General Real Estate Questions and The Answers!

Q: What is a CMA?

A: The short answer is that a CMA is a Comparable Market Analysis. The purpose of a CMA is to arrive at an understanding of market value for a specific property. The CMA is sometimes otherwise referred to as the valuation analysis.

When a Seller asks me to list their home for sale, we review together my Comparable Market Analysis - my CMA. The key elements of a CMA are the relevant comparable sale events - the comps.

For example, let's say a Seller owns a 1,000-square-foot, renovated, two-bedroom, one bath condo without parking in Cambridge. The CMA I put together will review the relevant comps - that is, the relevant properties in Cambridge that are similar. In this example, I will be reviewing in the CMA the recent condo sale events in Cambridge for those condos with approximately 1,000 square feet, two bedrooms, one bath and no parking.

Of course, no two properties are the same. Among the key elements that influence an understanding of a property's value are condition and location. That being said, relevant recent sale events, pulled together in a CMA and reviewed there, typically allow one to zero in on a specific market range of value for a property.

A valuation analysis - a CMA - is equally valuable to a prospective Buyer. When a Buyer client of mine wishes to make an offer, I complete a CMA of the subject property. This allows the Buyer to understand if the property is priced below market value, at market value, or at a premium. This information is useful to a Buyer making an offer.

For sure, market value is ultimately determined by the market. That is, what a ready, willing and able Buyer will pay for a property offered by a ready, willing and able Seller, typically in the open market. Since the middle of 2012, many properties in Cambridge and Somerville have been selling for over the asking price. Winning bids way over the list price - and often over market value - are not ultimately informed by analysis. Rather, they are informed by someone's desire to acquire a specific property in a competitive bidding environment. That being said, a CMA is a crucial element for both Buyers and Sellers in the real estate process, as it sheds light on the range of value in terms of comparable sales.

A knowledgable real estate agent can be counted on to deliver a meaningful CMA. Make sure you are seeing one when you are buying or selling.

Q: What is the normal real estate transaction timeline?

A: The short answer is that from accepted offer to closing, the typical timeline is four to six weeks. Many buyers and sellers often ask what the normal real estate transaction timeline looks like in Cambridge and Somerville, MA.

Here is summary overview:

An offer is made and accepted. A check ("The binder") is presented with the offer. Generally speaking, the check is made out to the listing broker office for the property. Current pre-approval letter or proof of funds is attached to the offer.

Inspections: If the offer accepted includes any inspection contingencies, the next step very often is completing any inspections. Most common is a home inspection. A buyer may also have a pest inspection or other inspections done. By law, for properties built before 1978, the buyer has 10 days to have a lead paint inspection completed. The buyer indicates on the lead paint form if they are accepting or waiving their right to this particular inspection. Typically, inspections are completed within 7 days of offer acceptance. Since 2012, the market has been so hot that very often inspections are completed BEFORE bids are due.

Purchase and Sale Agreement: If the Buyer is satisfied with the results of any and all inspections, the Buyer will usually secure a real estate attorney at this juncture to begin communicating with the Seller's real estate attorney about the purchase and sale agreement - "The P&S." The P&S replaces the signed, accepted offer as the document binding Buyer and Seller in the transaction. Usually, the purchase and sale is signed a few business days after the inspection period time frame ends. A second check, usually for 5% of the purchase price, is written by the Buyer at this stage. It joins the first check (the binder) in the escrow account established for the transaction.

Mortgage Commitment: Generally speaking, for a deal with a mortgage contingency, the mortgage commitment letter is issued by the lender three to four weeks after the signing of the purchase and sale agreement. The mortgage contingency is usually the last contingency to be satisfied. Next step is the closing! 

Closing: The date arrives for the transfer of real estate. Generally speaking, the closing date is four to six weeks after offer acceptance.

Q: What does it mean when a property is under agreement?

A: The short answer is that when a property is under agreement, the property has a signed, accepted offer. That is, there is a legally binding agreement between Buyer and Seller.

This is one of the most frequently asked real estate questions. Most all residential properties for sale in the Cambridge and Somerville market are listed in the Multiple Listing Service (MLS). In our MLS, a property that is for sale is ACTIVE (ACT). A property that is under agreement - that is, a property that has a signed, accepted offer - can be listed in MLS in one of two ways:

UAG - Under Agreement. There is a signed, accepted offer. That is, there is a legally binding agreement between Buyer and Seller.

CTG - Contingent. There is a signed, accepted offer. That is, there is a legally binding agreement between Buyer and Seller.

Yes, that's right, UAG and CTG status in MLS mean essentially the same thing - namely, that there is a signed, accepted offer between Buyer and Seller. If a property is said to be under agreement or contingent or pending or under contract or active with contract or have a signed offer - it means the same thing. Namely, that there is a signed, accepted offer between Buyer and Seller. And that means that the property is not presently available for sale.

It's typical for an accepted offer to have contingencies. Standard contingencies include home and pest inspections, mortgage and (for condos) condo docs and budget review. Contingencies afford a Buyer a way to exit a transaction. This means that a property that is under accepted offer could possibly come Back On the Market (BOM). Under accepted offer does always lead to SOLD (SLD). Remember, though, that when a property is under accepted offer, there is a legally binding agreement in place between the Buyer and the Seller. Other would-be buyers cannot undo an accepted offer - it is a legally binding agreement between the Buyer with the accepted offer and the Seller.

