MA Real Estate, the buyer broker for buying a home in MetroWest Massachusetts, The Buyers' Counsel.

Home

For every home buyer there is a loan program. You can determine which type of loan you fit into by your income, expenses and home ownership goals. If you plan on spending many years in your new home, you are probably best suited for a fixed-rate loan. By getting into a low interest fixed-rate, you will have the security of knowing what your monthly payment will be over the long term and you can make the rate even lower by paying points up front. However, if there is a good chance that you will be moving in five years or less, an adjustable-rate mortgage may be a better answer for you. And, if your income will be rising in the future, an ARM will give you more purchasing power now.

Fixed-Rate Mortgages

The most easily understood loan is the fixed-rate loan. It allows the borrower to repay the principal and interest over a fixed period. During this time, the interest and payment amounts stay the same. There are currently fixed-rate programs available for 30 years, 20 years, 15 years and 10 years. The most popular terms are 30 and 15 years.

With the 30 year loan your payments will be lower since the loan amount is extended over a long period of time. However, if you can afford a higher payment, the 15 year loan will pay off your mortgage in half of the time and the loan will be at a lower interest rate.

The payments on fixed-rate fully amortizing loans are scheduled so at the end of the term your mortgage is paid in full. The advantage to this type of loan is in knowing what your payment will be for the life of the loan. In a period of low interest rates, the fixed-rate loan is a popular way to buy a home.

Adjustable-Rate Mortgages (ARMS)

With adjustable-rate mortgages, your interest rate will fluctuate with the economy. Depending on your financial situation, these types of loans may allow you to have more purchasing power now than a fixed-rate loan. This is due to the fact that lenders offer introductory interest rates on ARMs that are substantially lower than on fixed-rate loans. ARMs carry risks in periods of rising interest rates, but, if interest rates drop, they can become less expensive.

The rise and fall of ARM interest rates are tied to their relationship to an index. The type of index varies and could include Treasury securities or the national average cost of funds to savings and loan associations. If the index rate moves up, your payment does as well. On the other hand, if the index rate goes down, so will your monthly payment.

To get a better understanding of ARMs, you should become familiar with the following terms:

The Adjustment Period

With ARMs, the interest rate and monthly payment change every year, every three years or every five years, depending on which program you are in. The period between one rate change and the next is called the "adjustment period." For example, in a 1-year ARM the adjustment period, i.e. when the interest rate can change, is 1 year.

The Margin

To determine the interest rate they will charge on a loan, lenders add a few percentage points to the index rate. This is called the "margin." Margins tend to vary from one lender to another. For example, both lenders may use Treasury securities as an index, but one uses a 2% margin and the second uses a 3% margin. The larger margin will make your monthly payment higher.

Discounts

To make a loan program attractive and, sometimes, to get you approved, a lender may use a lower initial rate than what is standard for them. These rates are referred to as discounted rates. Often these loans are accompanied by large initial loan fees or "points."

The discount provides you with a lower monthly payment and also qualifies you for more than you would otherwise be approved of. Just be aware that, after the discount period expires, which is often at the end of the first year, the savings from this period may be made up during the life of the mortgage by a rise in your mortgage payment.

Interest-Rate Caps

Caps were put into effect to protect borrowers from extreme increases in their monthly payments. A cap does this by placing a limit on how much your interest rate can increase. A periodic cap limits the rate increase from one adjustment period to another; while, overall caps limit the rate increase over the life of the loan.

For example: you have an ARM with a periodic cap of 2%. At the first adjustment, the index rate goes up 3%. Because of your 2% cap, your interest rate will only go up 2%.

Be aware that a drop in interest rates does not necessarily lead to a drop in your monthly payment. Some ARMS have a carryover feature. If your 2% cap has kept your interest rate to 2% during a 3% increase in the index, the additional 1% can carry over to the next adjustment period. This would raise your interest rate an extra 1% in that period even if the index rate has not had an increase.

For an overall cap example, you have an overall cap of 5%. The index rate increases 1% in each of the next nine years. Your payment will not go up 9 percentage points, but will only go up 5%.

By law, virtually all ARMs must have an overall cap.

Payment Caps

Some ARM programs have payment caps. A payment cap will limit your monthly payment increase at each adjustment, usually to a percentage of the previous payment.

With payment caps you need to know about the possibility of negative amortization. This can happen when your monthly payment amounts are not large enough to pay all of the interest due on your mortgage. Since payment caps deal only with payment increases and not with interest-rate increases, there could be a time when your payment does not cover all of the interest due on the loan. This shortage is added to your debt and may have additional interest charged on the amount.

Since real estate values are usually appreciating, the extra charges in the loan may be covered by an increase in your property value, but this is a possibility that you should carefully consider when looking at any adjustable rate programs.

1-Year Adjustable Rate Mortgage

With this 30-year loan the interest rate changes every 12 months. The amount of the adjustment is determined by an index, as previously discussed. Whether it is the Treasury Bill Rates, Treasury Note Rates, Federal Reserve Discount Rates or the Cost of Funds Index, these indices are all published and readily available to the consumer. Your lender has no control over the rate of increases or decreases.

One reason to consider a 1-year ARM is that the introductory interest rate will be significantly below the rate on a fixed-rate loan which may help you to qualify for the largest possible loan on your current salary. Your part in this arrangement is that you will be taking a risk in that your payment may change from year to year. If interest rates rise dramatically, you could end up paying much more for a 1-year ARM than for a 30-year fixed rate mortgage.

This loan usually comes with a 2% periodic cap and a 6% overall cap.

3-Year Adjustable Rate Mortgage

The interest rate on this 30-year loan changes every 3 years. Like the previous loan, the rate is tied to a predetermined index.

While you are still taking a risk, it is not as much since the rate will not adjust as often. Once again, you will be offered an introductory rate that is lower than a fixed rate loan. Some view the 3-year adjustable as a moderate risk compared to the 1-year adjustable.

If you expect to move or refinance in three years, this could be a good solution for you. It is also an opportunity to qualify for a larger loan than you would under a fixed rate. In any event, you should have some expectation of an increase in your income to be able to cover any possible future adjustments.

5-Year Adjustable Rate Mortgage

This is a 30-year loan in which the interest rate changes every 5 years.

You will still be offered a lower rate than the rates on fixed-rate mortgages. In exchange, you are willing to accept a small amount of risk that your rate will go up.

This would be a good option if you expect to stay in the home for at least 5 years. Once again, you should be confident that you income will go up to be able to cover the possible increase in your payment.

Understanding Closing Costs

One of the most confusing aspects of home financing is determining what is fair or competitive with regard to closing costs. These costs are not fixed and can vary greatly depending on the lender, the lending program and the amount of your loan.

When shopping for a loan, get estimated closing costs from lenders. Ask for them to be in writing. This will help in your comparison shopping. Once you have applied for your loan, The Real Estate Settlement Procedures Act requires your lender to provide you with a Good Faith Estimate of closing costs within three business days of your application. Also, you must be provided with a disclosure estimating all of the costs associated with your loan, including your total finance charge and Annual Percentage Rate.

Although the categories of lending costs are standard, the amounts charged for the fees are not. Below is an explanation of each of the possible fees as they appear on the HUD (Department of Urban Housing and Development) statement.

Loan Fees

Loan Origination: A charge for the lender's work in evaluating and preparing your mortgage loan, often expressed as a percentage of the loan. Cost: varies from lender to lender.

Loan Discount: Also referred to as "points". A point is a one-time charge imposed by the lender to lower the interest rate the lender would otherwise charge. Each point is equal to one percent of the mortgage amount. Cost: varies with mortgage amount.

Appraisal Fee: This covers the cost of an independent appraisal of the home you are purchasing. The lender requires this evaluation of the property since it will serve as collateral for the loan. Cost: $200 - $400.

Credit Report Fee: Covers the cost of a credit report to evaluate your credit history. Cost: $50 - $100.

Mortgage Insurance Application Fee: If you are putting less than 20% down on your home you will be required to take out mortgage insurance (PMI) This covers the lender's risk in the event you should fail to make loan payments. Cost: Varies from lender to lender.

Mortgage Broker Fee: Any fees paid to the mortgage broker would be listed here. Cost: Approximately $500.

Items to be paid in advance

Interest: Lenders usually require borrowers to pay the interest that accrues from the date of the settlement to the first monthly payment. For example, if you closed on June 20 you would owe ten days of interest payments to the end of the month.

Mortgage Insurance Premium: The lender may require you to pay the first year's mortgage insurance premium in advance.

Flood Insurance: If the property you are purchasing is in a flood zone, you would have to carry flood insurance.

Reserves Deposited With Lender

Hazard Insurance Premium: You will be paying at least three months of prepaid home insurance at the closing. Cost: Based on your home's value.

Property Taxes: You are required to pay three months of property taxes which will be held in escrow with the hazard insurance by the lender. Cost: Based on your home's value.

Title Charges

Settlement or Closing Fee: This is a fee paid to the settlement agent or closing attorney. Cost: Approximately $600.

Abstract of Title Search, Title Examination, Title Insurance Binder: The title search is done to prove to the lender that the seller owns the property you are purchasing. The search involves reviewing public records, recorders of deeds, county courts, tax assessors and surveyors. Also, records of deaths, divorces, court judgments, liens and contests over wills are examined. Cost: Approximately $250.

Document Preparation: This is a separate fee that some lenders charge to cover their costs of preparation of legal papers and the deed. Cost: $50-$200.

Notary Fee: This is the cost of having a notary public sign the documents and swear to the fact that the persons named are the ones who signed them. Cost: $50-$100.

Attorney's Fees: You may be required to pay for legal services provided to the lender such as examination of the title binder. Cost: Approximately $600.

Title Insurance: The total cost of your title insurance as well as the lender's. Title insurance protects you from an error in the title search. Such an error could mean that you are buying a house from someone who did not own it in the first place. Cost: Based on your home's value.

Government Fees

Government Recording and Transfer Charges: These fees are for recording the new deed and mortgage. Cost: Approximately $300.

Recording Fee: This fee is paid to the title company and involves recording the transfer of title with the county clerk's office. Cost: $125.

Additional Settlement Charges

Survey Fee: A survey, or an Improvement Local Certificate, is done by a licensed surveyor and determines that your lot has not been encroached upon. At a minimum, the lender will require evidence that no additional structures have been added to the lot since the last survey was conducted on the property. Cost: Approximately $200.

Administrative Fee, Document Preparation Fee, Courier Fee and Certified Copies: Costs vary.

Private Mortgage Insurance (PMI)

Will You Need It?

The determining factor as to whether or not you need to purchase private mortgage insurance is your down payment amount. The bank is concerned with the loan-to-value or LTV. If you are putting down only 10%, your LTV is 90 percent. Since most lenders will only insure 80% of the loan, you will have an exposure of 10% that must be covered. This is done with private mortgage insurance.

What Does PMI Cost?

According to the Mortgage Bankers Association of America, PMI costs are typically one-half of one percent of the loan.*

For example: You put down 10% on a loan of $200,000. $200,000 minus $20,000 (10%) is $180,000. This is the amount to be financed. The lender multiplies $180,000 by .005. The result is $900. Divide $900 by 12 for your monthly PMI payment of $75.00.

*PMI costs may vary from lender to lender.

Avoiding PMI

Some lenders have programs in which you can avoid PMI by paying more interest. The usual rate increase amounts to .75 % to 1%, depending on the lender and the amount of the loan. One advantage to this method is that mortgage interest is tax deductible.

Another method is called an "80-10-10" loan. This involves getting two loans and putting 10% down on the property. The program is structured with a first mortgage equal to 80% of the sale price and a second mortgage for the remaining 10%. The second mortgage will usually have a higher interest rate than the first but since it only applies to a small portion of the total price, the monthly payment for both loans will usually come out to less than paying a PMI premium.

If you do end up with PMI payments in the structure of your loan, keep track of your payments on the principal of the mortgage. When you reach a point where your loan to value is 80% there are provisions which mandate that you be notified. According to the Homeowner Protection Act of 1998, Federal Public Law 105-216, the following rules apply:

Mandatory Initial Disclosure - At the time of the closing the lender must provide a written notice of when PMI may be cancelled or that the lender will notify the customer when the cancellation date is reached.

Borrower-Initiated Cancellation - When the balance of the mortgage reaches 80 percent of the original value of the property the borrower may request in writing that the PMI be cancelled.

Automatic Termination - When the balance of the mortgage reaches 78 percent of the original value of the property the lender must automatically terminate PMI, provided that payment is current.

Chapter Three

Real Estate Agents

With All the Help There is

On The Internet – Why Do

I Need an Agent?

With regard to searching for properties on the internet, there are some important limitations. One of them is that house listings are not always updated, so, you may often be chasing one after it has gone under agreement. If you call listing brokers directly, you will not be be getting impartiality about other properties you may be interested in since they stand to make twice as much money by selling their own listings to you. This leaves you with the task of calling on every property, setting your own appointments and having no one on your side.

Since buying a home is not something you do on a regular basis, there is no reason for you to learn how to be a real estate agent. Plodding through the maze of listings, property values, zoning regulations and inspection issues is something best left to those who do it for a living. Help is available, and it usually costs you nothing.

The profession of real estate agency has evolved dramatically over the last ten years and it is due, not only to changing technology, but also to the sophistication of today's buyers. With all of the information now available at our fingertips, we are able to bring a higher level of service in a shorter amount of time. The old concept of a real estate agent whose qualifications were that she lived in town and had put her children through the school system no longer suffice for today's home buyer needs.

Many realtors are specializing and developing their own niches. One of those niches is buyer broker representation. Because of this innovation, there is no reason to embark on your home purchase alone. Home buying is a complicated process and one that is best coordinated by a professional who, not only helps you to find a property, but also has the knowledge necessary to bring your transaction to a successful closing.

Exclusive Buyer Agent vs. Traditional Real Estate Agent

Over the past few years, the popularity of buyer broker (synonymous with buyer agent) assisted transactions has grown. Because of the demand from the public, many traditional real estate agencies now offer buyer agency services. These are not to be confused with exclusive buyer agents who always work with buyers and for buyers.

Where is the distinction?

In the case of real estate agents who work as buyer agents if that is what the public asks them to do at the time, they are still spending most of their time working for sellers.

Why is that important?

A buyer broker's job is to put the buyer's needs first, sometimes at the risk of losing the transaction. This is a huge psychological hurdle for a traditional real estate agent to make. The task is made even more difficult by sometimes representing the buyer and sometimes not. This is tantamount to working as a prosecutor for a living and, suddenly, having to defend someone with no practice at doing so.

Another issue is that of the traditional real estate brokerage and its relationship with its sellers. When working with a traditional agent who is offering buyer brokerage services there is a potential conflict regarding the agency's in-house listings. Often, a brokerage will offer a higher commission on the sale of its own listings providing an incentive to an agent to promote those properties more than others on the market. In a buyer agency relationship, your agent should be completely unbiased with regard to which properties to show you, thus, the in-house listing financial incentive is an inherent conflict.

Accidental Dual Agency

Aside from the obvious problem of promoting certain listings, there is also the issue of dual agency. Dual agency happens when "your broker" shows you an in-house listing and you put an offer on it. Since that agent's brokerage works for the seller of that property, so does the agent. Even if you have a buyer brokerage contract with the agent, he/she is also duty-bound to represent the seller of the in-house listing. In this case, a dual agency develops. In dual agency, no one really has representation since doing so would be in conflict with the other side.

In this situation, the agent cannot advise you on offering a lower price, cannot provide you with comparable sales or a comparative market analysis since doing so would be in conflict with the duties the agent owes to the seller.

