attorney documents are critical. The original document must be recorded at the registry of deeds where the land is located. It is noted that recording a copy is not sufficient, and the original document is essential for reliance on the power of attorney.
Common Issues and Red Flags
There are common issues to watch out for when dealing with power of attorney in real estate transactions. Self-dealing transactions and non-arms-length considerations can lead to potential title claims due to breaches of fiduciary duty by the agent. It is important to ask questions and vet the use of power of attorney to ensure its legitimacy.
By being aware of the types of power of attorney, considerations for its use, recording requirements, and common issues to watch out for, real estate professionals can navigate power of attorney transactions with confidence. Understanding the legal and ethical standards surrounding power of attorney in real estate is crucial for ensuring compliance and protecting the interests of all parties involved. If you have any questions at all about using Powers of Attorney in Massachusetts real estate transactions, please give one of our Attorneys a call.
Mar 15, 2018 | Mortagage Tips
U.S. military veterans have opportunities to enjoy some richly-deserved benefits in other aspects of their lives, including some special options for financing their homes. VA loans may give active military personnel, retired veterans, and sometimes surviving family members of veterans the ability to purchase homes that might not prove available to them through more conventional mortgage loans.
But the mere fact that you can do a thing doesn’t necessarily mean that you should. In some circumstances, military home seekers may find other types of loan options more amenable to their specific needs.
If you’ve decided to pursue a mortgage loan during or following your military career, you may want to examine these considerations before leaping into a VA loan application.
Loan Qualifications and Limits
A VA loan can open the door to home ownership for cash-strapped or credit-challenged military personnel who might otherwise struggle to get a conventional mortgage loan. This type of loan offers tremendous flexibility in qualifying factors such as credit scores and debt-to-income ratios; in fact, VA loans may come with no maximum debt ratio at all.
Potential For Zero Down Payment
Additionally, VA loans do not require the down payment typically needed for a more conventional or FHA loan. (The only other loan with no down payment requirement, the USDA loan, applies to rural areas and comes with some prohibitive income restrictions.)
The elimination of a mandatory down payment, coupled with the relaxed financial qualifications, can make a VA loan the most sensible choice for individuals who suffer from limited resources, “upside-down” credit and short credit histories.
Additional Qualifications To Consider
That said, VA loans usually impose some qualifications of their own — qualifications which may not appeal to some buyers. For one thing, a VA loan can only go toward the primary place of residence, not a summer cottage or second home. Military personnel who already own a home may therefore find this restriction a deal-breaker for their specific needs.
VA Loan Limits
VA loan amounts may also impose varying guaranty limits depending on where you live. The guaranty limit refers to your VA entitlement, the portion of your loan that escapes the down payment requirement.
In most counties, that limit currently levels off at 435,100, although in several major metropolitan markets it can range as high as 679,650. If you want to buy a more expensive home, you may end up making a down payment — potentially making your VA loan competitive against other loan options.
As always, your best move is to call your trusted real estate professional to discuss the VA home purchase process and find out if it’s the best option for you.
Aug 29, 2016 | Mortagage Tips
Last week’s economic reports included readings on new and existing home sales, a speech by Fed Chair Janet Yellen, and a report on consumer sentiment. Weekly reports on mortgage rates and new jobless claims were also released.
New Home Sales Rise in July as Pre-Owned Home Sales Fall
Sales of new homes jumped in July to a seasonally-adjusted annual rate of 654,000 sales, which surpassed expectations of 579,000 sales and June’s downwardly-revised reading of 582,000 sales. This was the highest reading for new home sales since 2008 and represented a 31.30 percent increase since July 2015.
Builders were seen by analysts as addressing the need for more affordable homes; this trend contributes to a healthy housing market by supplying homes for a wider range of buyers. First-time buyers play a vital part in housing markets as their purchases enable current homeowners to buy larger homes or relocate.
Sales of pre-owned homes fell 3.20 percent to a seasonally-adjusted annual rate of 5.39 million sales as compared to expectations of 5.59 million sales and June’s reading of 5.57 million sales. Year-over-year, sales were 1.60 percent lower. Limited inventories of available pre-owned homes have narrowed buyer options; increasing prices and narrow choices were seen as factors contributing to lower sales. There was a 4.60 month supply of available homes in July. Real estate pros typically consider a six months a normal reading for homes on the market.
Lawrence Yun, chief economist for the National Association of Realtors®, noted that a slowdown in home appraisals may have contributed to July’s lower sales reading for pre-owned homes. Low mortgage rates prompted a surge in refinancing which created a backlog in home appraisals. While low mortgage rates may entice home buyers, stricter mortgage requirements can also keep prospective buyers at bay.
Federal Reserve Chair Janet Yellen indicated that the stage could be set for a federal rate increase as early as next month. If the Fed hikes its target federal funds rate, interest rates for consumer credit and mortgages can be expected to rise.
Mortgage Rates Hold Steady; New Jobless Claims Fall
Freddie Mac reported that fixed mortgage rates for 30 and 15-year loans were unchanged at 3.43 and 2.74 percent respectively. The average rate for a 5/1 adjustable-rate mortgage was one basis point lower at 2.75 percent. Discount points averaged 0.60, 0.50 and 0.40 percent.