Why are some properties with accepted offers marked as UAG in MLS and others marked as CTG? Good question. The decision to list a property with an accepted offer in MLS as UAG or CTG is always a judgment call for the respective Seller, and it is the Seller's decision to make. Choosing CTG is a way of signaling the marketplace that there are one or more contingencies in the accepted offer that need to be satisfied and that the property could come back on the market. Of course, this could happen even for a property marked UAG in MLS. The important thing to to remember is that UAG and CTG mean essentially the same thing - namely, that there is a signed, accepted offer between Buyer and Seller.

Q: How do I search the Massachusetts Registry of Deeds online?

A: You can find your property records online at the Secretary of the Commonwealth's Massachusetts Land Records website at MassLandRecords.com. Access is available to deeds, mortgages, plans, and other land records recorded in the various Registries of Deeds. Locate my Registry of Deeds Office will help you find the Registry of Deeds Office specific to where your land is located.

Both Cambridge and Somerville are in Middlesex County and are part of the Middlesex South Registry of Deeds.

CLICK HERE for the Mass Land Records SEARCH PAGE for Middlesex South (including Cambridge and Somerville).

Once you are on the Search Page for Middlesex South and are searching for a specific deed or plan or other document related to a Cambridge or Somerville property, a degree of patience is required, as the search interface is not especially user-friendly. Click on SEARCH CRITERIA in the upper left corner of the Search Page to bring up more search options.

Q: What does "on record" mean?

A: The short answer is that "on record" means the property sale has been recorded at the Registry of Deeds. Yes, that means the Buyer and Seller have completed the transaction - SOLD!!!

The real estate transaction process is a journey. There are many steps to the process. The final step is the closing. I work in the Cambridge and Somerville marketplace. Generally speaking, the seller's attorney (on behalf of the Seller) and the buyer's attorney and the Buyer are at the closing. The Buyer is at the closing to sign various documents. If the Buyer is getting a loan, the Buyer has even more documents to sign at the closing. After signing all those documents, the Buyer certainly feels like they have completed the process and now owns the property.

However, there is one final step. The sale event must be recorded at the Registry of Deeds.

Only when the sale event has been recorded at the Registry of Deeds - when it is "on record" - have the Buyer and Seller completed the transaction and the property is SOLD.

A few observations:

- Typically, at least a couple of hours are needed after the closing has taken place for the sale event to be recorded at the Registry of Deeds.

- Remember, a Buyer does not own the property until it is on record. A Buyer ought not to plan to move in until the property is on record and the Buyer owns it. Indeed, after leaving the closing table, the Buyer needs permission of the Seller to enter the property again before it is on record. It is not uncommon for a Buyer not to receive keys to the property until it is on record.

- The Registry is open Monday through Friday, excluding holidays. Closings take place on business days and sale events are recorded at the Registry of Deeds when it is open. In our market, it's worth noting that if a sale event is not recorded by 4 pm, the sale will not be recorded that day. Sometimes it happens that a closing is not recorded until the next day. This can have an impact on the Buyer and the Seller in the transaction. The Buyer might have been planning to move in on closing day. However, if the sale event is not on record, the Buyer cannot move in. The Seller might have been planning to use the proceeds of the property sale for another purchase. However, if the sale event is not on record, the sale is not complete and the Seller will still be waiting for their money.

In our marketplace, the Buyer has a Buyer's real estate attorney. The Seller has a Seller's real estate attorney. And the lender, if there is a lender, has an attorney. It's up to the attorneys to organize the closing and to coordinate the recording of the sale at the Registry of Deeds. Buyer and Seller ought to communicate with their respective attorney about the closing date and time and understand when the property is expected to be on record and plan accordingly.

Q: In residential real estate, what is a fixture?

A:The short answer is that a fixture is something - equipment, decorations, or appliances - affixed or attached to the real estate. Attorney Richard Vetstein has written an excellent blog post on this topic on his Massachusetts Real Estate Law Blog.

As Vetstein notes, "From a legal standpoint, when equipment, decorations, or appliances become affixed or fastened to the real estate, it becomes a fixture and is supposed to be transferred as part of the sale, unless there is an agreement providing otherwise. "

Of course, as Vetstein goes on to note, "There are, of course, plenty of gray areas with fixtures. Wall mounted flat screen TV’s, surround sound speaker systems, and decorative mirrors are a few coming to mind. These gray areas are the cause of most disputes surrounding fixtures."

The best approach for a Seller is to have a clear conversation with their listing agent BEFORE the property is listed for sale regarding any exclusions or inclusions, so that the listing agent can disclose these in MLS when the property is listed. For example, "Dining chandelier is excluded; curtains and rods in master bedroom are included."

The best approach for a Buyer is to write into their offer the specific items the Buyer wishes the Seller to include or exclude. For example, "all window treatments and kitchen appliances included. Extra freezer in basement to be removed by Seller by the closing date."