At home inspection time, the agent cannot recommend a home inspector to you, cannot renegotiate for repairs on your behalf for any of the issues that have come out of the home inspection. Since the agent represents the property, he/she cannot be counted on for duties of confidentiality and loyalty to you. What, actually, happens is that you end up with no representation at all.

Dual agency is a no-win situation that both agents and buyers should try to avoid. To get the standard of representation you deserve and to avoid a dual agency situation, it is prudent to work only with an exclusive buyer agent who always works as one and whose agency does nothing else but buyer agency.

Client vs. Customer

When you make the decision to work with a traditional agent who shows you properties, does follow-up and, eventually, writes up your offer, the relationship that you have with that agent is as a customer. This means that you really have no legal relationship at all. As a customer, you cannot expect that agent to provide you with the duties of loyalty, confidentiality and exclusivity. He or she owes those things to the seller of every house you walk into.

When you work under contract with a buyer agent, you are not a customer, but, rather a client. This means that you should and must expect the agent to have a fiduciary responsibility to you. That includes duties such as loyalty, confidentiality and exclusivity. These duties are of a professional who must always put your best interests first. An exclusive buyer broker is an advocate for you. As an advocate he/she is not expected to say things to other brokers, or to anyone for that matter, that would be negative or harmful to you in any way.

By way of illustration:

You have a contractual relationship with an exclusive buyer agent. In your previous discussions you have told him that you wish to spend not more than $500,000 on a home; however, he knows that you actually qualify for $600,000.

You put an offer on a home for $500,000. The listing broker asks your buyer agent how much you can actually spend. Your buyer agent does not betray the fact that you can spend more than $500,000 in that conversation.

In the same situation but with a traditional agent:

You put an offer on a home for $500,000. The listing broker asks your traditional agent how much you can actually spend. That agent is duty-bound to tell the listing broker that you can spend up to $600,000 because he, like the listing broker, is working for the seller of the property even though they have never met.

What Should You Look for

In a Broker?

There has long been a belief that people choose attorneys who are similar to themselves in a number of ways. This tradition seems to also transfer to how home buyers ally themselves with real estate agents. Because the home buying process can be lengthy and stressful, you may want to work with a broker who shares some of your own personality traits. These might include: being detail oriented, low key or fast paced, shirt-sleeved and basic or high tech and desirous of someone who is tech savvy enough to communicate with you in a way in which you are accustomed.

Other requirements for a good broker to work with are more generic, but extremely important. Some of these are:

--Good buyer/client references;

--Familiarity with the area that you are looking in;

--Ability to provide you with a link into the MLS;

-- Exclusive representation. Complete loyalty without conflicts of interest;

-- Confidentiality concerning your money and motivation;

-- Unbiased showing of all available homes whether listed with a brokerage or

offered by for-sale-by-owners;

-- A thoroughness about properties, including pointing out flaws that no conventional

agent would point out;

-- A fair and straightforward buyer agency agreement;

-- Assistance in determining if a property is overpriced, advice about offering less

than the asking price;

-- Help in finding a good home inspector, lender, and an attorney.

Throughout this book I have asterisked (*) sentences regarding the ability of brokers to recommend the services of others. A traditional real estate broker has no obligation to recommend professionals to you. Because of this, you will most often find that they will recommend three or more professionals (bankers, attorneys, and, especially home inspectors) because they have and want no liability to the recommendation of one.

A buyer broker, on the other hand, does have a liability to recommend the services of the best professionals possible. This is part of why you are hiring a broker, for a professional opinion. When you ask for advice on professionals to help you with your home transaction, do you really want three choices? How will you know which one to use? When you ask for help with these issues, you need answers. Only a Buyer Broker can give you a direct recommendation.

What Motivates

a Buyer Agent to

Negotiate a Lower Price?

This is a very important question and one worth addressing. Since the commission for a broker is a percentage of the total price why would a buyer agent even try to get a low price for her client?

The answer is clear. An exclusive buyer agent does not carry property listings. Because of this fact, the entire business hinges on home buyer representation. A career is not made from one client and one commission, but from many clients. An exclusive buyer agent would not have much of a business without first having cultivated and maintained a good reputation as a buyer advocate, and the only way to achieve that is by doing the best job possible for everyone you work with.

Just as an attorney works hard to win cases for clients, a buyer advocate must also build and keep a good track record in a business that is often referral driven.

What Are the Advantages of

Having an Exclusive Buyer Agent

Involved in a Transaction?

These days, many listing agents prefer to have their listings sold by an exclusive buyer agent and there are some very good reasons for this.

Since an exclusive buyer agent is almost always a full-time professional, the listing broker knows that the buyers will have been counseled, prepared and are better able to proceed with the purchase. It is, in fact, better for the seller and seller agent to work with buyers who are realistic and well advised, providing a greater chance that the transaction will run smoothly.

Another benefit to the listing agent and seller is that there is limited liability to them knowing that the buyers are represented by a buyer agent. In this situation, all parties know who represents whom and there is substantially less legal exposure to the sellers and listing agents than there is when a seller agent is working with buyers.

The home inspector can be more at ease in a situation of working for buyers who are represented by a buyer agent. In cases where the buyers are working with a seller agent, the inspector walks a fine line in his communication with the agent since he knows that she works for the seller, not those buyers. If he fails the house, he probably will not get any more business from that agent. The situation between seller agents and home inspectors has always been one ridden with conflict of interest issues. That is why the rules have changed, disallowing real estate agents to recommend a home inspector. Only a buyer agent can recommend a home inspector to you.

When an exclusive buyer agent is involved, even if the inspector reveals things which cause the buyers to get out of the transaction, that is the appropriate outcome for the client. They will simply move on to another property and still use the same home inspector since he has a proven track record.

Clearly, the inclusion of a buyer agent in a real estate transaction can prove to be a winning situation for everyone involved.

The Mandatory Agency Disclosure Form

There has long been confusion about real estate agency. Many people believe that the realtor who is setting up appointments and showing them houses is working for them as their agent. Most of time, this is not true. To clarify the issue, Massachusetts has made it mandatory for every real estate agent to have the state agency disclosure form signed by all potential buyers. It must be presented and signed prior to showing properties.

Exhibit C

MASSACHUSETTS BOARD OF REGISTRATION OF REAL ESTATE BROKERS AND SALESPERSONS

MANDATORY AGENCY DISCLOSURE - AGENCY RELATIONSHIP

The purpose of this disclosure is to enable you to make informed choices before working with a real estate licensee. It must be provided at the first personal meeting that you have with an agent to discuss a specific property. THIS IS NOT A CONTRACT. It is a disclosure notice for your information and protection. BE SURE TO READ THE DESCRIPTIONS OF THE DIFFERENT TYPES OF AGENCY REPRESENTATION ON THE OTHER SIDE OF THIS DISCLOSURE.

CONSUMER INFORMATION

1. Whether you are the buyer or the seller you can choose to have the advice, assistance and representation of your own agent. Do not assume that a broker is acting on your behalf unless you have contracted with that broker to represent you.

2. All real estate licensees must, by law, present properties honestly and accurately.

3. If you are a seller you may authorize your agent to cooperate with agents from other firms to help sell your property. These cooperating agents may be subagents who work for the seller or buyers' agents.

4. If you are the buyer you have the option of working with sellers' or buyers' agents. This decision will depend on the types of services you want from a real estate agent. A buyer should tell sellers' agents, including subagents, only what he/she would tell the seller directly.

CONSUMER RESPONSIBILITY

The duties of a real estate licensee do not relieve the consumer of the responsibility to protect his/her own interest. Consumers with questions on whether and how estate agents share fees should pose them to the agent. If you need advice for legal, tax, insurance or other matters it is your responsibility to consult a professional in those areas.

__________________________________________________________________________________________

ACKNOWLEDGEMENT

I have provided this disclosure form to ___________________________________________________________

I have informed the above named consumer that I am a: (check one)

___ Seller's Agent ___ Buyer's Agent

_________________________________________________ ______________ ________ ________, 20___

(Signature of Real Estate Agent) (License Number) (Month) (Day) (Year)

I have read this agency disclosure form IN ITS ENTIRETY ON BOTH SIDES. I understand that this form is for agency disclosure AND NOT A CONTRACT. It was provided to me by the agent named above.

__________________________________________________ ______ ____, 20___ Check Here: __ Buyer

(Signature of Consumer) (Month) (Day) (Year) ___ Seller

___ As a consumer I decline to sign this form.

________________________________________________________________________________________

(PRINT NAME OF CONSUMER AND REASON, IF ANY)

The reverse side of the page:

TYPES OF AGENCY REPRESENTATION

SELLER'S AGENT

When a seller engages the services of a listing broker, that seller becomes the broker's client. This means the broker, and his/her subagents represent the seller. They owe the seller undivided loyalty, utmost care, disclosure, obedience to lawful instruction, confidentiality and accountability. They must put the seller's interest first and negotiate for the best price and terms for their client, the seller. (The seller may also authorize subagents to represent him/her in marketing the property to buyers).

BUYER'S AGENT

When a buyer engages the services of a broker then that buyer becomes the broker's client. This means the broker represents the buyer. The broker owes the buyer undivided loyalty, utmost care, disclosure, obedience to lawful instruction, confidentiality and accountability. The broker must put the buyer's interest first and negotiate for the best price and terms for his/her client, the buyer. (The buyer may also authorize subagents to represent him/her in locating property.)

DISCLOSED DUAL AGENT

A broker can work for both the buyer and the seller on the same property provided such broker obtains the informed consent of both parties. The broker is then considered a disclosed dual agent. This broker owes the seller and the buyer a duty to deal with them fairly and honestly. In this type of agency relationship the broker does not represent either the seller or buyer exclusively and they cannot expect the broker's undivided loyalty. Also, undisclosed dual agency is illegal.

Chapter Four

Looking at Properties --

Architectural

Styles

The study of architecture is a fascinating subject. A glance at the evolution of structures, materials used, as well as the variations from ornamental to practical can reveal a great deal about people and culture. The dwellings we choose to inhabit speak volumes about who we are and where we would like to be headed.

In this section, I chose to limit the styles of homes to those that we actually see and purchase for life in New England.

Cape

The Cape Cod is one of America's oldest house styles. It was a popular style through the 1840s and later experienced a revival when mass production techniques allowed builders to fill developments with capes after World War II.

The cape is usually symmetrical in design. The roof is a steep gable type covered with shingles. Originally, capes were small in scale. Now, there are many large capes with additional wings and dormers to increase their useable space.

New England Colonial

The colonial is the most popular architectural style in the United States. It was developed in the 18th century which is considered the "Colonial" period.

The original colonials were symmetrical with four equal sized rooms on the first floor and four rooms above. The basic colonial still has two windows on either side of a central doorway and five windows across the second floor.

The floor plan for the standard colonial is a central hall with stairs, a living room to the left that is two rooms deep, a dining room on the opposite side with the kitchen behind it. All bedrooms are located upstairs.

Colonial with Farmer's Porch

Colonial With Hip Roof, Portico and Palladian Window

The portico is the covered, balconied entrance with columns on either side. Porticos were taken from Greek architecture and were characteristic of the Georgian houses that were fashionable in the English colonies throughout most of the 18th Century.

The Palladian window is named for Andrea Palladio, a Renaissance Italian architect whose work revolutionized Western architecture. The modern look of this style encompasses a triple window effect with a circle head window above.

Gambrel

The gambrel has a ridged roof with two slopes on each side, the lower slope having the steeper pitch. The shape of the structure allows for a maximum of attic storage while still providing a weather tight roof. Because of the efficiency of storage the gambrel roof is often found on agricultural buildings as well as residential.

The gambrel is thought to be attributable to the Dutch since Dutch colonials have a similar roof style.

Garrison Colonial

It is widely-thought that the garrison colonial's style was influenced by colonial block houses that were used for protection against unfriendly Indians. The overhang section was there to provide a good vantage point from which to safeguard the house from intruders.

Other historians dispute this and say that the style was taken from the popular Elizabethan townhouses of the period that were being built in the overcrowded cities of England. This was due to the fact that the overhang area created additional living space on the upper floors.

Original garrisons had four carved, acorn shaped pendants ornamentally attached to the front of house.

Saltbox Colonial

In 17th Century New England, adding a single-story lean-to shed to the back of a house was a clever way of increasing space. By the 18th Century, the lean-to was being built into the original construction.

The hallmark of a Saltbox is the sharply sloping gable roof that resembles boxes which were used for storing salt in old country stores. The front of the house is a two-story structure while the back slopes down until it becomes one story.

Dutch Colonial

This house gained popularity in America in the 1900s. Its center entrance, symmetrical style features a broad gambrel roof with flaring eaves. The structure is typically a moderate size with 2 to 2 1/2 stories.

Original Dutch colonials had central Dutch doors which were divided horizontally to allow light and air into the home through the top portion while the bottom was kept closed to deter the livestock from entering.

Characteristics of this style include double-hung sash windows with small panes of glass, two to three dormers with shed-like overhangs and an attached breezeway or garage.

Tudor

The most distinctive feature of the Tudor house is called half-timbering. In this type of construction the actual framework of the house is left exposed and the space between the timbers is filled with brickwork or white stucco. This presents the appearance of what has sometimes been referred to as a "black and white house." Modern Tudor houses are often created using decorative woodwork that is, actually, false half-timbering.

Other characteristics of the Tudor style are diamond-pane windows, steeply pitched roofs, Tudor arches and bay windows.

When Tudors came to America they were a Medieval Revival Style based on English Renaissance buildings of the 16th century. By the 1920's the existence of numerous Tudor mansions gave rise to the term "Stockbroker's Tudor."

These decorative and striking houses remain popular.

Contemporary

Contemporary style homes were first designed between 1950 and 1970. The photo above is but one of many variations on this style, which usually consists of an open interior with high, and often, cathedral ceilings. The exterior of the home is typically flat and neutral, utilizing tall windows and skylights.

The roof of the contemporary is either a one-pitch gable, flat roof or a series of flat roofs. Other characteristics include geometric forms, exposed beams, large amounts of glass, lofts and overhangs.

Many of these homes were originally designed to incorporate the surrounding landscaping into the overall style of the house.

Ranch

The first ranch home was designed by Cliff May and was built in San Diego, California in 1932. This simple and informal style eventually spread to other parts of the country. During the 1940s and post-war boom of the 50s the ranch soared in popularity.

The ranch style embraces the ability to move freely about, all on one level, without steps and into private patios and back yards.

Today, many one-story homes are referred to as ranches.

Split Level

The split level home originated in the 1950s and 1960s with the purpose of having a separation of the formal, informal and sleeping areas of the house.

The basic split level has the main living on the second level. This is where the living room, dining room and kitchen are. The bedrooms are located in a separate wing or, sometimes, level. It is standard to have the lower level function as a family room as well as additional recreation and storage areas.

Chapter Five

Exterior Details

The Roof

Most roofs are now made with asphalt shingles. The advantage of this material is that it can be patched when a leak occurs and is relatively inexpensive. Some owners take full advantage of the fact that you can layer a new asphalt roof over an existing one instead spending the money to have the old one removed. Be wary of this possibility because a roof with a number of layers is not going to be as durable as one that has been properly replaced since it is now taking on more weight than it should. Look for a waviness to the roof which can indicate a build-up of layers. A wavy roof can also be a sign of excessive moisture or rotting.

One of the main causes of leaking roofs is that the flashing has failed. The flashing is material that is preventing water seepage in the area where the chimney meets the roof. It can sometimes be punctured or torn due to old age and corrosion.

