Article 1 (A Review of the 1998 Single Family Real Estate Market) Article 2 (The Misunderstood Coverages ) Article 3 (Pre-approved vs. Pre-Qualified) Article 4 (The Right Time to Buy and the Dangers of Waiting!) Article 5 (Q&A with Michael Merrill) Article 6 (Buy or Rent? Tips to Answer that Question) Article 7 (Decorating for Comfort, Beauty and Economy)

A Review of the 1998 Single Family Real Estate Market By Sara Rosenfeld, Sr. Vice President, Co-Manager of Hunneman & Coldwell Banker Many Metro Boston communities have experienced a healthy appreciation in values in 1998, along with having a severe shortage in inventory available for the buyer to purchase. The demand for Metro Boston real estate properties has increased for a number of reasons, including: Low interest rates; A strong Massachusetts economy, especially job security; A rapid increase of rental values since 1995 with a shortage of well-maintained inventory in good locations; The "after effect" of the end of Rent Control in Boston, Cambridge and Brookline, leaving a number of former rent-control tenants highly motivated to become purchasers of real estate; All commuters, especially the commuters dealing with "The Big Dig," want to live in areas of Metro Boston that are easily accessible to public transportation, namely the T and commuter rail; The new wave of 50-plus-year-old purchasers who are selling their suburban homes once their last child is out of high school and moving closer to the city, especially to communities that have a more reasonable tax rate and diverse communities. They want to be conveniently located near Universities in order to take evening or weekend courses (Harvard Extension, adult education programs, etc.) and local entertainment in order for them to enjoy themselves as they did in their "college days;" The new Tax Laws regarding the sale of your primary residence have also motivated many people, who may be able to have nontaxable profit, to "downsize" into a smaller home (please consult your tax advisor); An increase in High Tech professionals working as consultants or starting their own businesses, who work at home, but need easy access to the major Universities, the airport, and other High Tech firms and do not want long commutes into the city. Communities that my office services, including Brookline, Newton, Brighton, Allston, Jamaica Plain, West Roxbury, Roslindale and Hyde Park continue to grow in popularity and have experienced a lack of homes for sale along with rising prices. These communities continue to benefit from the proximity to Boston and busy buyers who do not want to take the time for a long commute into the city. Adding to this demand is the number of dual-income households trying to juggle personal lives with demanding professions and not having enough time! Within this small geographic area of Metro Boston, you can find single-family houses starting around $100,000 and going up into the millions. Finding the right house has become more of a problem this year because of a lack of inventory. Not only has there been a change in demand, but the houses are selling faster in many communities, keeping the total amount of houses on the market down in number. There has been a decline in the number of condominiums and multi-family houses available, too! It takes a good deal of time to search for the right home, but especially in a market with a shortage of inventory. You also need to make sure you are working with a good real estate professional, one who is watching the market carefully and will call you the moment he hears of new property that has come on the market. If you need a name of a good broker to work with you in a specific area, please feel free to call me for a reference at (617) 731-2447.

The Misunderstood Coverages From Eastern National Insurance Agency, Inc. There are two coverages offered as part of your automobile policy that sound the same and are often misunderstood by the policy owner. These are the coverages of "uninsured auto" and "underinsured auto." The first thing that one should bear in mind is that these coverages are to pay you for your own injuries, pain and suffering, unlike the rest of the liability coverages offered as part of the auto policy, which are for the benefit of an insured third party. Uninsured auto coverage will pay bodily injury damages to you in those cases where you have been hit by an uninsured auto (it is estimated that over 10% of the vehicles on the road in Massachusetts at any given time are driving without insurance, as it has been canceled for non-payment or some other reason). This section will also pay you if you get hit by an unidentified, hit-and-run driver. This coverage part will pay you when you are in your car or as a pedestrian. In some instances this coverage will extend to pick up other injured household members, if they don't have auto coverage themselves. Bear in mind that in any case the other party must be legally liable. In other words, the accident must not be your fault. The "uninsured auto" coverage is mandatory. You must carry limits of $20,000 per person and $40,000 per accident. The insurance companies must sell you limits of up to $35,000 per person and $80,000 per accident, but will usually sell you a higher limit if asked. As a general rule of thumb, we at Eastern National recommend that you carry limits of $250,000 per person and $500,000 per accident in keeping with the higher limits commonly carried to protect others for bodily injury. The other misunderstood coverage is the "underinsured auto" insurance, which is optional coverage. While this coverage is not mandatory, statistically, it is more likely to occur. This coverage protects you when the person who hits you does not carry enough insurance to pay for your injuries, pain and suffering. The most common group of drivers that fall into this category are the young drivers with no personal assets, with an older, low-valued car, who purchase "minimum" insurance limits, which means that you have only $20,000 available under their coverages to pay for your injuries, pain and suffering. The determination as to whether you, as an injured person, are legally entitled to recover damages from the legally responsible owner or operator of the at-fault vehicle is by agreement between you and your insurance company. The amount of damages will also be determined by agreement between you, as the injured party, and your insurance company. If an agreement cannot be reached, then arbitration, using independent third parties, will be used, but this arbitration process will not be used until a voluntary settlement between you and your insurer has been attempted.