New jobless claims were lower last week. 261,000 new jobless claims were filed against expectations of 264,000 new claims and the prior week’s reading of 262,000 new claims filed. Declining jobless claims can indicate strengthening labor markets, but can also indicate that workers are leaving the labor markets.
Consumer sentiment declined slightly in August due to concerns over the upcoming presidential election. Analysts expected a reading of 91.0 for August, but the reading for August was revised from 90.4 to 89.80.
What’s Ahead
Next week’s scheduled economic news includes reports on pending home sales, inflation, construction spending and consumer confidence. National unemployment, non-farm payrolls and ADP payrolls are also scheduled.
Aug 22, 2016 | Mortagage Tips
Last week’s economic news included the NAHB Housing Market Index, Commerce Department releases on housing starts and building permits issued. Weekly reports on mortgage rates and new jobless claims were also released.
Shortages of available single-family homes have driven up home prices and increased competition among homebuyers; short inventories of homes for sale are affecting affordability in many areas, although buyers seem motivated by lower mortgage rates and some easing of mortgage requirements. Analysts have repeatedly said that the only solution to the shortage of homes is building more homes.
Fortunately, the National Association of Home Builders reported that builder sentiment concerning U.S. housing markets increased in August. The HMI moved up to a reading of 60 in August as compared to July’s reading of 58. Readings over 50 indicate that a majority of builders surveyed are confident about housing market conditions.
According to NAHB, home builders continued to face obstacles including shortages of buildable lots and skilled labor. Regulatory issues were also cited by some builders, but overall, builders remain optimistic about housing market conditions.
Housing Starts Up, Building Permits Issued Slip in July
Commerce Department reading s on housing starts and building permits issued were mixed; housing starts rose from July’s reading of 1.186 million permits issued to 1.211 million permits issued in August. July’s reading was the second highest since the recession but was driven by multi-family construction. Building permits were lower in August with a reading of 1.152 million permits issued against July’s reading of 1.153 million permits issued.
Analysts said that under present market conditions, there is little reason for homebuilders to increase single-family home production as current pricing has put many would-be buyers on the sidelines.
Mortgage Rates Mixed, New Jobless Claims Lower
Freddie Mac reported that average rates for 30-year and 15-year fixed rate mortgages dropped last week while the average rate for 5/1 adjustable rate mortgages rose. The average rate for a 30 year fixed rate mortgage was 3.43 percent and the average rate for a 15-year fixed rate mortgage was 2.74 percent; both readings were two basis points lower than for the prior week. The average rate for a 5/1 adjustable-rate mortgage was two basis points higher at 2.76 percent. Average discount points held steady for fixed rate mortgages at 0.50 percent; average discount points for 5/1 adjustable rate mortgages were lower at 0.40 percent.
New Jobless claims fell by 4000 claims to 262,000 new claims, which was lower than analyst expectations of 265,000 new claims and the prior week’s reading of 266,000 new claims. Job security is important to home buyers and signs of strong labor markets can help propel would-be buyers into the market,
What‘s Ahead
This week’s scheduled economic news includes releases on new and existing home sales and consumer sentiment. Weekly reports on mortgage rates and new jobless claims will be released on schedule.
Jul 29, 2015 | Mortagage Tips
If you are looking to buy a home, you may want to consider shopping for a loan first. Having your financing squared away ahead of time can make it easier to be taken seriously by buyers and help move along the closing process. For those who are looking to get a mortgage soon, keep in mind that the Debt-to-Income ratio of the borrower plays a huge role in the approval of your mortgage application.
What is a Debt-to-Income Ratio?
A debt-to-income ratio is the percentage of monthly debt payments compared to the amount of gross income that a person earns each month. Your gross monthly income is typically the amount of money you earn before taxes and other deductions are taken out. If a person’s monthly gross income is $2,000 a month and they have a monthly debt payments of $1000 each month, that person would have a DTI of 50 percent. The lower the DTI the better. 43 percent is in most cases the highest DTI that potential borrowers can have and still get approved for a mortgage.
What Debt Do Lenders Look At?
The good news for borrowers is that lenders will disregard some debt when calculating a borrower’s DTI. For example, utilities, cable, phone and health insurance premium would not be considered as part of your DTI. What lenders will look at are any installment loan obligations such as auto loans or student loans as well as any revolving debt payments such as credit cards or a home equity line of credit. In some cases, a lender will disregard an installment loan debt if the loan is projected to be paid off in the next 10-12 months.
What Is Considered Income?
Almost any source of income that can be verified will be counted as income on a mortgage application. Wage income is considered as part of a borrower’s monthly qualifying income. Self-employed individuals can use their net profit as income when applying for a mortgage, however, many lenders will average income in the current year with income from previous years. In addition, those who receive alimony, investment income or money from a pension or social security should make sure and include those figures in their monthly income as well when applying for a loan.
How Much Debt Is Too Much Debt?
Many lenders prefer to only offer loans to those who have a debt-to-income ratio of 43 percent or lower. Talking to a lender prior to starting the mortgage application process may help a borrower determine if his or her chosen lender offers such leeway.
A borrower’s DTI ratio can be the biggest factor when a lender decides whether to approve a mortgage application. Those who wish to increase their odds of loan approval may decide to lower their DTI by either increasing their income or lowering their debt. This may make it easier for the lender and the underwriter to justify making a loan to the borrower.