Home inspectors often do their roof inspections using binoculars, but even with the naked eye you should be able to see if the ridge of the roof is straight. The ridge is the very peak of the roof and should not be swaying or sagging. A sagging ridge can mean a cracked or rotted ridge beam. Also look for lifted or missing shingles. This can indicate old age or poor maintenance.

Always ask the seller or broker the age of the roof. If the roof is the original one on a home that is 20 years or more, this is something to take note of. The life expectancy of an asphalt roof is usually 20-25 years. It could last longer depending on climate and maintenance, but these numbers are guidelines that manufacturers use when talking about their warranties.

When you are inside of the house you should check the ceiling areas for any signs of water damage. Water marked ceilings can indicate that the roof has been leaking. The exception to this is, obviously, a room that is located under a bathroom. In that case, the water marks could be from an overflowing tub.

An important factor that plays into the quality and lasting power of a roof is ventilation. As I have heard so often from home inspectors, "A house is like a person. It has to breathe." The positive airflow that comes from proper ventilation allows a house to breathe and prevent moisture build-up. That is why it is so significant that the contractor did a proper job when he installed the roof.

When heat and moisture build up in the attic through warm weather and household activities such as showers, laundry and cooking it can damage rafters and shingles and promote premature aging. Vents allow outside air to move through the attic resulting in a longer lasting roof. Because of this, you will often see a long piece of material running from one end of the ridge to the other. This is a ridge vent. You should also see what appears to be a pipe or pipes sticking up out of the roof which are usually plumbing and attic vents.

A typical asphalt roof with several attic vents

Water Drainage

Water should not be allowed to run wherever it wants to on a property. It should always be directed away from the house. This is usually accomplished with the installation of gutters and vertical downspouts. The idea is to catch rainwater from the roof and lead it away from the home preventing water from seeping into the foundation and causing a damp basement.

Guttering can be thought of as a necessary evil. It is not particularly attractive and requires a certain amount of maintenance. It is a natural collection area for leaves, twigs and pine needles and should be cleaned out regularly. This process can be helped by covering the gutters with removable screens or caps which can be popped off when necessary and run through with a garden hose.

Most of the gutters installed on homes are galvanized steel or bare aluminum which need to be painted to match the home. There are also aluminum with factory baked enamel paint and vinyl gutters. Vinyl gutters can become brittle in the cold weather but require very little maintenance.

Sometimes a home has natural drainage due to the slope and contours of the land. In this case, gutters and downspouts may not be necessary. If you are looking at a home without gutters, check the natural grading of the property to ensure that any water problems are being directed away from the structure.

The most common problem with gutters is their installation and maintenance. When viewing homes, take note as to whether downspouts are neat, trim and securely fastened to the house and whether they seem to be performing their desired function. If they are bent, sagging or not aiming the water away from the structure, they are in need of repair.

Downspout needs a diverter to send water away from the structure.

Exterior Doors

The most common doors are solid wood, steel and fiberglass and all can suffer from warping, splitting and scratches from the family pet. It is also important to note whether or not the door closes properly. If it does not, this is an indication of a problem with the frame. It could also be a house settlement issue or the actual door may be warped or expanded from the weather.

Steel doors have magnetic stripping around them. Sometimes the stripping can be partially ripped out from wear and tear. Check the bottom portion of a steel door. It can be rusted from the rain or from having salt poured onto the front step.

Fiberglass doors can become faded from being exposed to too much sunlight. They can also suffer from the same warping problem as wooden doors.

Storm doors should be checked for some of the same problems as previously mentioned. Additionally, the damper arm, which is a cylinder-like item that causes the door to close slowly, can be bent or ripped out of the door frame. Make sure that this mechanism is in good condition and securely attached.

Windows

As you walk around the house the most obvious window problems are broken or missing panes of glass. These should be repaired by the seller as part of the negotiations following your home inspection. It is also important to inspect the wooden frames around the windows to check for rot or to see if painting is needed.

From inside the home, look at the window sills to check for chipped and cracked paint. This is important, particularly in an older home. If the home was built prior to 1978 there is a possibility that lead paint is present. If you are looking at an older home and the sills are chipped, blistering and flaking, you can almost be certain that there is lead paint. If the sellers have done extensive renovations, including stripping, refinishing and installing replacement windows, this becomes less of a probability. However, if they are stating that there is no lead paint in the house due to renovations, ask for a "Lead Paint Letter of Compliance." This is a legal letter that states that either there are no lead paint hazards or that the home has been deleaded. It must be signed and dated by a licensed lead paint risk assessor.

Other considerations when looking at windows are whether or not they open and close easily. Double-hung windows often have a pulley, rope and weight mechanism. Many times these are not in good condition in an older home since the owner may have painted over them a number of times, thus reducing their functionality.

A single pane of glass would not be energy efficient in summer or winter. Because of this, most homes have double pane glass windows with a vacuum seal between each pane. Eventually, the insulation barrier is lost. You can tell that a window has lost its seal from the visual affect of moisture between the panes. These panes must be replaced to regain their functionality as well as to be aesthetically pleasing.

Siding and Shingles

Vinyl Siding

Due to its low cost and maintenance, vinyl siding is currently used on more houses than any other siding on the market. When properly installed it can last many years through a multitude of weather conditions.

When problems do occur, they are usually the result of poor installation. Since vinyl contracts and expands during temperature changes, it has to be cut long enough to compensate for the difference. If it is not cut generously, the contraction from the cold can cause significant gaps between pieces. When this happens, the home's exterior is exposed to the elements and needs to be corrected. Vinyl does not dent as easily as aluminum, but can fall prey to various items such as baseballs and rocks causing gaping holes. When a home has areas with holes or other damage in the siding, those sections should be replaced.

On the side of the house where sun is a rarity, check for mold, mildew or algae. This doesn't hurt the vinyl but can damage the wood underneath if it is allowed to spread. There is really no excuse for this problem since it has an easy solution. The owner can simply wash it off with soap and a bit of pressure from a garden hose.

A tell-tale sign like this one should set off a small red flag and alert you to look more closely at the home's other possible maintenance issues.

Aluminum Siding

Home improvement companies sell aluminum siding with the promise that it will never need painting. Although it comes with paint bonded onto it, many owners eventually feel the need to repaint. This does not negate the fact that it is is low maintenance when compared to clapboard or other wood siding. One of its features is the ability to keep a house cool in the summer by bouncing back the sun's heat rays. The siding is usually sold in a thin (.19 inch) and a thick (.24 inch) version; the thicker be able to hold up better under normal wear and tear.

While vinyl siding has the potential of developing holes in its surface, aluminum's biggest concern is with denting. When dents occur, paint can come off revealing the bare metal underneath. If the dent is deep, there is often rust which needs to be sanded and repainted.

Other things to watch for are scratches and rusted nails

If you are viewing a property and are unsure of the siding material, rub your hand lightly over the surface. Aluminum siding with any age on it will dissolve into a fine white powder.

Clapboard

The word "clapboard" got its name from the Dutch word klappen, which means "to split". This was due to the fact that it was originally hand-split from logs of white pine, hemlock or cypress. Clapboard is the thin, overlapping wood planks that are installed on the outside walls of the house to protect it from the weather. Along with protection it also adds beauty to the exterior of the home.

Clapboard is always painted, not only for appearance, but to protect the wood from the weather. Because of this, it is important to take note of the condition of the paint. If the paint has worn away sufficiently to expose parts of the wood it will soon result in rotting. Mold and mildew can be a problem as well if the siding has not been maintained by an occasional power wash.

Clapboard siding has a natural beauty that many people prefer. It's just important to keep in mind that it should be painted every 5 to 7 years.

Wood Shingles

Shingles and shakes are highly durable. When they are installed properly they can last the life of the house. They are usually made from western red cedar.

Cedar shingles can create a New England cottage-style look. Usually, five inches of shingle is exposed with seven inches underneath in a weather tight overlap. The labor of applying shingles is part of what makes this a more expensive choice of siding.

When left unpainted or slightly stained, they give a natural appearance like that of a Cape Cod home. If you prefer, they can also be painted for a more formal appearance.

Composite Siding

Composite siding was made from shredded wood, sawdust and pulp mixtures turned into hardboard or various combinations of these glued together with cement.

During the real estate boom of the eighty's a number of contractors experimented with the use of these synthetic building products and they were were doomed to fail. They tended to rot prematurely, swell, grow mildew and fungus and buckle or warp. Some of these sidings originally came with 20 year guaranties but experienced deterioration after the first few years.

There have been over 11 nationwide class-action lawsuits involving these products with companies including Georgia-Pacific Hardboard, Abitibi-Price and Jefferson Smurfit. A number of the suits have been settled, including a class action suit against Masonite Corporation which manufactured a hardboard siding that the court found was defective.

The Masonite hardboard was a product made from wood fiber, wax and resins. It was designed to look like conventional lumber siding or clapboard. Since most of the installations were done in the early eighty's, any Masonite siding that is still in existence, at this point, is usually identifying itself through buckling and discoloration.

It is not always easy to recognize composite siding, except for the damage that has occurred. It is a pulp product that is usually held together with glue and sometimes finished with a shiny coat. At first glance, the siding will look quite normal but if it has been exposed to a number of years of weather it will exhibit a lot of breakage.

In the property listing, if the siding is described as clapboard but is actually composite, the listing has an error. This should be corrected with full disclosure regarding the correct siding material. Sometimes a listing broker will make an innocent mistake in listing siding as clapboard when it is actually a composite. One reason for this is that there has not been as much exposure to this product in Massachusetts as in some other areas of the country. Composite siding has been more prevalent in warm weather states since it holds up better in a less challenging environment.

You can find more information about composite siding on the internet at www.Masoniteclaims.com or www.Sidingsolutions.com.

Evaluating The Neighborhood

A good reason to do a property "drive-by" is to examine the environment surrounding the home. A home that looks great on a listing sheet may very well be across-the-street from an eyesore.

How close are the houses on either side? Do the neighbors have old cars, boats or RV's stored in their yards? Some of these things can reduce the value of the neighborhood, and, ultimately, your property. Once you have moved into the neighborhood you won't have much power to change the overall image of it so know that your first impression is critical. It will tell you what you think of the area and how comfortable you will be living there.

Traditionally, neighborhoods contain houses that are similar in age, size and value. If you are buying a large four bedroom colonial, you do not want it to be in a neighborhood of small capes and ranches. Being the biggest house on the street can have a negative impact on how well a home will retain and appreciate its value. It is always better to have homes surrounding you that are similar or better than yours since part of a home's value is judged by its location.

One of the reasons developments are so popular is that they provide some control over the issue of property value. Since all of the homes in a development are usually built by the same builder, their sizes, styles and ages will be somewhat uniform. Additionally, people living in them will, generally, be of the same social and economic status. These factors give a noticeable impression of unity and stability and help to preserve the resale value of homes.

Cul-de-sacs, slower traffic flow and safe areas for children are also aspects that contribute to keeping property values high.

In contrast to suburbia, urban neighborhoods are often not the result of planning, but of on-going growth. People who place a high value on convenience are often willing to contend with some of its disadvantages. These include lack of parking, traffic congestion, and a smaller supply of housing. That having been said, for many people, life in a city is far superior to that of the suburbs. There is less isolation, a faster-moving pace and greater access to cultural events.

Unlike the suburbs, there is greater diversity in an urban neighborhood. People from different backgrounds, ethnicity and earning power often live in the same block creating a more homogeneous environment than their suburban counterparts. In a city, property values are based more on the actual structure and physical attributes of the home as well as the part of town you are located in.

If you choose to invest in an urban dwelling, there should be no shortage of buyers when it is time to sell. There will always be those who thrive in the exciting atmosphere that a city can offer and who also desire a shorter commute to work.

Curb Appeal

Have you ever read the words on a listing sheet "not a drive-by?" This means that the home does not look good from the street, or, otherwise has no curb appeal. An example of this was an unusual house that I showed to a client. The side of the house, rather than the front, was facing the street. Although, once inside, it was long and spacious, from the street it looked like a small bungalow. This fact made it necessary to for the owner to compensate for its obvious lack of curb appeal and lower the price.

If you have the ability to look past the obvious, you may be able to pick up a bargain. Most people cannot see past a property's initial shortcomings. If the landscaping has been neglected or the house needs a coat of paint, many home buyers will not even go inside. Having the ability to visualize beauty in a distressed property is a valuable gift. If you are also handy and able to make your own repairs, you may be greatly rewarded for having had an early vision of the finished product.

Typically, the first impression a property makes is crucial to its resale value. There must be plants, bushes, and landscaping details to enhance the appearance of the home. The driveway needs to be in good condition, presenting a pleasant entrance. If the house does not look good from the street, most buyers will just keep driving.

Chapter 6

Interior Details

Bedrooms

Because we spend one third of our lives sleeping, the comfort of the bedrooms is extremely important. Generally speaking, bedrooms should be located away from the main living zones and have an accessible bathroom.

Lighting and ventilation are also significant. The main sources of artificial lighting in bedrooms are ceiling lights and lamps on end tables or dressers. For sunlight and ventilation, you should check the size and placement of the windows.

The minimum code requirement for the window area is 10 percent in relation to the rest of the room. Most of us enjoy more sunlight than that so it should have several windows or a skylight. The windows should also be located in a way that allows ample wall space for your furniture. If you have large bedroom furniture bring a measuring tape with you when viewing homes to make sure that the wall space will be adequate.

Three bedrooms are usually considered minimum for a family and are also important for resale. If your budget allows, a fourth bedroom will increase the value considerably.

If you view a home that has three bedrooms upstairs and a bed in a finished basement, it is not a four bedroom house. To qualify as a bedroom it should be either upstairs with the other bedrooms or in a quiet corner on the first floor. It must also have its own closet.

Large master bedrooms and master suites have grown in popularity. These often have walk-in closets and generous sitting areas. The master bath can range from a small bath with vanity and shower to a large one with double vanities, Jacuzzi tub and a separate shower.

The Kitchen

The kitchen is the center of living and activity in most homes. Whether you gather together for meals or wander in at different times, this is still where the food is as well as the microwave, dishwasher and stove. It should be located close to any possible eating areas, including the formal dining room, outside patio and family room. It should also be convenient to the garage or breezeway with the thought of carrying in groceries.

The kitchen should have an inviting atmosphere, be well lit and benefit from the sunlight with adequate windows. The window over the sink is a popular design for reasons of ventilation and adequate lighting. For night time cleanups, there should be a additional lighting in the sink and cleanup area.

To be properly ventilated, there should be at least two windows and a back door. It's also important to have an exhaust fan system that draws cooking fumes directly to the outside air.

Although most of us feel that it is not possible to have enough counter or cabinet space, newer construction has been paying great heed to this need and providing more utilization of all of the available areas. Corner cabinets have lazy Susans and additional counters are installed wherever possible. Pantries have also been welcomed back into homes, some equipped with sliding shelves and spice racks.

Many people like to have an eat-in kitchen since this is more convenient for daily or informal meals. To respond to this need, space should be allotted for the inclusion of a table and chairs. Center islands with areas for barstools provide another informal eating place. They also provide extra counter space and additional cabinet storage underneath.

When viewing potential kitchens, you may want to ask yourself some practical questions: Do you prefer a range or a separate cooktop and oven? Does the design of the room allow for easy rinsing and loading of the dishwasher? Are there enough cutting and preparation surfaces? Is there an area to store cooking items, such as olive oil, close to the stove? If you have the need, is there enough room for two cooks to work without bumping into one another?