PRE-APPROVED VS. PRE QUALIFIED - THE DIFFERENCE BETWEEN READY & WAITING By Bob Watterson President, First Financial and Chairman, Massachusetts Mortgage Bankers Association You’re selling your house. Two young couples drive up. Both prospective, eager young buyers arrive clutching official-looking letters from their banks. One couple has a letter stating that they have been “pre-qualified” for a mortgage. The second couple’s letter says they have been “pre-approved.” Quick. Which couple should you focus on? Which is a more serious buyer? In short, pre-qualification from a bank means very little. All pre-qualification tells the seller is that the prospective buyer has spoken with a bank and, if everything checks out, if they don’t lose their jobs, and if they don’t incur additional debt before the loan is approved, they will probably be able to obtain the mortgage loan. That’s a lot of ifs and shoulds. PRE-APPROVAL MEANS COMMITMENT It’s usually best to focus on the pre-approved buyer. Pre-approval is equivalent to a commitment from the lender, and it usually represents the culmination of a two-week process. It means that this buyer has been checked out thoroughly and is ready to sign on the dotted line. Their arrival on your doorstep means they are eager to find new home and the broker thinks your house is just what they’re looking for. In a hot real estate market such as we currently have, sellers are wary of taking their homes off the market unless it’s for a serious buyer, that is, one who has been pre-approved. A pre-approved prospective buyer who arrives letter in hand has a very distinct advantage over others who might give the impression that they aren’t quite as serious shoppers or that there might be a problem in securing a loan. As the seller, you should seek out pre-approved buyers and focus on them. You can even tell your real estate broker that you only want your home shown to those who have been pre-approved. This eliminates much of the anxiety about whether a specific prospect will or will not be approved – and gives some idea about ho much longer you will have to be ready to open your home to strangers. Pre-approvals are just a step below the final approval for a mortgage. In fact, all that is essentially missing at this stage is the appraisal and purchase and sales agreement. Pre-approval from a lender carries the same legal weight as a loan commitment. The applicant will be asked to produce recent bank statements, income verification, and pass a credit check. It’s relatively easy and pain-free. And best of all, the process is usually free. Editor’s note: Bob Watterson is Chairman, Mass. Mortgage Bankers Association and President of First Financial, a mortgage company based in Wesley with branch offices in Boston, Beverly and Northboro, MA, Manchester, NH, and Greater Hartford, CT. For additional information or for a free brochures outlining the mortgage process and the many loan options, please call First Financial, call (800) 836-0768, or visit their home page (under construction) firstfinancial.com.

The Right Time to Buy and the Dangers of Waiting! By Jay McHugh of RE/Max Affiliates We all now the importance of researching a home before buying. Many buyers will first review property by driving by homes and neighborhoods before setting an appointment with their broker. In addition, others will educate themselves by reading real estate journals to understand he process of buying a home. While the aforementioned is surely an important introductory to finding a home, buyers and sellers should recognize that procrastination can be damaging in the real estate arena. After a buyer has met with a loan officer and realizes the loan amount hat they can afford, the process of buying a home begins to move rapidly. We all know that having a qualification letter makes for a stronger offer for the buyer and an easier decision for the seller. At this time a buyer who is comfortable with the mortgage information from the loan officer should act confidently and accordingly when a home is up for sale. In many instances, a buyer who is searching for a particular home will become uneasy when that home becomes available in the beginning of the search. The buyer feels that a search of more homes is necessary to solidify the decision of whether to buy. Unfortunately, this may work to the disadvantage of the buyer and the home will sell to another party because of procrastination. Conversely, the prospective buyer who has searched for a long time may act with skepticism when a home becomes available because of with purchasing process and again the results may end up the same—missed opportunity! When searching for a home, a buyer must understand that other buyers are searching too and they may beat you to the table with a good offer. Therefore, when a property is compatible with the needs of the buyer, the buyer should look closely and exclusively at that property and not ponder the unknown. That unknown may consist of: "Oh, other properties may come on the market" or "Is this really a nice neighborhood." This procrastination will only frustrate you, the buyer. While these questions are valid and important, they are not necessary objections but rather hesitations for making a decision. On the other side of the agenda, sellers must recognize the importance of an offer. Whether the offer is near to the asking price or if the offer is many dollars away, an offer is a beginning that should be reviewed carefully. Sellers need to understand that buyers are becoming more sophisticated day in day out with the origination of literature and buyer seminars. Whether the age of information is pleasing to the seller, the seller should work with the buyer in attempting to agree on he price and terms. The reason for this is simple: without buyers the house will not sell, and if the seller wants the house badly enough then the price will certainly come together. If, however, the seller does not acknowledge the offer in good faith, then the answer of whether the price could have come together will forever be unknown to that buyer.

