The process of buying or selling a home in any market can be a daunting experience. Martha’s Vineyard presents its own set of challenges. The Martha’s Vineyard Times recently asked several real estate professionals to describe how best to avoid common mistakes and ensure a smooth process. A recurrent issue was finance, especially financial preparedness.
What’s a common mistake first-time homebuyers make during their acquisition process?
Alan Schweikert, President of Ocean Park Realty: “I think there is one basic common mistake that first-time buyers, and, actually, most buyers make, and that is not getting pre-approved by a local bank so that they know for sure their price range.”
What’s a buyer’s calculation error to be watchful for?
Aly Lanzone Wiesner of MVYBroker/Suzanne Lanzone & Daughters: “On the Vineyard, buyers should make sure to prepare their budgets to
include closing costs, especially the 2 percent Martha’s Vineyard Land Bank fee on the total purchase price due at closing on the buyer’s side. This fee is disclosed by agents when buyers are viewing property to purchase and it is also included on the property listing sheet. However, sometimes people forget to consider it when preparing budgets, both first-time home buyers here and people buying a vacation home.”
Are you seeing an uptick in construction loans?
Polly Bassett of Martha’s Vineyard Mortgage Co.: “We see very few requests for construction loans versus requests for the purchase of homes because unless you own the land already it is much more expensive to build a home than buy one. Lending activity has been busy in all of the towns except Chilmark and Aquinnah. We have been qualifying many new potential buyers for USDA 100 percent financing which is great for people who just can’t save the down payment because rents are so high.”
Are there elements to borrowing that former renters, as opposed to former owners, need to be especially cognizant of?
Lesley Heidt, owner of Sandpiper Realty: “Taking on too large of a loan, although a lender may approve for a certain amount, it can sometimes be more than affordable. They [buyers] must be careful to look at the big picture. The change from being a tenant to homeowner and being responsible for all aspects of home ownership for the first time — mortgage payment, insurance, taxes, utilities, repairs, and on and on — is daunting and it adds up quickly. The excitement of ownership can quickly be shadowed when the bills start coming in.”
Have the more stringent rules put in place after the great recession been making acquisition for first time homebuyers a challenge?
Abby Rabinovitz of Tea Lane Associates: “While the rules have changed, I’m very impressed with our local banks. They go out of their way to help first-time home buyers. There is a sense of community here. The mortgage brokers at these banks do a fabulous job and make the process for first-time home buyers much easier than it would be otherwise. And rates are still great, too!”
Radon and mold have been in the news increasingly as potential property hazards. Are these being discovered more often in home inspections?
Lesley Heidt: “It is always important to be fully informed of any potential issues with a home. Radon testing is occurring more and more frequently; incidentally, now that more testing is being done, we are seeing more cases of unsafe levels (above 4 pCi/L). The good news is that radon mitigation is available and can typically reduce levels to a number that satisfies the buyer. Mold testing is done but not as frequently as radon; I believe this is because radon is truly an unknown without testing. In regards to mold, there is typically evidence, i.e. odor, visual detection and so unless any of those factors exist, testing is not performed. We are fortunate to have reputable contractors who handle both radon and mold issues.”
Do city folks or even folks from towns on the Island with sewer systems get thrown when encountering septic systems in the inspection process?
Alan Schweikert: “People who are unfamiliar with septic systems are also a bit scared of them. These people are used to being tied into a municipal sewer and never even think about the disposal of sewage. When looking at a property that requires and upgrade of the septic system on the part of the buyer, it makes it much harder to sell and many buyers will quickly take that property off of their short list. It is very important to have a Title V Inspection prior to listing a property so that the condition of the system can be determined. Every offer is subject to a Title V inspection that “passes,” and if it “fails” it can throw the deal into a tailspin. It’s always better to know up front.”
What percentage of Islanders that you do business with are hunting for additional property beyond their primary residence?
Ms. Heidt: “A good number, actually. Some are looking for typical rental investment and others are in the need of employee housing; with a deficit in long-term rental properties, the purchase makes sense to stabilize their employees and ultimately their businesses.”
What is a common mistake sellers make in the real estate process?
Jim Joyce of Carroll and Vincent Real Estate: “The most common mistake is comparing their price to others that are on the market but have not sold yet.”
What towns on the Island are hot?
Ms. Rabinovitz: “Aquinnah. This is a very special part of the Island and the values are great. Nowhere else on the Island can you get such fabulous water access for the same price. The waterfront-water access segment of the Aquinnah market has been more active this year than last. In 2013, there was just one Aquinnah sale over $2 million, $2.250 for 21 Oxcart Rd. This year, there has already been one sale over $3 million, $3.025 for 63 Moshup Trail and there are several properties currently under contract with asking prices between $2 and $6.75 million.”
Are there pitfalls to sellers trying to list property on their own?
Ms Heidt: “The pitfall to that, is that it is of utmost importance to be on LINKMV, our local multiple listing service for full exposure to all island brokers, without this, the listing is lost and not on the minds of brokers or buyers alike. Obviously there are other issues as well but this is the most important when inventory is still at a high.”