Appliances

Popular appliance colors in the 1960s and 70s were Avocado Green, Harvest Gold and Deep Copper. Following this phase, we saw appliance colors go back to white and almond. The trend now is toward industrial-style stainless steel with an emphasis on professional quality ranges with oversized hoods. This polished and high-tech look goes well with every decor from traditional to contemporary and the stainless steel trend is expected to become even larger in the coming years.

For those who do not want stainless steel, there are still all-white appliances and also the integrated look. With this style, it's hard to tell that an appliance is not a cabinet. With an integrated style, you no longer have a kitchen designed to accommodate a refrigerator since the refrigerator is built into the look of the wood. Sub-zeros, which are built-in refrigerators, have been around for awhile but are now gaining in popularity. These are usually side-by-side and come with a framed overlay allowing you to put a on a wood front thus projecting a cabinet-like look.

Dishwashers are also available with wooden fronts to disguise their appearance. The newer ones are coming with dishwasher drawers which can be used separately or simultaneously. The draws are more energy efficient, using only 4 gallons of water which is heated up to 165 degrees. Also, manufacturers are releasing other products that are completely integrated into kitchen cabinet fronts such as built-in coffee machines and toasters.

With regard to the stove, gas cooktops and ranges have retained their popularity since their look is one of nostalgia and also of a serious cook. Since a gas flame gives you more control than an electric burner, it is usually preferred by gourmet chefs. Still, there are pragmatic cooks who choose electric stoves with ceramic surfaces since they are, generally, easier to clean.

Kitchen Counter Surfaces

There is, currently, a wide selection of countertop materials available. When buying an existing home you may be restricted to whatever the previous owner has chosen. However, if you decide to redo the kitchen or if you are buying new construction, your choice can depend on a number of factors including personal taste, desired usage and cost.

Formica

To date, the most widely-used material for kitchen counters has been Formica or plastic laminate.

Formica is a laminated melamine which is made from layers of special papers impregnated with synthetic resins. The saturated papers are fused together under heat and pressure to produce the laminate surface. The surface is easy to clean, resists stains and wears well. It is usually accompanied by a matching backsplash that abuts the wall the countertop is mounted against.

Formica comes in a variety of colors and can even mimic the appearance of Corian. It does not; however, hold up under high heat. Hot pans must be put on a protective surface to avoid damaging a Formica counter.

Ceramic Tile

Ceramic tile is a hard and durable surface and is not affected by heat or fire. It is resistant to stain and sharp knives will not cut it. The color is unaffected by sunlight and stays true to its original.

A lovely effect can be created with matching tile on the walls countertop surface. It can be beautiful and many designer magazines feature kitchens with imported tile countertops.

A negative aspect of ceramic tile is in its maintenance. Hard blows can chip the tile and the grout must be cleaned on a regular basis or it will take on a dingy appearance. The grout can also be stained by red wine since it is a porous substance.

Corian

Corian is an extremely durable surface developed by Dupont. It can be drilled, sculpted, bent or worked like fine wood. Although it is available in over 100 colors, the standard countertop colors are usually shades of alabaster. Every Corian countertop is custom designed and has a completely seamless appearance.

Corian's beauty and durability have made it a popular kitchen and bath surface for home owners as well as for builders. It is also a surface that is easy to care for.

Although some builders refer to Corian as indestructible, it can be deeply scratched. It can also be burned by hot pans. The difference with Corian is that the scratches and burns can be repaired and the surface can usually be restored to a "like new" appearance.

Granite

Granite is formed deep in the earth's mantle at extremely high temperatures. This makes it a very hard and resistant substance. Hot pans will not damage the surface of a granite countertop and the manufacturer seals it immediately following installation. The sealing penetrates the stone, clogging most of its pores, thereby making it invulnerable to any liquid spills.

Even though granite is extremely resilient, it should not be used as a cutting board. The solid surface is harder than any knife blades and will quickly dull them.

Since granite is made from a natural stone, each countertop is unique, owing its beauty and design completely to nature. If you are having granite installed in your home, your contractor will give you samples to choose from. Be aware that your granite will differ slightly in color and pattern from any sample. This distinctive and original quality is part of the beauty of owning a natural substance.

Concrete

Concrete countertops boast a warm and natural look that go well with materials such as wood, stone and brick. These countertops are either pre-cast in a shop or built on site. The plus to an in-shop build is that the environment is controlled while it is curing and the surface can then be adequately sealed. An on-site installation will more likely conform to the home owner's particular style or need.

Due to the texture and individuality of concrete, many find it to be a dynamic addition to a kitchen. No two concrete countertops are alike and some contractors have their own unique styling to ensure this. One style is called a "veined" look. After the surface has been worked, a grinding disk zigzags across it revealing marble-like veining. It is then sealed to be completely smooth. Another method is called "terrazzo" whereby marble chips are worked into the background, creating a two-toned effect which adds textural interest under the smooth, sealed surface.

A concrete surface is not stagnant. Its color and texture vary as well as its look over a period of time and with regular use. Cast concrete countertops are becoming popular with those who want a completely individualized look.

Stainless Steel

Stainless steel, which was once the exclusive domain of commercial kitchens, is fast becoming popular in new homes. To provide it with sturdiness and to act as a sound barrier, it is always installed over a plywood substrate.

Like stainless steel appliances, stainless countertops bring a professional restaurant look into residential kitchens. It is waterproof, heat resistant and easy to clean. It has also long been considered an ideal surface for food preparation. Besides being extremely durable, the addition of chromium provides it with rust-resistant properties.

The negative side of stainless steel is that it can be scratched and dented. It is a surface that should not be used for cutting.

Significantly, a study by the Hospitality Institute of Technology and Management concluded that stainless steel countertops are a proven germ fighter. The study revealed that this surface is the least likely to harbor dangerous bacteria, such as E. coli when compared to other countertop surfaces which may be why it is used in so many restaurant and commercial applications.

The Laundry Room

Until quite recently, the standard area for the laundry was in the basement. This location had the advantage of space and also of the soiled clothing being out of the main part of the house for aesthetic reasons. Although there was the problem of having to walk up and down the stairs, installing a laundry chute from the upper levels was part of a solution.

Newer homes tend to have the laundry area off of the kitchen, often in its own section behind closed doors. Many people find this to be advantageous since they spend most of their time in the main level of the house. People with small children seem to prefer to have the laundry in or around the kitchen to save steps while supervising them.

Others argue that the dirty clothes emanate from the bedroom level and prefer to have a second floor laundry. This makes perfect sense since the clothes, towels and sheets usually have to be returned to the second floor. If this is your preference just pay heed to the possibility of odors from detergents being so close to the bedrooms. Make sure that cabinets close tightly for storage of all cleaning solvents and that proper ventilation is in place.

Wherever the laundry area is there should be venting from the dryer to the outside. This is the case whether you are using electric or gas. Also, the surrounding floors and walls should be made of substances resistant to moisture, humidity and the spilling of solvents.

The size is not as important as the convenience of the location. Cabinets and shelves are needed for storing detergents, softeners and bleach. Countertops are helpful for folding and sorting the laundry and, the importance of adequate lighting in the laundry room should not be minimized.

Bathrooms

The American bathroom has become a major selling feature in new homes. Next to the kitchen, it is the most important interior influence. Because of this, the number and quality of bathrooms in a home can affect its resale value.

Today, the minimum amount of bathrooms in a three bedroom house are one full and one half bath. It has become more common in newer homes to have at least two full baths and one half. The usual arrangement is a full bath in or near the master, a full bath down the hall with close proximity to other bedrooms and a half bath or powder room downstairs.

Another minimum standard is a bathroom or half bath on each separate floor. Custom built luxury houses often have a full bathroom for each bedroom.

A bathroom may be called full if it has a tub and shower, or only a shower. The standard is a bath and shower combination.

A bathroom that is shared by two bedrooms is sometimes referred to as a Hollywood bath, or, in the case of children's bedrooms, a Jack and Jill bath. This may not be an optimum situation due to the light over the door and possible noise waking the person in the adjacent room. There is also the problem of forgetting to unlock the adjoining door, thus locking the other person out.

Many newer homes are being built with a Jacuzzi or simply an oversized tub in the master. In this case, you will want to take note of the size of the water heater to ensure that it is capable of providing sufficient hot water for a large tub.

During your home inspection make sure that enough heat is getting to all of the bathrooms. Baths require additional heat, especially in the winter months. When a bathroom has been built over a garage area, proper insulation is a must. In this situation, it is crucial that the heating system is adequately reaching this area. If not, an additional heat source should be installed.

All bathrooms should also have fans that ventilate air to the outside.

When viewing bathrooms, check inside of the tub and shower for mold and mildew, making sure that it is cleanable and not permanently stained. Also check the grout between ceramic tiles for chipping and color.

Living Room

Throughout the years the idea of having a separate room for entertaining apart from casual spaces has remained with us. The term "drawing room" was short for withdrawing. It referred to the ladies leaving the men to their brandy and cigars to a place where they could withdraw for some conversation.

Customs in the twenty-first century have changed that way of thinking and, due to the overwhelming popularity of the family room, the living room has taken a position of less importance.

The location of the living room is usually in the front of the home to the right or left of the foyer. It should not be in an area where traffic passes through, but rather in a dead-end area. Many home owners have turned this room into a study or office. With the addition of French doors, this can be easily achieved.

Today, the family room, kitchen and three season porches are when most of the household activities take place, somewhat diminishing the importance of the living room. It no longer maintains its exalted status as the family living center.

The living room has, however, survived the sociological changes that have taken place over the past few centuries and many people still place great importance on the furnishings and elegance of this graceful living area.

Family Room

The family room had its origin a half a century ago with a connection to the end of World War II. With the return of soldiers, their subsequent marriages and raising of families, the baby boom generation began. These larger families needed a room for activities and, thus, the family room was born.

There is no exact standard placement for the family room. Some older homes have it situated in a finished basement. Split level houses also have this arrangement. In newer homes, the room is often located near the kitchen area for easy flow and proximity to the where food is prepared. The open flow of a family room and kitchen can create a central area which is conducive to monitoring the activities of small children while cooking and cleaning.

The layout of the family room generally takes on the character of the family inhabiting it. If there is a music buff in the household it will be reflected in the shelves of stereo equipment and media storage. This is also where a home theatre will be located, equipped with a television and speaker system. Built-in cabinets and bookshelves are a welcomed asset for holding various items that are stored and used such as books, photo albums, videos and CD's.

A good size for a small to medium house can be 12 feet by 16 feet. There is really no maximum size and a large house could conceivably contain a family room that is 16 by 26 feet or more. It is generally thought that the larger the family room, the smaller the living room. One being formal and the other informal in use and furnishings.

Some feel that with society's new population philosophies, the importance of the family room may diminish in a decade or two. It will probably not disappear, but will be modified with regard to its current uses. However you use it, the usually large room is a welcomed asset and often a visual focal point of a home.

The All-Important Basement

The basement is where you can tell a great deal about a home, particularly if it is an older one.

As you inspect the basement, check for the following items:

Are there cracks in the foundation?

If there are significant cracks in the walls these can be a point of entry for water to come into the basement. Look for patches over cracks that are deteriorating. Eventually, they can widen if the problem is not corrected. Some cracks are due to settlement and these are not serious. However; wide or V-shaped cracks can be signs of something more significant.

Are there any water stains or water marks in the concrete?

Check under the windows. Often water seeps through causing rust colored stains. Also note any white powder that may be on the walls. This is known as efflorescence and is the residue that is left after water has seeped into the building and evaporated.

Is there a sump-pump?

If there is one, it is an indication that the basement may have had water seepage problems, however, sometimes a sump pump will be installed as a precautionary measure. Some builders are now installing sump pumps in all of their houses simply as a precautionary measure. Consult the owner about the history of water problems and what went into the decision to install a sump pump. You might also ask if there were any other water correction methods put in such as a perimeter drain. A perimeter drain is usually installed around the foundation of the house to prevent water from going into the basement.

Are the current owners storing items directly on the floor and, if so, are they in good condition?

Also check the bottoms of metal items like the hot water heater. If it has rust and flaking this is an indication of a water problem.

Does the basement smell musty?

Check for the presence of a dehumidifier and note if it is running. It is common to have a dehumidifier in a basement to help keep the musty smell out. Just be sure that if there is one that it is doing an adequate job.

Take notice of the furnace. If you are looking at an older home the chances are that you are looking at an old furnace. Check for any leaking or odor of oil or gas. Also, ask the home owner if the furnace is the original and what has been done to update it. Often with an older furnace, some parts, such as the burner, have been replaced.

If there is water on the floor directly under the furnace this could be a sign that the boiler has cracked in the heat exchanger. Rust along the bottom can, once again, indicate a wet basement problem.

There should be an inspection tag from the last time the oil or gas company did an inspection. A cleaning and maintenance should be done on a furnace at least once a year, usually in preparation for the winter season. If the tag is missing, ask the seller or broker when the furnace was last checked or serviced and if the record of it is available. If there is no sign of recent service it is a good idea to ask the seller to have the furnace serviced and provide you with the paid invoice prior to closing.

Basement Sump Pump

Electric Service Panel

The electric service panel is usually located in the basement attached to a wall. It should be on a wood panel and not directly on the concrete.

An important rule to know about the electric panel is to not touch anything in it. Home inspectors not only have an electrical background but they also take precautions about what they are wearing and using to inspect these systems. These include rubber-soled shoes, insulated tools and insulated mats.

If you are looking at an older home, there may still be fuses which means it has not been updated. Preferably, there will be circuit breakers. Look on the main breaker, which is at the top, to see what the amperage is. It will usually, but not always, be stamped into this breaker. The minimum acceptable amperage is 100 amps. Newer homes come with at least a 200 amp service.

On the inside of the panel door there should be a list of all of the circuits and which items in the house they control. This is necessary, according to Massachusetts electrical code, and needs to be corrected if the coordinating items are not listed.

Chapter Seven

What You Can and Cannot

Expect to be Disclosed

About A Property

The old rule about purchasing real estate used to be caveat emptor: "Let the buyer beware." Today, with revisions to laws, including laws of disclosure, some of this responsibility has shifted to place more responsibility to the real estate broker and seller.

Real Estate Disclosure Laws

Until the 1960s people purchased properties without the advantage of property disclosure laws. Gradually, more states have adopted their own rules to protect the public. In most states now, the broker has a duty to advise buyers of known property defects and there has been a great deal of encouragement for all listing brokers to have their sellers fill out property disclosure forms.

Presently, mandatory property disclosure is the law in Alaska, California, Connecticut, Delaware, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Maine, Maryland, Michigan, Mississippi, Nebraska, Nevada, New Hampshire, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Virginia, Washington and Wisconsin.

In Nevada, for example, they have an actual "Lemon Law" with regard to real estate purchases. The seller must fill out their mandatory disclosure form. If at any time during the transaction, the buyers discover a defect that was not on the form or is worse than was indicated previously, they may get out of the transaction with all deposits returned.

In California a seller must have the property inspected before putting it on the market and must tell the buyer of any hazardous conditions that the property is on such as a mudslide area, earthquake zone, flood hazard zone, wild-land fire area or seismic hazard zone.

Many states now make it compulsory that a seller fill out a Seller Disclosure Statement. In Massachusetts; however, it is still voluntary.

That having been said, you may well purchase a property that is listed with a real estate company with its own rules about property disclosures. Many agencies require their agents to have sellers fill out a form when they take a new listing. They will require that buyers sign a copy of the disclosure form. This is not done for a validation from you, but, simply to acknowledge that you have received and read the sellers' property disclosure.

If you are presented with a seller disclosure, be sure to keep a copy of it with your home purchase file. If problems occur at a later time, you will have a record of what the sellers claimed to be true about their property.