Q&A with Michael Merrill of Merrill & McGeary, a real estate attorney.   Q: I live in a condominium unit which I do not own. I have lived here for seven years and love the unit. I would like to be a Trustee in the Condominium so that I can assist in many decisions. One of my neighbors said only unit owners can be Trustees. Is this true? M.F. Woburn, MA A: The qualifications required to serve as a Trustee of a condominium are stated in the condominium's Declaration of Trust or By-Laws which are recorded in the Registry of Deeds. Most condominium documents merely state the vacancies can be filled by a "natural person." In that case, a tenant or any other person could serve as a Trustee. If, however, the Condominium documents state that vacancies in the position of Trustees must be filled by a "unit owner," then all others are excluded. If the documents are unclear, I favor an interpretation that would allow any person, regardless of unit ownership, to serve as Trustee because this encourages participation by those interested in and affected by the condominium's governing process. Q: I signed an agreement to buy a townhouse style condominium unit which is newly constructed. The financing is in place, and the closing is schedules to occur in the next two weeks. I have inspected the unit several times, and have found that there are still some unfinished items which the Seller refuses to remedy. Also, during the recent rain storm, flood water pooled in the back yard area. The Seller said not to worry about this because the water resulted from a "one hundred year storm" and would not occur again. What can I do? R.T. Boston, MA A: The purchase of a house or Condominium unit of new construction can be one of the most difficult transactions to complete because of the variables with the property and the people involved. As with most projects, the key to success is preparation. You appear to understand the issues, which is a good first step. If the Seller has agreed to perform certain times prior to closing, I recommend you make a list of these items and have the Seller sign it, indicating his agreement to perform these items at his cost and expense. The purchase and sale agreement determines whether or not the Seller is obligated to perform those punch list items which are in dispute. If there is nothing in writing which requires the Seller to perform the work, the Seller may take the position that the items are extras for which he has no responsibility. Such disagreements are often the result of miscommunication in the building process and generally one party ends up taking a hit. However, I would not accept the Seller's response regarding the accumulation of water in the yard. I recommend you retain a civil engineer to check the drainage and the grading of the property and determine whether or not it meets the building code. This may be expensive, but relative to the potential loss of value of the unit, it is money well spent. With a specific engineer's report, you may have sufficient grounds to terminate the transaction and request the return of your deposit. Without an expert opinion, you may forfeit the deposit if you fail to close on the property as scheduled. Michael W. Merrill

Buy or Rent? Tips to Answer that Question By Rick Fedele A booming economy and high employment have made the late ‘90s an ideal time for those looking to buy a home. And with interest rates threatening to go below 7% jumping into the red-hot real estate market may make more sense than paying ever-increasing rents. But whether the time is right for a foray into the housing market isn’t so much a matter of national trends as individual number crunching. Some simple math can indicate whether purchasing a new home makes financial sense for you and your family. Start off by determining the price range you are willing to pay. Assume, for the sake of calculation that you will obtain a 30-year mortgage, the average for most home buyers, and use 7.50 percent interest as the mortgage rate. In the current economy, a buyer can likely do better than 7.50 percent, but that figure will give you an estimation of the most you would likely have to work with. Use these figures to determine what you will have to pay the bank annually. Then, after finding out what the property tax rate is in the community you are looking to buy in, add that annual amount (based on the value of the home) to the total. Now compare the total to what you are paying each year in rent. If the mortgage scenario is higher, determine whether your tax bracket and the federal tax deduction for mortgage interest (which averages between $6,000 to $7,000) offers a different, and money-saving, scenario. Obtaining a mortgage can be white-knuckle time for many, especially first time home buyers. But, for the most part, mortgage approval is a straightforward process if you are adequately prepared and have all the necessary paperwork in-hand for the loan officer’s review. Get pre-approved before you start looking for your home. You will need to provide W-2 tax forms for the past two years. This will prove your earning power and stability. Self-employed individuals will also need to show two years of complete tax returns. Twelve months of rent or mortgage payment receipts or canceled checks will also be requested along with the name and address of the landlord or mortgage holder. Pay stubs for the last 30 days or, at the least, a contact who can verify your employment status, will be needed. A complete list of creditors will also be asked for. If you do decide to purchase a home, and all goes well with the bank, be forewarned that there are some up front costs you will need to be prepared for. The first mortgage payment will be due shortly after you move in and this first payment, unaffected by the later tax break, may seem like a budget buster. But, thinking about the long-term savings, and the satisfaction of owning your own home, should help alleviate the stress. Richard Fedele is President of Summit Funding, a Boston-based mortgage company with offices at 376 Boylston Street. Summit is an affiliate of Pacific Guarantee Mortgage Company (PGM), based in Greenbrae, California. PGM is the largest mortgage broker in the United States with a full line of loans and an annual volume of in excess of $1 billion. PGM has more than 40 offices and 135 loan originators throughout the country, and brokers its loans to a network of more than 200 nationwide lenders. For additional information, please call 617/859-0900.