Chapter 93A – The Consumer Protection Act

In 1968 Massachusetts adopted Chapter 93A which provides greater protection for consumers. The law states that the use of "unfair or deceptive practices" is illegal and it applies to any area in which a consumer may be affected. This includes debt collection practices, landlord-tenant actions and sales tactics.

With regard to the sale of real estate, some precedent setting cases have guided the way in which 93A applies. The Regulations of the Attorney General state that an unfair or deceptive act is committed if a person ..."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."

What does this mean to you?

With the threat of possible lawsuits looming, listing brokers know that they must disclose any fact they are aware of which may have an influence on anyone's decision to purchase a property. Some of these could be roofing problems, wet basements, zoning violations, unpaid betterment charges, underground oil tanks and structural problems.

Because of 93A, when a property goes through a home inspection and the potential buyers opt out of the deal due to something revealed in their inspection, that fact must be disclosed to any potential future buyers.

For example: A home inspection reveals that a house needs a new roof . The buyers decide not to purchase the property. That property must go back on the market with a disclosure in the listing specifically stating that it needs a new roof.

Limitations of 93A

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, even if the buyer makes no inquiry, 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.

The case of Nei v. Burley in 1983, ran contrary to the above ruling. In Nei,a broker had been charged with a violation of Chapter 93A. It was alleged that he had represented that a parcel of land was suitable for building a home and "ready to go." After their purchase, the buyers discovered that, in order to install a septic system in accordance with the state sanitary code, they would need to purchase landfill. The landfill was necessary due to a high water table level which had not been disclosed to the buyer. The buyer sued with the charge that the broker should have disclosed the water table problem.

Although the broker had been given an engineer's test results which would have indicated to an "informed person" that fill would be necessary for a septic system installation, the Supreme Judicial Court ruled that there was no evidence that a "reasonable" broker should have known that fact from those tests. No evidence had been offered to prove that the broker should have understood the test's implications, therefore, the Court ruled in favor of the defendant.

A case which supported the 93A ruling was Piers, et al v. Wheeler & Taylor, Inc.

In this case, the buyers had decided to purchase a house and contacted a real estate firm they had dealt with previously. The firm assigned one of their brokers to work with the them. The buyers told the broker that they wanted to buy an old house but made it clear that the house was to be lead free. The broker showed them a house that was owned by a fellow agent at her company who also assured them that the property had been deleaded.

The house had been extensively renovated and the seller assumed that this fact would have negated the possibility of it having lead paint; however, she had never actually had a lead paint inspection. When filling out the property disclosure form, the seller checked "no" next to the question of whether or not the house had any lead paint. The listing broker never questioned the response by the seller and never asked for a Lead Paint Certificate of Compliance.

Due to the fact that they had two small children, the buyers stressed to the seller, outside of the broker's presence, that their need for a deleaded property was paramount. The seller did not deny to them that the house had been deleaded. Due to this interaction as well as the statements made by the broker, the buyers had their regular home inspection but did not have the property tested for lead paint.

As the closing was approaching, the agency sent a lead paint disclosure form to the buyers to sign. They insisted that they would not sign the form since it did not apply to them. They had been assured they were buying a deleaded home. Even when the broker insisted to them it was "just a formality" they still refused to sign.

Six months after closing on the home, they took their younger son to the doctor for a checkup. After examining the child, the doctor came to the conclusion that the little boy had lead paint poisoning. They filed a lawsuit against the brokerage firm, the broker and the seller. They alleged deceit, breach of contract and violation of Chapter 93A.

As to the 93A violations, the judge ruled that the broker's conduct had been particularly egregious and ordered her to pay treble damages to them. Because she was an experienced broker, she should have known the dangers of lead paint to small children, and, by trivializing the disclosure form and telling the buyers that the house had been deleaded, she caused them to make a decision to not have the house tested for lead paint.

"The seller warranted in writing that the premises were free of lead paint, and the broker went one step further by orally informing the buyers on more than one occasion that the house had been deleaded," the judge stated. "Both statements were clearly false, and I rule that they constituted the type of unfair or deceptive acts or practices' proscribed by Chapter 93A, Sect.2."*

*Source material for Piers v. Wheeler & Taylor from "Broker Liable Under 93A For Lead Paint Damages" reprint from Massachusetts Lawyers Weekly February 16, 1998.

Amendment to Chapter 93A

On August 11, 1998, Chapter 294 of H 2099 was signed into law. This amendment states that "The fact or suspicion that real property may be or is psychologically impacted shall not be deemed to be a material fact required to be disclosed in a real estate transaction..."

Such facts would include:

-- That the property was the site of a murder or suicide;

-- That the property has been the site of a supernatural

phenomenon (such as ghosts).

Some people are not comfortable moving into a house that has been the site of an illness or misfortune. There can be fear associated with property that has had an assault or murder take place in it; sometimes, a fear that the perpetrator may return. Unfortunately, 93A does not force realtors to disclose this information unless they are specifically asked.

On your own, you can go to the town or city hall and inquire about these concerns. In a small town, ask the people at the assessor's office if they know of anything with regard to the subject property. People in small towns generally know what has transpired in their town.

In general, if you have any concerns about a property that you want to purchase, ask the question that is on your mind. When confronted with a specific question, a broker must provide an answer to you if there is any way that he or she could have possibly known it.

Without questioning, a listing broker is really only liable to disclose facts that have actually been made known to him or her. This may be from the broker's own knowledge or as a result of information supplied by the seller. A seller agent is under no obligation to look for potentially negative facts about a property.

Chapter Eight

Focusing in On a Specific Property

Property Valuations

When you become serious about making an offer on a property your broker should be able to put together some numbers which will indicate a reasonable offer price. Contrary to popular belief, there is no one exact price that a property is worth until a buyer has actually offered to pay it.

No matter how many analyses, comparable marketing reports or appraisals are done on a subject, there are still the variables of seller motivation, buyer motivation and other factors that cannot be predicted for any particular piece of property. Sometimes the analyses can be ongoing during the negotiations as parties reveal their necessities for buying or selling.

One method for developing an offer price is to turn to Comparable Sales. These are sales of properties in the same town, preferably close to the subject area that have closed within the last six months. This method is only as effective as the available sales. If you are able to find a recent sale of the same type of home as the subject, close to the subject, the same age and with a similar lot size, you have a perfect comparable sale. Armed with this perfect sale you can conclude that the subject property should, more than likely, sell for close to the same price.

A second way to develop an offer price is to perform a Comparable Market Analysis. This is how a listing broker determines the selling price of a property to be put on the market. It is done by finding three comparable sales as in the previous illustration. The sales are then fed into a software CMA program and the result generated is a suggested sales price. Once again, this method is only as good as the recent sales and software is not necessarily cognizant of the real world. A good broker will know how to adjust the results accordingly.

A third method is called a Drive-By Appraisal or Broker Price Opinion. This can only be done by someone who is trained in doing these analyses. It is similar to the appraisals required by the bank, and some institutions actually use drive-by appraisals rather than full appraisals.

The Drive-By Appraisal is done using three recent sales that are as close as possible to the subject in every way. Comparisons are then made by subtracting or adding value from the property dependent upon the features which may or may not be present. For example, if the subject house has four bedrooms and the comparable sale has only three, an equivalent dollar value is added to the comparable sale for an additional room. Adjustments are made for every feature and a new sales price is computed for each comparable sale. From these adjusted sales, the broker arrives at a suggested sales and offer price for the subject property.

Making an Offer

After deciding on a price, the offer is written. Most realtors use the preprinted form provided by their board for the main section of the offer. The contingency pages are another matter. Obviously, a buyer broker will have contingencies that are geared toward the protection of the buyers' interests, especially, the deposit.

These important contingencies include the following:

-- The Financing Contingency -- This states the amount of financing you will be applying for and accomplishes two things. One, it protects your deposit should your financing be turned down and states that if you are unable to obtain your loan by a certain date, you may withdrawn from the transaction and have your deposit money returned. Two, it tells the seller how strong a buyer you are. He can see from the mortgage amount whether you are a 5%, 10%, 20% down or more buyer and this could matter in a multiple offer situation.

-- The Home Inspection Contingency -- Written into the offer is a time-frame, usually one week, to give you a chance to have the property inspected. A buyer broker contingency should state that "If the property is found to be unsatisfactory in any way to the buyer, the buyer may terminate the offer and have the deposit returned."

The traditional, seller agent will have a contingency that states that a only certain amount of damage; $500 or sometimes, $1,000 will allow the buyers to get out of the transaction and have their deposit returned.

-- Additional Contingencies -- These will be tailored to meet the particular circumstances of the buyers' needs. For example, perhaps there is an unknown fact about the property that must be checked into, i.e., "Offer is contingent on information regarding the adjacent vacant lot" or "Offer is contingent on viewing a plot plan."

Exhibit D

OFFER TO PURCHASE REAL ESTATE

TO___________________________________________

___________________________________________

___________________________________________ DATE____________________________________________

The property herein referred to is identified as follows:__________________________________________________________________

_____________________________________________________________________________________________________________

Special provisions (if any) re fixtures, appliances, etc.____________________________________________________________________

______________________________________________________________________________________________________________

hereby offer to buy said property, which has been offered to me by ___________________________________________________________

_______________________________________________________as the Seller's Broker (s) under the following terms and conditions:

1. I will pay therefore $______________________________, of which Check one: __Check, subject collection

(a) $______________________is paid herewith as a deposit to bind this Offer __ Cash

(b) $______________________is to be paid as an additional deposit upon the execution of the Purchase and Sale Agreement provided for below.

(c) $______________________is to be paid at the time of delivery of the Deed in cash, or by certified, cashier's, treasurer's or bank check (s).

(d) $______________________

______________________

(e) $______________________ Total Purchase Price

2. This Offer is good until ___________________A.M. P.M. on ___________________________, 20____ at or before which time a copy hereof

shall be signed by you, the Seller and your (husband) (wife), signifying acceptance of this Offer, and returned to me forthwith, otherwise this Offer

shall be considered as rejected and the money deposited herewith shall be returned to me forthwith.

3. The parties hereto shall, on or before ____________ A.M. P.M. _________________________, 20____ execute the applicable Standard Form

Purchase and Sale Agreement recommended by the Greater Boston Real Estate Board or any form substantially similar thereto, which, when

executed, shall be the agreement between the parties hereto.

4. A good and sufficient Deed, conveying a good and clear record and marketable title shall be delivered at 12:00 Noon on __________, 20_____

5. If I do not fulfill my obligations under this Offer, the above mentioned deposit shall forthwith become your property without recourse to either

party. Said deposit shall be held by ____________________________ as escrow agent subject to the terms hereof provided however that in

the event of any disagreement between the parties, the escrow agent may retain said deposit pending instructions mutually given in writing by

parties, A similar provision shall be included in the Purchase and Sale Agreement with respect to any deposit held under its terms.

6. Time is of the essence hereof.

7. The initialed riders, if any, attached hereto are incorporated herein by reference. Additional terms and conditions, if any:

NOTICE: This is a legal document that creates binding obligations. If not understood, consult an attorney.

WITNESS MY HAND SEAL SIGNED __________________________________________________________________

Buyer

___________________________________________________________________

Buyer

__________________________________________________________________________________________________________________

This Offer is hereby accepted upon the foregoing terms and conditions at _______________ A.M./P.M. on _______________________, 20_____

WITNESS my (our) hands) and seal (s)

_________________________________________________________ ________________________________________________________

Seller (or spouse) Seller

The body of the offer will contain the following:

- address of the property;

- the brokers involved in the transaction;

- the offer price;

- initial binder (usually $1,000);

- the additional deposit to be put down at Purchase and Sale (usually 5% of the purchase price minus the $1,000 initial deposit);

- the date of the Purchase and Sale Agreement (usually within two weeks);

- the closing date;

- who holds the deposit (usually the listing agency);

- what is included in the sale (i.e., refrigerator, washer, dryer);

- any additional terms of the offer.

All offers are presented "as quickly as humanly possible". This has been greatly helped with the advent of fax machines, and, at some point in the soon we will be seeing the e-mail offer.

Keep in mind that the price is not the only point of negotiation, although it is usually the strongest. Other factors are: how strong you are financially, if your closing date is agreeable with the seller's closing date and how flexible you can be.

Make no mistake about this fact, the "Offer to Purchase Real Estate" is a legally-binding document. That is why the contingencies are so important. The information in the offer will eventually be transferred into the purchase and sale agreement along with your attorney's additional addendums and riders to protect your interest.

What is included with the property?

Real Property vs. Personal Property

In contemporary terms, property is divided into two categories. Real property is the land and everything that is attached to it, including the ground to the core of the Earth and up to the sky. This would encompass the building, landscaping, trees and all things that are sold as part of the real estate transaction.

Another way to think of it is what realtors call "fixtures". Examples of fixtures are: wall-to-wall carpeting, attached lighting, built-in ovens, stoves, microwaves and ceiling fans. This is every item physically attached to the property, including, but not limited to the furnace and the kitchen sink.

All of these items will be included in the purchase unless they are mentioned as exclusions in the listing.

Personal property, conversely, is that which is not attached, such as furnishings, scatter rugs, free-standing lamps, the refrigerator, washer, dryer and grand piano. These are all considered personal property which is why they can sometimes be used as bargaining chips when negotiating a price on a house.

On the listing sheet will be inclusions and exclusions. If the refrigerator, washer and dryer are not mentioned, they are not included in the purchase price. If a chandelier is mentioned as an exclusion, the sellers are taking it with them, even though it is attached to the property.

Chapter Nine

The Home Inspection

Please don't give any thought to skipping this important step. Using the analogy of a boating trip in waters that can sometimes be choppy, in the process of buying a home, your inspection is your life jacket. Even when buying a fairly new home you should have it inspected. There are many elements involved in the setting, layout, functionality and quality of construction of a home and you should have a professional analysis of it before signing a Purchase and Sale Agreement.

During the week that has been allotted for your inspection, you or your buyer broker* will set up a time for a home inspector to come in to inspect the property. It is always better to do this sooner, rather than later in the event that any issues should arise. This will allow ample time for possible renegotiation before any further paperwork is signed.

Depending on the size of the house, plan on spending three or more hours. You should try to be there, although I have filled in for absent clients who are too busy to attend. In those cases I have given them a full report of my own, plus the inspector's.

If you can be there, you'll find it to be an informative time and will give you a much better look at the property before committing yourself to it. Sometimes a buyer will notice things during these two or three hours that he did not have a chance to see the first time around. Even if the house comes through with flying colors, it will have been worth the time and expense (a home inspection costs between $300 to $500 depending on the inspector and size of the house) since it is extremely educational and informative on all of the systems that will be part of your new home.

*Per Section 2, Chapter 87YY of the Massachusetts Home Inspector Licensing Bill signed November 24, 1999, a real estate agent cannot recommend a specific home inspector, he/she must supply a complete list of home inspectors provided by the Board. Only a Buyer Broker can recommend a specific home inspector to the buyer.

The Inspection

A basic home inspection should include the following:

EXTERIOR: Roof, siding, chimney, trim, gutters and downspouts, perimeter drainage and grading, basement windows, window wells, exterior faucet, electric service entry, exterior outlets, exterior lighting oil fill pipe and vent, walkways, driveway, decks/porches, patios, retaining walls.

GARAGE AND BASEMENT: Garage: foundation, floor, wall, sill, automatic door openers, primary doors, fume barrier, primary door, fire grade sheetrock, roof.

Basement: Foundation, floor, crawl area, basement windows, load bearing girders, support columns, sill, subfloor, joists, wall framing, chimney, bulkhead, water penetration and dampness.

CENTRAL HEATING AND COOLING: Thermostats, fire grade sheetrock, emergency shut off, exposed flue and damper from the heat plant, burner/gun, fire box liner, boiler, circulator pump, zone valve, pipes. Furnace: heat exchanger, circulator fan, filter, duct work, space heaters, fuel tank. Cooling system: Compressor, evaporator unit, service line, condenser drain, temperature at service line, temperature at air intake-outlet, electric disconnect, compressor slab.

ELECTRIC SYSTEM: Accessible wiring, service panel box, junction box covers, switch and outlet covers, smoke/fire detectors.

PLUMBING SYSTEM: Supply (municipal or private), waste (municipal or private), visual condition of accessible feed lines and connectors, visual condition of accessible waste lines within structure, main vent stack, accessible well equipment, laundry tub, washer/dryer connections, hot water heater, interior sewer ejector pump.

KITCHEN: Sink water flow, counters, cabinets, walls, ceilings, windows floor, electric outlets, heat source, baseboard/radiator/diffuser.

APPLIANCES: Stove top and oven, ventilator, dishwasher, disposal.

INTERIOR: Door: main, rear, side, sliding door, fireplace, stairway (basement), stairway (interior), halls, skylight. Baths: sink, tub/shower, toilet, GFI/electric/fan, tile/fiberglass wall, window, floor, door, heat source.

Interior rooms: ceiling, windows, walls, floor, door, electric outlets, heat source, baseboard/radiator/diffusers.

ATTIC VENTILATION/INSULATION: Access to attic, structural supports, roof backings, ceiling joist, flashing, chimney, insulation, ventilation, whole house fan, evidence of water penetration.

Pest Inspection

Your home inspector should check for any insect infestation. If you are getting an FHA loan, a pest inspection certificate will be required.

Typical pests to be encountered are termites and carpenter ants.

Termites

These creatures exist to eat wood, so they must be dealt with or serious damage can be done to your home. Termites are almost a half an inch long and resemble large ants. Up to five million of them can live in a colony. Left untreated, they can weaken and destroy a home structure with the damage going on for months or years if you are unaware of them.

Termites obtain their nourishment by eating cellulose materials such as wood, fabric, paper and fiberboard. They thrive in conditions where the soil is moist. A single colony is able to consume large amounts of wood in this environment.

In structures where the wooden portion of the building comes in contact with the soil, chemically treated wood should be used. It is also important to remove all scraps of lumber from the exterior grounds and under the crawl space and to not store firewood close to the house.

Carpenter Ants

Carpenter ants do not eat the wood but they hollow it out to build their nests. They live in rafters, walls and any other wooden items they can get into. They also like soft and damp wood and will tunnel into it to make their nests.

The Remedy

If your home inspector finds infestation of any kind, the seller should be made to deal with this. A simple treatment for termites or carpenter ants may be as little as $200. But, if the extent of the damage that they have done to the wood is great, the bill could be higher than $1,000. Before you agree to go through with a purchase of a home with this situation, the seller should agree to have a pest control company treat for the problem, and they should also pay to have any of the damage repaired.

When you take possession of the home, maintain an annual contract with the pest control company to eliminate future problems.

Other Inspection Issues

Radon

Radon is a naturally occurring gas produced by the breakdown of uranium in soil, rock, and water. It is also the second leading cause of lung cancer. The acceptable level of radon in your home is 4 picocuries per liter of air or lower. This is the level that is normally found in the outside air.

The source of the radon can usually be traced to floor openings in the basement such as drains, sump pump openings, floor joints and pores in hollow block walls. It collects in the basement with levels decreasing as you move up into the main areas of the house.

Because radon is often drawn in through foundation cracks and other openings, the most important place to test it is in the basement. The standard for radon testing is to place two canisters in the basement on a table or chair and away from any possible opening doors. These canisters will be left for 48 hours and will typically picked up by your broker and sent to a lab for results.

The Remedy

When the radon test produces a reading of 4 picocuries or higher corrective measures should be put into effect. In this case, the seller should pay to have a radon mitigation system installed. If the seller refuses to do this, under Chapter 93A, the home will have to go back on the market with a disclosure that there has been a high radon reading on the property.

The most common radon mitigation system consists of a pipe that is inserted from the basement and up through the house to the air outside. A fan in the pipe blows air out. Radon is drawn through the pipe and evacuated to the outside air so that it can't enter the home. Look for the system to have a gauge on it so that you can always tell that it is working. It is common for radon mitigation companies to provide a life-time warranty on their systems.

Having a high radon reading is not a reason to walk away from a house. Radon mitigation systems do work and they usually bring the radon levels down to 2 picocuries or less. Since it will be continuously working to keep radon levels low, you'll have safety in your air quality plus the security of knowing that when you sell the property it will have a low radon reading.

Lead Paint

In 1978, the consumer Product Safety Commission banned the use of lead paint in houses. Prior to this, from 1900 to the 1940's lead was the primary ingredient in many interior paints due to its brightness and durability. From 1940 to through the 1960's the use of latex paint, which does not contain lead, became widespread.

If the home you are purchasing was built prior to 1978, your broker will have provided you with the mandatory "Lead Paint Notification". The overall message in this disclosure is that a property this age may have lead paint, and actually, the older the property, the greater the likelihood is that it does have it.

Although most of the focus has been on the effect of lead paint on small children, lead paint can also be harmful to adults. Lead dust which is caused from the normal deterioration of lead from scraping, sanding or from simply opening and closing windows is dangerous when inhaled or ingested. The matter can be made worse from sweeping or vacuuming since this scatters the dust and makes the situation more volatile.

For a number of reasons, children are more susceptible to the dangers of lead paint, partly due to their size and weight. They tend to put lead objects in their mouths since lead has a sweet taste to it. The lead is easily absorbed into their bodies, which are still growing and their nervous systems are extremely sensitive to the toxic effects. Childhood lead poisoning can cause brain damage, damage to kidneys and liver and blood formation. It can lead to behavioral problems, slow growth, hearing impairment and headaches.

Exposure in adults can cause high blood pressure, reproductive problems, nerve disorders and problems with concentration. Pregnant women should stay away from airborne lead since it can harm the unborn baby if ingested by the mother.

A basic home inspection does not usually include an inspection for lead paint. This is a separate test with a separate cost involved. You will need to make the decision according to your situation whether or not you want to have the test done.

The Remedy

You should be aware that the cost of deleading a property can be high. Roughly $25,000 or more for a single family house and $15,000 or more for a single rental unit.

Although some encapsulating measures can be done by an owner, the actual lead paint removal must be done by a professional. This is the law in many states but, even if it were not, lead paint removal is too dangerous to do yourself. Improper removal of lead paint can spread lead dust around the home, making the situation worse. A list of lead-abatement contractors should be available from your lead paint inspector or from state or local agencies or you can call 617-727-7047 or 1-800-425-0004 for a list of licensed deleaders.

There is help available from the government to homeowners who want to delead in the form of financial assistance as well as tax credits. The current tax credit available is $1,500 per unit and the Joint Committee on Taxation on H.1865 is currently urging the state to increase this credit to $2500 per unit.

There are also grants and no-interest, deferred loans, or low-interest loans available to eligible property owners. These funds are available through the U.S. Department of Housing and Urban Development, the Massachusetts Executive Office of Communities and Development, the Massachusetts Housing Finance Authority and local banks.

You can obtain more information on these programs by calling The Massachusetts Housing Finance Agency at 617-854-1000.

UFFI (Urea Formaldehyde Foam Insulation)

Houses that were built in the 1970's and early 1980's were sometimes insulated using UFFI. It was a wet foam material and was pumped into the walls through small holes where it hardened to form a layer of inexpensive insulation. Unfortunately, UFFI released amounts of formaldehyde gas into the air. This colorless gas was known to cause health problems. Some of these included irritation to the eyes, nose, throat and also respiratory illnesses.

Studies have shown that the levels of formaldehyde in the air have dropped significantly with the age of the insulation and, because of this, the UFFI laws on are becoming less stringent. Sellers no longer have to have a test done for the presence of UFFI and, soon, the requirements on disclosure will also be relaxed or gone, however; you may still have to fill out papers for the bank that ask about UFFI.

The Remedy

Currently, it is incumbent upon the seller to tell you that there is no UFFI present on the property.

Water Tests

Public Water

If the property you are buying is on the public water supply, the water has to meet certain standards. In 1974 the Safe Drinking Water Act (SDWA) was enacted by Congress and established minimum standards for public drinking water. In 1986, the law was amended to accelerate regulations. It also banned future use of lead pipes and other protections of groundwater sources for drinking water.

Under the SDWA, water suppliers must test their water on a regular basis to ensure that it meets all of their guidelines. If it should fall short, they must notify all customers regarding the contaminants that are in excess.

It's a good idea to get in touch with the water department of the town you are moving into and question them regarding the history of their water system and ask if it has ever failed to meet any SDWA requirements.

Private Well

If you are purchasing a property with a private well, you should have the water tested for its quality and safety. In fact, many banks require testing if you are buying a property with a private well.

Usually, the home inspector who does your basic inspection will have a service to send the water to a testing facility. If not, you can find a water testing company in the yellow pages.

If you are testing a private well, you should ask for a comprehensive scan. This would test for: total coliform, fecal/e, coli, calcium, copper, iron, magnesium, manganese, potassium, sodium, alkalinity, chloride, chlorine, color, conductivity, hardness, nitrate, odor, ph, sediment, total dissolved solids, sulfate, turbidity, arsenic, lead, ammonia, radon, 61 volatile organics compounds including mtbe, plus the following pesticides: aldrin, a-bhc, g-bhc, chlordane, 4,4'-ddd, 4,4'-dde, 4,4'-ddt, dieldrin, endosulfan i, endosulfan sulfate, endrin, endrin aldehyde, heptachlor, heptachlor epoxide, methoxychlor, toxaphene.

The water sample should be taken from the kitchen tap, since this is the area where people will drink from the most. Run the tap for five minutes to flush standing water in the pipes. There is also a test for the water pressure and the home inspector can usually set this in motion. The test must be done over a twenty-four hour period of time.

The Remedy

If the water test comes back reading positive for any contaminants, the best source to ask is the water testing company. They are the experts and should be able to tell you what action needs to be taken.

The most common problem with private wells is contamination from bacteria. The cure for this involves chlorinating the water with bleach. Of course, if the problem is more severe, there are number of water purification systems that may be installed.

- Under-the-sink systems are relatively inexpensive and can help if you want to only purify one area, such as the kitchen.

- A whole-house water treatment system (a water filtering and softening system) can be installed.

After the Home Inspection

What Happens When There are Problems?

During your home inspection the inspector will point out any significant problems as he finds them. You may want to keep a small notepad to jot these down as the inspection proceeds. At the end of your home inspection you will be provided with a detailed, written report.

Gauging the Seriousness of Inspection Issues

The typical home inspection report will have numerous small issues that are a result of normal wear and tear. These are mostly there to give you a heads up on any maintenance you will be facing in your new home. A standard report may offer the following:

There is a mineral blush on the chimney. Evaluate and remove any residue.

Maintain areas of wood trim for peeling paint.

Remove built up bark mulch.

Work with/maintain yard grading and roof run off to help control water entry.

Turn down hot water temperature at tank.

Trim bushes away from structure.

These are generally maintenance suggestions to provide you with knowledge of your new home's upkeep.

The following are more significant items that you may want to ask the seller to repair:

Water penetration and entry into the basement.

Roof has missing and broken shingles; sagging ridge; wavy surface; flashing is torn.

Furnace not functioning properly. No record of recent service. Full maintenance is needed.

Electric Service box: wiring is not code. Circuits are overloaded.

Gutters and downspouts need repair; not functioning properly.

Large cracks in siding will allow water penetration, need repair.

Deck support posts are rotted. Railings are missing. Deck is not securely fastened to house.

Heating System: cracks and holes in masonry flue; chimney clogged.

Heat not getting to some rooms in the house.

Foundation: major cracks, crumbling and missing mortar. Bowed foundation.

Outlets in kitchen and bathrooms not ground-fault protected.

Front door is warped, does not close properly due to settling.

Windows are broken; some have lost their seal.

Large, expensive items such as the roof, electrical systems, plumbing, heating and a wet basement are, definitely, points for renegotiation.

If there is structural damage of a serious nature, you may either try to renegotiate the price of the house or have the seller make the repair. It is important to get an estimate of what it will cost even if the seller agrees to make the repair. This will help you to know how serious the problem actually is.

Put it in Writing

The usual protocol is for you to go over a list of issues with your broker. Your broker will then present the issues to the listing agent and negotiate the repairs or possible price adjustments.

When the offer was written, you were given a specified date by which you had to have your home inspection results. To keep an accurate record of the fact that you met this date, it is always prudent to put the issues and requests in writing and date the memo. Depending on the outcome of the negotiations, any agreed upon repairs will be put into the purchase and sale agreement. There, it should clearly state the repairs, quality of workmanship and time frame for completion.

The seller should make all repairs before the closing with enough time for you to do a walk-through and see that they have been properly made. For situations, such as service or updating to the furnace, roof or electrical repairs, there should be an invoice or paperwork from the service provider to back up any work that has been done.

Chapter Ten

Additional Property Issues

Private Septic Systems

What is Title V?

Title V regulations, Massachusetts State Environmental Code 310 CMR 15.000, went into effect on March 31, 1995. The rule pertains to any residence that has a private septic system (or on-site wastewater disposal system) and was implemented to protect our drinking water supplies, shellfish beds and to prevent pollution of the environment.

Older septic systems, which were sometimes cesspools, consisted of a pit in the ground which acted as a settling chamber for solids and a leaching systems for liquids. The soil system could be overloaded in its capacity to remove bacteria, viruses and phosphorous and to break down ammonia and organic nitrogen compounds. The newer septic systems have a tank in which solids can settle and begin to degrade. They also have a distribution box and soil absorption system that provides a treatment for removing bacteria, viruses, phosphorous and nitrogen.

Title V regulations state that a seller of a home with a private septic system must have it inspected by a certified Title V inspector and it must pass inspection to be certified. The certification is then valid for two years.

There is an an exception to this rule. If you think you may want to resell within three years from your purchase date, have your septic pumped annually and keep the records. Under these conditions, the Title V certification will be valid for three years.

Title V and Older Homes

A word of caution when buying an older property; even if it has passed the Title V inspection, you should do a little more checking. According to the Department of Environmental Protection, you, as a buyer, are entitled to a copy of the Title V inspection report. Carefully review the report, checking to see that the system passed all of the tests. If you have any questions about the results call the Title V inspector and ask for more details on the inspection that was done.

If you have reason to believe that the report has been altered or contains false information, contact the Massachusetts Environmental Strike Force at 617-556-1000 or 1-888-846-5283.

The reason for the scrutiny is that an older system may have barely passed the Title V requirements. If that is the case, you don't want to buy a house that may not pass when it's time for you to resell the property. A new septic system can cost between $10,000 - $30,000 so this is something to be very careful about.

Often with older septic systems, the property will fail the Title V inspection. In this case, the seller is forced to install a new system before the sale can be completed. This can be a fortunate occurrence for you, since you will be getting a new septic system without any money out of your pocket.

Information regarding the installation of the new system to be installed at the seller's expense should be put into your purchase and sale agreement. Additionally, it should state that the seller must comply with the procedure for abandoning the old system according to State Environmental Code 310 CMR 15.354.

When Can the Closing Take Place?