Decorating for Comfort, Beauty and Economy By Judy Moore Decorating for Comfort, Beauty and Economy For prospective buyers, the interior design of a house is important. However, the Residential Association of Realtors of the Greater Real Estate Board says that the location, price and layout of the home counts more, as the interior can always be redone to suit one's personal taste. It is much easier to add a bucket of paint to a house in the right neighborhood than to move a house painted the right color to another location. Redecorating a home can be exciting, but also frustrating. You may begin to wonder whether you should hire a professional interior designer or do it yourself. The professional has a trained eye and may be better able to transform your well-loved and well-used furniture into a balanced, attractive scheme. On the other hand, money paid to an interior designer could be channeled into furnishings for the new home. "If you decide to invest in the services of a professional designer, there are a few things to remember," Judy Moore says. "First, designer fees vary as greatly as doctor fees. Some work on a set rate basis, others work for a percentage of the total decorating budget. The first question s homeowner should ask is the basis on which he or she charges. What a homeowner thinks is a rough estimate or a casual opinion of a room might be a chargeable appraisal for the designer." When seeking a designer, ask for recommendations from friends who have used one and have been satisfied with results. Also, if a designer uses the initials ASID after his name, he or she is a member of the American Society of Interior Designers, an organization of approximately 10,000 members nationwide. This society has strict membership requirements. To join, a person must have had extensive education and experience in the interior design field, in addition to passing a two-day examination. There are plenty of helpful hints for homeowners who decide to do the work themselves. First, do your homework. That is, take a tour of some furnished model homes, visit furniture showrooms, look through decorating magazines, or pay attention to friends' and relatives' homes. Jot down ideas and compile a list of what you like and dislike in color combinations, arrangements and furniture. "Another word of advice is to take your time," advises Moore. "Successful decoration develops from a carefully considered, long-range plan. Many homeowners wisely wait one or two years after they move in before beginning a major redesigning venture. This gives them plenty of time to get an idea of what they want and to shop around for furnishings that will give lasting satisfaction." Keep in mind that rooms in your home must serve your living habits and those of your family. The design should satisfy your family's ideas of comfort, beauty, economy and ease of maintenance. For instance, if no one on your home enjoys housekeeping, stay away from small intricate accessories or white carpeting that demands constant cleaning. However, don't be drab in order to be practice. Choose colors you like, not necessarily colors of current fashion. Collect color samples that you intend to use in a room and study the combination carefully. If you still like it after a day or two, include the combination in your plan. It's also interesting to note how different groups respond to various colors. Men tend to like tomatoey, yellow-based reds to raspberry shades with a blue base. While older women adore the color purple, it's the color most disliked by men of any age. Almost everyone finds pale blues calming. Cut out cardboard shaped in scale with your furniture and room size. Experiment with different arrangements. This is much easier than moving the furniture itself around. Remember that some bare spots in a room are desirable - simplicity best enhances beauty. Above all, don't shy away from an interior design merely because it's unusual. If something works well for your lifestyle, then you've done a good job. The satisfaction of having your home the way you want it is what matters in the long run, the Residential Association of Realtors of the Greater Boston Real Estate Board advises. The Greater Boston Real Estate Board, Residential Association of Realtors is one more than 1,800 local boards and associates of Realtors nationwide that comprise the National Association of Realtors. As the nation's largest trade association, NAR is "The Voice for Real Estate," representing nearly 750,000 members involved in all of the real estate industry.