If the sale is taking place in the winter the ground may be too frozen to have a septic system installed or, sometimes the contractors who install them will have a full schedule and be unable to meet your closing date. If either of these situations apply, the closing may take place prior to the completion of the system with your attorney holding back (from the proceeds of the sale) an amount that is equal to one and one half times the cost of the new septic. The seller will have the additional funds returned once the system has been installed and inspected by the town.

An exception to the above solution is that some banks will not allow a closing to take place if the septic has failed until the new one is completely in place and working. If your bank has this restriction, the closing will have to be delayed until the new system is fully installed.

Pressure-Treated Wood

Those of us who have decks attached to our homes know that most decks are made of pressure-treated wood. The reason for this is that wood that has been pressure-treated resists rot, mold, fungi and insects enough to make it last ten times longer than untreated wood. Some manufacturers will offer a twenty-year guaranty or, in some cases, a lifetime.

Pressure-treated wood is made by placing the wood in a pressurized chamber and adding liquid preservative (various pesticides) into its pores. This is how the chemical barrier against insects and damage is formed. Arsenic is usually part of the mixture.

Until recently, this practice was not thought to cause any health risks. However, as of November, 2003, a study conducted by the University of Massachusetts and Wellesley College researchers determined that at least 10 Boston playgrounds contained high levels of arsenic from the pressure-treated wood used on their playground equipment. The researchers took soil samples from parks in city neighborhoods in Boston. They found that even where the playground structures had been removed, there were still pieces of the pressure-treated lumber present around sandboxes and in borders. These pieces of wood were still contributing to the level of arsenic in the soil.

Many of the outdoor playground structures that people currently have in their yards are made with this wood and could possibly be a danger to children if the arsenic from the structures contaminates the soil. Currently, the scientific community has not stated to the public that this is a problem; however, I feel that in time we will be hearing more about this potentially harmful situation.

Even with the verdict still out on the soil issue, it is important to note that if you do any repair work to a deck or playground equipment made with pressure-treated wood, such as sawing, drilling or anything that may release dust particles into the air, you should take care to not have any small children nearby and also wear a protective mask so that you do not ingest any of the particles.

Never burn any pressure-treated wood, especially in an indoor fireplace or stove. And, if the property you are purchasing has extra pieces of this wood laying around, ask the seller to remove and dispose of it before the closing.

Underground Heating Oil Tanks

Until the late 1970's, many homes were built with underground oil storage tanks. This was a space saver and sometimes used as an additional tank for back-up. During the oil embargo in the 1970's many underground tanks were used to store oil as a hedge against rising prices. Because of the inflated oil costs, numerous homes were converted to gas or electric leaving some oil tanks buried in the ground.

Since an oil tank's life is usually around fifteen years, tanks that are older can leak oil and pose a threat to nearby drinking water supplies as well as to the environment in general. Aside from the possibility of poisoning the water supply, oil fumes can cause other health problems if they migrate into homes, usually into basements.

The EPA has no current regulatory control over residential underground oil tanks and has left this matter up to the individual states. A number of states, including Massachusetts, have made it mandatory that no oil tank be kept underground, even one that is not currently being used for oil storage. If a property has an underground oil tank or has had an underground oil tank in the past, this fact must be disclosed to any real estate agent or any potential buyer of the property. If there was an oil tank on the premises, it has to have been not only removed, but certified by a DEP inspector that the area is free from any potential oil spill.

If you purchase a property that has had an underground oil tank, be sure to get documents from the seller stating that the area where the tank was has been inspected and certified.

Asbestos

Prior to the 1970's, asbestos was widely used in a number of construction materials due to the fact that it was strong, a fire retardant and a good insulator. In certain circumstances, it can be an unsafe substance to have in a home. The potential health risks associated with asbestos are dangers arising from the material being in an airborne state. Crumbled fibers in the air can be inhaled and cause lung cancer. They can also cause asbestosis, which is a scarring of the lungs.

Stable asbestos in vinyl flooring is not a threat, as long as it remains intact and undisturbed It is the presence of asbestos which has been disrupted through renovation or aging which can be quite dangerous.

A typical area where asbestos may have been used is around pipes in a basement for insulation purposes. It can also be found as siding material on older structures, often on older multi-family buildings. If the asbestos containing material is in good condition and is in an area where it can remain undisturbed, you should probably leave it alone. However, if it is friable or old and likely to become airborne, you should ask the seller to have these areas encapsulated or enclosed.

If precautions are used, asbestos can be removed. The pieces or fragments should be as large as possible. This can be done in the event of blocks of pipe insulation which are molded to fit pipes snugly. They should be removed without breaking them so that no dust or fibers get into the air. This should only be done by someone who knows how to handle asbestos and is properly suited with gloves, mask and other protection.

A standard home inspection does not include an inspection for asbestos. If the house is an older one, ask your home inspector if he suspects any areas in it to have asbestos. If there is a reason for concern, you should bring in an actual asbestos inspector.

Carbon Monoxide

According to the Journal of the American Medical Association, carbon monoxide is the leading cause of accidental poisoning deaths in America. Carbon Monoxide is a colorless, odorless, tasteless gas that is produced during incomplete combustion of fuel. This fuel includes gas, oil, coal, wood and kerosene.

One way to protect yourself against this silent poisoning is to install carbon monoxide detectors. They are relatively inexpensive, ($50-$75 for those with digital readings,) and can save lives. Currently, there are laws mandating the installation of smoke detectors in homes, but none for carbon monoxide. I predict this will change at some point. Until then, it is done on a voluntary basis.

The most important places to install the detectors are in or near bedrooms. Most carbon monoxide fatalities occur when people are sleeping. In these cases, the victims simply never wake up.

The causes of CO poisoning lie in faulty heating equipment or areas around heating sources that are too air-tight, therefore, not allowing any fresh air in to compensate for the CO filling the room. Homes need to be checked for blocked chimneys, cracked flue liners and faulty heating systems. These should be inspected and also checked on a regular basis to make sure that an adequate amount of fresh air is allowed into the home, and, always protect yourself with several strategically placed carbon monoxide detectors. The good ones will sound an alarm when the CO levels hit 50% or more.

Carbon Monoxide Detector

Electromagnetic Fields

EMF radiation emanates from a number of sources in the home such as hair dryers, microwave ovens, electric blankets and television sets. The levels of EMFs are measured in "milligauss" and they rapidly decrease as you move away from the source. The EMF generated from a hair dryer ranges from 60 to 2,000 milligauss one inch away and from a microwave oven, 40 to 80 milligauss one foot away.

With regard to real estate issues, the controversy surrounding EMFs is associated with the proximity of high power utility lines to any given property and the possible health risks involved. A great deal of research has been conducted to determine the health risks, if any, from high frequency transmission power lines. Some early studies had an indication of health risks but most of the studies have found no increase in the risks associated with them.

In November of 1992, a Swedish study concluded that EMFs from high power lines increased the risk of leukemia in children. Since that time, more testing has been done by the EPA, OSHA and other industrial and academic groups resulting in no convincing evidence that EMF's from power lines cause any demonstrable health hazards.

Because of the uncertainty of all of the compiled scientific data, the issue of high voltage power lines remains controversial. It is important to keep in mind that if you a home with this situation, it can serve to stigmatize the property to future buyers. To be certain of your own health and to assist with the potential resale of your home, it is best to avoid properties that have high power lines in close proximity.

Wetlands

Under the Wetlands Protection Act (WPA) M.G.L., Chapter 131, section 40 it is designated that certain areas which fall under the heading of wetlands must be regulated and protected due to their environmentally sensitive nature. Since the rules surrounding this issue are a bit complex, it is incumbent upon a broker listing a property, which is considered to be on wetlands, to disclose this fact to any potential buyer.

Definition: Wetland is a regulatory term for land that is sometimes submerged by water. This could include inland marshes, creeks, rivers, ponds, meadows, swamps, brooks, intermittent streams and drainage ditches. It can also indicate land which may become wet only seasonally.

Because of the laws protecting these lands, there are a number of rules restricting what can be done on the property. If the wetland is very close to the house you may not be able to expand the home, build a deck or an outbuilding, or install an in-ground pool. You also will not be able to subdivide the property.

The rules also go further by stating that you cannot disturb the vegetation on wetlands in any way. As an example, if the property behind the home you are buying is covered in brush or other growth you may feel to be unsightly, you need to know that, if this is designated wetland, you will not be able to cut or chop the brush in any way.

Most people are not deterred from buying property that contains some wetlands as long as the lot is large enough. It is sometimes looked upon as an advantage if an adjacent lot contains wetlands since this will provide a degree of privacy due to the fact that no construction can ever take place on it.

Easements

Having an easement on your property means that someone else has a right to use it for a specific purpose. An example of this would be: your neighbors have an easement to walk over your driveway to get to their property or a utility company has an easement to get to a set of nearby meters. There are also easements for profit allowing a neighbor to remove something from your property, such as blueberries.

An easement is written into the deed. The seller knows about it and should have revealed it to the listing broker. The broker should then disclose the information to any potential buyers or their broker.

If the property you are interested in has an easement, get a copy of the wording on the deed and have your attorney go over it. An easement, per se, is not necessarily something that should prevent you from purchasing and enjoying a property. Just be sure you know all of the facts and make the decision as to whether or not it is something you can live with.

Encroachments

When a neighbor's swimming pool, garage or house partially hangs over your property, this is an encroachment.

Most often with these cases, the encroachment has been going on for many years with the current owner of the property not objecting. If it has, then, chances are the neighbor has an implied easement on your property to continue using it in this manner.

Once again, this fact should be disclosed at the time of the listing.

Often these encroachments are a minor nuisance, if any, and may or may not influence your purchase of the property. The important thing is that you are aware of it and can make an informed choice.

Smoke Detectors

Massachusetts law states that all homes must be equipped with smoke detectors. With regard to the sale of a property, the burden for compliance falls on the seller. Prior to the closing, the seller of a property must have the fire department come to the property and inspect their detectors to assure that they are all in working order. The fire department will issue a certificate of compliance that must be brought to the closing. Without this certificate, the closing cannot take place.

The law requires that there must be an operable smoke detector on every habitable level, including the basement. A finished attic must also be equipped.

On the first floor, smoke detectors should be placed on the ceiling in a hallway near a stairwell to the second floor. If there is a bedroom on the first floor there should also be a detector outside the bedroom door.

On the second floor, the smoke detector must be placed on the ceiling in the hallway common to all of the bedrooms, normally at the head of the stairs. This is done so that the smoke will get to the detector before it reaches the bedroom.

In the basement, smoke detectors should be placed on the cellar ceiling at the base of the stairs. In an unfinished basement, it should be on the edge of the joist and never placed at the top of the basement stairs by the cellar door.

In properties that were built after 1975 it is mandatory to have a hardwired system with battery backups.

Chapter Eleven

Following Up With Your Lender

The Bank Appraisal

After the home inspection, you should contact your lender to keep the process in forward motion. At this time, you can give the okay for the bank to send out an appraiser. The appraiser will contact the listing broker and meet with him at the property to conduct his evaluation.

The bank appraiser is independent of the bank, the realtors and anyone else involved in the process. Most appraisers are linked into the Multiple Listing Service which gives them the ability to look at all of the comparable sales for the area.

To become a certified appraiser you must take the required classes, pass the state exam and also serve a two-year apprenticeship under an already established appraiser. The requirements to become certified have become stringent since a great deal is riding on the appraiser's opinion and valuation of properties.

The appraiser will use the comparable sales, much as we used them, to decide on a price. Based on training, experience and knowledge of the market, he or she will arrive at a value and deliver the report to your lender. The property must appraise for the price that you are paying for it or close enough to justify your loan. The bank will notify you of the results as soon as they are available.

Formal Loan Application

If you have not already done so, you must now actually apply for your loan. One of the important dates in the home buying process is the loan commitment date. You will want to keep in touch with your loan officer to make certain that the loan is done by this date. Your broker will also stay in touch with the loan officer to help this process along.

Chapter Twelve

The Purchase and Sale Agreement

At this point, you already have a legally-binding agreement in place and that is your original offer. Everything in the signed offer will be going into your purchase and sale agreement, plus any repairs or items negotiated after the home inspection. Now is the time to get in touch with a good real estate attorney. If you are working with a buyer broker, he/she will be able to direct you toward an attorney. If you are working with a seller agent, he/she will usually give you a list of three to choose from.

If you have a friend who is a practicing attorney and want to use him or her for your home purchase -- don't. Exception: your friend is a real estate attorney, not a divorce lawyer, a civil rights attorney, a medical malpractice attorney, or, especially, a criminal attorney. There is not enough paper here for me to explain what the wrong attorney can do to your home purchase.

The biggest problem with lawyers who do not consistently practice real estate is that your home purchase is not important to them. Every other part of their practice takes a higher priority than a real estate deal that they stand to make $600 from. As a result, they do not return phone calls to the other attorney, the broker or to you. They typically feel that they can always just get an extension and, regardless of what they say, you cannot always count on getting an extension. I have experienced a seller refusing to grant an extension because he was impatient with the attorney who did not get back to him in a timely fashion. When this happens, you lose whatever leverage you may have had left with the seller and you can possibly lose your deposit.

I am a big advocate of using an attorney for your home purchase and am pleased to say that every one of my clients has used one because I insist on it. Just be sure to work with someone who is going to do a good job for you and get things done on time. If Perry Mason were available to you today, I would suggest that you pass him by because he would be too busy to pay attention to a residential real estate deal. Instead, go with someone who does real estate transactions on a regular basis and will give your home purchase the timeliness and attention that it deserves.

What Will an Attorney Do For You?

As with so many dealings with professionals these days, your contact can all be done through telephone and fax, or, if you can take the time, you can meet in person.

The purchase and sale agreement is drafted by the listing office or by the seller's attorney. Therefore, there is very little in it to protect your interests. You should have a copy of the agreement to be able to review it and discuss it with your attorney.

Aside from making any changes to the body of the agreement, your attorney will add a rider that is often several pages long. This will usually be a standard rider that the attorney uses for all home buyer clients. In addition to the rider, he/she will include wording that is specific to your home purchase. Examples of these issues are:

- All of the repairs that were negotiated after the home inspection, stating the workmanship that is expected, plus the timeframe in which they should be made;

- If a new septic is being installed by the seller, specific details of the installation and time for completion;

- If there are outstanding tests such as radon or water, there should be an agreement with regard to a possible high radon reading (the seller should pay to install a radon mitigation system), or negative water results (an agreed upon plan for this outcome);

- Money that must be paid for a possible betterment fee to the town;

- If you are buying new construction, all of the building specifications (a multi-page document that is a detailed list of everything going into the house) should be part of the agreement;

- Anything else that is specific to your home purchase.

If the seller is using an attorney, he and your attorney will work out the details of the agreement through faxing and telephone conversations. When the final document is agreed upon and ready to sign, four copies are made. All four copies need original signatures. It is customary for the buyers to sign the documents first and then the sellers will sign all four.

At the time of the signing, you will be putting down an additional deposit which, with the initial binder, will usually be equal to 5% (five per cent) of the total price of the house. Write a personal check for this deposit and in the bottom left corner write, "Deposit on (address of the property.)" Also, make a copy of the check for your records. This money will be put into an escrow account through the listing office and stay there until your closing.

Deposits are usually held in an interest bearing account and the interest is split between buyer and seller at closing.

Chapter Thirteen

Title Issues

Obtaining Clear Title

Prior to your closing, your attorney will examine an abstract which includes copies of all documents with recorded transactions involving the property. This is done to uncover any tax liens, judgments, mistakes in the record, undisclosed heirs or unknown easements. Problems such as these are referred to as encumbrances. If there are any encumbrances on the title, the seller will have to try to clear them before being able to transfer the property to anyone.

Following the title examination, an attorney will write a letter of opinion expressing that the seller does indeed have good title. Only then will an insurance company agree to provide title insurance for the property.

Title Insurance

Part of your closing cost is to buy a title insurance policy that protects the bank against any title claims. This is a Loan Policy and the bank will require you to purchase it. The policy is based on the dollar amount of your loan and protects the lender's interest in the event that a title problem should arise. There is also an Owner's Policy that you should purchase for your own protection. This policy is written based on your purchase price and will protect you for as long as you have an interest in the property.

Since the property you are buying will usually have a history of previous owners and transactions it's impossible to guaranty that nothing from the house's history will ever pose a problem to you. Even though a title search has been done, this does not negate the possibility of title claims arising from the past. Title problems are rare occurrences, but, as is the case with all types of insurance, you don't want to be without it when those rare instances happen to you.

Following are two examples which illustrate the value of title insurance.

Several years ago, one of my clients was preparing for his ownership of a three-family home. Two weeks prior to the closing I received a call from his attorney to inform me that the transfer would not, in fact, be taking place. During the title examination the attorney had discovered a lien on the property. It was a $60,000 loan that had been taken out against the equity by a previous owner. The lien had not shown up at a title search which had been conducted five years prior for its previous sale which was, obviously, an error made by that title examiner.

The seller embarked on a search for the individual who had owned the property and had taken out the $60,000 loan using it as collateral. The situation could not be resolved since the person was never found and the money never repaid. Unfortunately, that seller had not taken out an owner's title policy when he purchased the property. If he had, the title insurance company would have paid the $60,000 and the seller would have been free to sell to my client. As it happened, I had to find another property for him to purchase.

Another occurrence which demonstrated the value of title insurance happened in the case of The Wampanoag Indians vs. the Town of Mashpee.

Mashpee, which is located on Cape Cod, was originally a province that early English settlers had promised to the Indians who lived there. In the 1970's, with the population soaring and buildings consuming most of the open space, the members of the Wampanoag Tribe filed a lawsuit to get back the much of the town that they felt had been taken from them a long time ago.

As the court battle went on from 1976 to 1978, angry and confused property owners in Mashpee had to face the possibility that they could lose their homes. There were, more than likely, two groups who were nervously awaiting the outcome of this case: home owners who had no title insurance and title insurance companies holding policies for the rest of the town.

The town of Mashpee was well-represented by the law firm of Hale & Dorr and they won the case in 1978, but during those two years many property owners were unable to sell due to clouds that were hovering over their titles.

There are other situations that could hold your title for ransom. Suppose that a year from now, someone comes forward and claims he has inherited the property from a passing relative and that the seller who sold it to you had no right to do so. Or, perhaps the seller took out a second mortgage two days before the closing, after the title search had been done. In addition, there are mechanic's liens. If the seller had work done to the property and neglected to pay the contractor, the law allows the contractor to place a mechanic's lien against the property for the amount of money that is owed.

Even if the home you are buying is new construction, you need the protection of a title insurance. You may well be the first owner of your new home, however, the land that it is built on is another matter. Builders often purchase land with existing structures with the intention of demolishing the structure in order to build a new home. That original home and the land that it was on would certainly have a history of owners dating back into the distant past.

Unlike homeowner's insurance which is there to protect you against a possible future event, title insurance is there to protect you from an event which has already happened. For a one-time fee which is paid at the closing, title insurance is well worth the protection.

Chapter Fourteen

Homeowner's Insurance

Several weeks before your closing you should get in touch with your insurance company to let them know that you are purchasing a home. They will prepare an insurance binder which can be sent to you or to the office of the closing attorney. This is done so that when you leave the closing, your new property will be immediately covered. The policy is required by your bank, since your home will be collateral for the loan.

A standard homeowners' insurance policy provides four types of coverage:

1. Coverage for the structure of your home;

2. Coverage for personal belongings;

3. Liability protection;

4. Living expenses in the event you are temporarily unable to live in your home due to a fire or other insured disaster.

Property Structure Coverage

Most standard policies will pay to repair or rebuild your home if it is damaged or destroyed by fire, hurricane, hail, lightning or other disasters that are listed on the policy. They will not ordinarily pay for flood or earthquake damage. If you want or need this coverage it is sometimes available at an additional cost depending on what part of the country you are buying in.

A typical policy will also cover detached structures such as tool sheds, gazebos, or a detached garage.

In determining how much insurance you need to cover your home, your agent will calculate the cost of rebuilding the structure at current construction costs. The cost of the land is not included in this figure. The insurance should be at replacement cost which will pay for repair or replacement of the damaged property at today's value with no deduction for depreciation.

Personal Belongings

In case of fire, hurricane or theft, your furniture, clothes, sports equipment and other personal items are covered. The coverage is usually 50% to 70% of the amount of insurance you have on your home. As an example, if you had $100,000 worth of insurance coverage on the structure of your home, you would have $50,000 to $70,000 worth of coverage on your belongings.

In order to calculate the proper amount of coverage you need for personal items you should take an inventory of everything you own and be able to put an approximate price on those items. As part of your inventory take photos or videos of your items and place them in a fireproof safe.

For coverage of personal items, you can insure them at cash value or replacement cost. Cash value will pay the cost of replacing your items minus depreciation. Replacement cost will reimburse you for the cost to actually replace them. If you have jewelry and silverware, there are usually limits to their coverage in your homeowner policy. Typically, you would be covered for $1,000 to $2,000 on these items. If you want to insure them for full value, speak to your agent about a floater policy or rider with no deductible.

Liability Coverage

This is coverage to protect you against lawsuits in the event someone is injured on your property. There is usually also a provision that will cover an event in which you, your children or pets accidentally ruin property belonging to a neighbor.

Experts advise that you purchase at least $300,000 worth of liability protection. If you feel you want more, an umbrella policy is something to consider. This type of policy takes up where your standard coverage ends. These policies can provide coverage on claims against you for libel and slander as well as higher liability amounts. An umbrella policy generally costs between $200 to $350 for $1 million of additional protection.

Additional Coverage

This part of your insurance pays the costs of living away from your home in case you suffer a covered disaster such as a fire or storm. It will pay hotel, restaurant and other expenses you incur while your home is uninhabitable. The coverage is typically 20% of the insurance on your home.

Chapter Fifteen

Final Property Walk-Through

Prior to the closing, usually the night before or the morning of, a final walk-through will be scheduled. Your broker will set up a time for you to go through the property to inspect it.

What Condition Should the Property Be In?

The sellers should be completely moved out. All furniture, possessions and debris should be out of the property and off of the grounds. You do not want to be left with an old sofa that the sellers did not feel like moving.

Any repairs that were specified in the purchase and sale agreement should be done. You should go through the list and inspect each repair. For some items, such as electrical work or service to the heating system, the seller should provide you with paper work or invoices proving that the repairs were not only made, but done by professionals in the business of working on these systems.

If the heating system was not working properly during your inspection and this was a repair that was agreed to, run the system to make sure that it is working. Inspect all items that can be physically seen and insist on paperwork for those that cannot be.

If the agreement states that the refrigerator, washer, dryer, window treatments or any other items should be included, make sure that these were, in fact, left behind. Everything that was functioning at the home inspection should still be in good working order.

Sometimes a mishap or accident can happen during the course of the seller's move out. Their moving company could bash a furniture item and put a whole or dent in the wall. There may be stains in the carpeting that were clearly not there during the home inspection. Accidents can happen, but you should be compensated for them.

The property should be "broom clean". It should be at least swept and free from all debris. I like the premises to have been professionally cleaned and all nail holes from hanging pictures to be spackled; however, you can only insist on these terms if they were part of the purchase and sale or any separate agreement that was signed by the sellers.

What is the Remedy for an Unsuccessful Walk-through?

If repairs are not made, furniture is left behind or there is damage to the property, you can ask for a "hold-back" from the proceeds of the seller's funds. A typical amount for a situation like this is $1,000 with the understanding that the sellers will receive the money as soon as the problem has been corrected.

Of course, if the damage is more serious, a higher amount may be held back and this can be negotiated at the closing table.

Chapter Sixteen

Your Closing

One of the decisions you will have to make is how you would like to hold title to the property that you are purchasing. If you are buying a home with a partner, friend or spouse, you should take some time before you reach the closing table to discuss this with your attorney to help you decide which form of title will best serve you and your future needs.

Forms of Taking Title

Singular Ownership

Fee Simple

This is the highest and most complete form of ownership and grants the holder the greatest degree of control over his property. In theory, a fee simple title is valid forever, unlike a shared ownership or an estate for years which will revert back to the original owner at some point.

The other side of fee simple ownership is that it carries with it the highest responsibility and liability. If a legal suit were brought against someone with this type of ownership, there would be no question that the property would be greatly exposed.

Even with that as a possible condition, a fee simple title is still the most common form of title, since it has no restrictions with regard to selling, renting or leaving the property to one's heirs.

Joint Ownership

Tenants in Common

In this form of ownership, each of the title holders owns and controls an undivided portion of the property. The main components of this arrangement are inheritability and undivided interests.

By example, John and Mary, have taken title as tenants in common. Each will own half of the value of the house and may sell his or her interest or leave it to someone in a will, whether or not the other approves.

Both John and Mary share in the costs, responsibilities and upkeep of the property. If one of them is sued, his or her half of the property may be partitioned by a court and awarded as damages.

If a couple wishes to exercise control over their estate with regard to leaving the property to their own heirs and not jointly with their partner, they should take title as tenants in common.

Joint Tenants with Right of Survivorship

If John and Mary decide to hold their property as joint tenants with the right of survivorship, they will still each have an undivided interest. The difference is that when one of them dies, the other will inherit their share of the property. The property will not go into probate since this form of title is explicit with regard to survivorship.

Either of the joint tenants may still sell his or her undivided interest, but the new owner will assume the role of tenant in common with the surviving owner.

This type of ownership effectively eliminates the right of either party to will their share to an heir.

Tenancy by the Entirety

In a Massachusetts, married couples traditionally take title as tenancy by the entirety. This arrangement is, actually, limited to married couples and includes an automatic right to survivorship.

Under this form of ownership, the owners are thought to be one entity. Neither one can sell, will or dispose of his or her interest separately from the other. If Mary wanted to leave her share of the house to a child from a previous marriage, she would not be able to do so unless John agreed and they both signed a deed indicating that they both agreed to the transfer.

For purposes of possible legal action against either John or Mary, tenancy by the entirety would offer more protection than other forms of ownership. Since the property is owned by both of them, it will usually not be subjected to a judgment against only one of the owners.

Filing a Declaration of Homestead

According to Massachusetts General Laws, Ch. 188, S.1-10, you have a right to file for protection of your property equity under The Homestead Act. The act allows you protection of up to five hundred thousand dollars ($500,000) of the value of your residence against attachment, seizure or execution of judgment from unsecured creditors. The document is called a Declaration of Homestead.

To qualify, the property must be your principal residence. Exemptions to the homestead protection are: debts for taxes, mortgages used to purchase the home, debts incurred prior to signing the homestead, and debts from the court pursuing child support payments.

You may file for protection whether you are a sole owner, joint tenant, tenant by the entirety or tenant in common, but the act states that only one owner of a home or one family is eligible for protection on your residence. The word "family" would include either a parent and a child or children, a husband and wife and their children or a sole owner.

Home owners who are 62 years of age or older and persons who are disabled are protected to the extent of $500,000 each. Therefore, if two disabled persons or persons above the age of 62 reside in the same home, they should each file a Declaration of Homestead.

The fee for filing a Declaration of Homestead is thirty-five dollars ($35). The form can be made available to you at your closing. It must be signed, notarized and registered at the Registry of Deeds.

Exhibit E

DECLARATION OF HOMESTEAD

I, _________________________________________________, owning and occupying as my

principal residence the real estate at____________________________________________,

in_________________________, Middlesex County, Massachusetts, ownership evidenced by:

_____Deed recorded in Middlesex County Registry of Deeds Book_________ Page_______,

_____Certificate of Title #_____________________register in the Middlesex Registry of

Deeds Land Court. Shown as Lot #__________ on Land Court Plan #___________________,

_____Inheritance from_________________________________________________________,

Probate Court Docket #_______________ ,________________________County Probate Court,

hereby declare a Homestead in said premises under the provisions of Chapter 188, Section 1 of

the General Laws of Massachusetts.

I expressly reserve the right, to myself and my spouse and to the survivor of us, and to the Executor

or Administrator of the survivor of us, to revoke and rescind this Homestead as to ourselves and

our minor, unmarried children.

Executed as a sealed instrument this__________ day of ___________________________20____.

______________________________________

(declarant's signature)

Commonwealth of Massachusetts

On this_______ day of _________________________,20__, before me, the undersigned notary

public, personally appeared____________________________________, proved to me

through satisfactory evidence of identification, which was/were_________________________

____________________________, to be the person whose name is signed on the foregoing

document, and acknowledged that he/she signed it voluntarily for its stated purpose.

_____________________________, Notary Public (seal)

My commission expires:

Closing Costs and Remaining Down Payment

Before your closing, you should receive your Estimated Closing Costs. These usually come from your bank or lender. An overview of the these costs can be found in Chapter Two.

The bulk of the money for your new home will be in the form of a check from the bank that is providing your loan and should be included in the closing package submitted to the closing attorney's office. You are responsible for bringing the remaining down payment and closing costs. These funds must be brought in the form of a certified bank check. Since the check is as good as money, it's advisable that you have the bank make it out to you. You can then endorse it and sign it over to the appropriate party at the closing.

Seller Reimbursements

(Outstanding items to be paid to the seller)

Taxes -- If the sellers have paid a full or partial year of real estate taxes, the tax amount will be prorated and you will be reimbursing them appropriately for taxes they have already paid.

Utilities -- If the house you are buying has oil heat, the sellers may have filled the tank. Plan on paying them for that full tank of oil. The same runs true if there are any other utility or incidental expenses that the sellers have paid and you will be inheriting. The listing broker will usually have the responsibility of bringing a final reading of the water and gas to the closing ensuring that the seller's usage has ended on that day.

The sellers will also have called the utility companies to end their electrical and gas service. Remember to call ahead to begin utility service in your name on the day of closing.

Be sure to bring your driver's license with you.

You will be asked for a photo identification and a copy will be made for the file. The bank wants to be sure that the person who signs the mortgage note is, indeed, the person who will be paying it. If you are not a U. S. citizen, bring your passport, visa and any other related documents.

Plan for at least an hour. If possible, it's a good idea to take the day off from work or at least half of the day if you can. Occasionally, something unforeseen may happen which can lengthen the time you will be at the closing office. Examples are: missing documents, errors on documents or the attorney may not actually begin on time.

The main activity of the closing consists of signing all of the papers associated with your loan. The closing attorney will take each document, explain it to you and tell you where to sign. If you cannot make it to your closing, you can give power of attorney to your attorney, spouse or partner to sign in your place.

Following the signing, the sale must be recorded at the registry of deeds. If your closing is at a lawyer's office, a courier will be sent to record the transaction. The property is not officially yours until it has been recorded. Many times keys will be given to buyers at the closing table, however, it is within the sellers' rights to have the keys held until the recording is done. If you are closing at the registry of deeds, this will happen almost instantaneously. If a courier is going to the registry, it may take several hours.

When all of the documents have been signed, money has changed hands and the seller has signed the deed over to you, your closing is over.

Welcome to home ownership, and congratulations.

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