State of the Market - Plymouth County, Massachusetts

15 Replies

The 1st Quarter numbers are in - these numbers compare January - March 2018 to the same period in 2017.

For sellers, it's more great news.  For buyers, not so much.

  • Average sales price: UP 11.1%
  • Number of homes for sale: DOWN 34.5%
  • Days on Market: DOWN 6.4%
  • Months supply: 1.9 months, DOWN 35.5%

In summary, there are a lot fewer homes on the market.  Those that are on the market, sell faster and sell for more.  Buyers are in a very competitive market and for properties that are priced reasonably, buyers will be facing multiple offer situations on a regular basis.

@Daniel Ortiz I’d say that it’s very easy to overspend right now, especially in metro Boston.  I’m seeing triple deckers selling close to $2M in places like JP and Southie, which strikes me as insanity.

I’d consider the South Shore.  Look in Plymouth, Pembroke, Middleboro, New Bedford, Fall River, Taunton for deals that can still make sense.

@Charlie MacPherson thanks for the feedback. I work in Andover and being that I’m a current renter I’d like to leverage my living situation and make my first investment an owner occupied property...therefore South of Boston is a bit of a stretch right now.

Are you finding most of your deals through the MLS? Or are you employing other means/tactics to identify and pursue off market deals?

@Daniel Ortiz I get some off MLS. The key to success there is to be able to act very quickly.  You should be prepared to get to a newly listed property and put an offer in the same day.  You'll need a good agent to run comps at a moment's notice.

You might think that it's smarter to put an offer in sight unseen, but many agents (including me) will discourage sellers from accepting offers until the buyer has seen the property, as these offers are a lot more likely to be withdrawn. If you want to go this route, consider making at least part of your EMD non-refundable.

Of course, the strongest offers are all cash with the fewest contingencies.  If you can get your contractor / home inspector to view the property with you, and if you're OK with the obvious risk, you might consider waiving the home inspection.

By the way, a sharp agent will see right through the kinds of proof of funds documents that hard money lenders let you print out on your own. We know that there's still a strong chance that the deal will blow up at appraisal if the HML doesn't see sufficient value in the property. If you really want the best chance of locking a deal up - especially at any kind of a discount - show cash in the bank.

Thanks for the summary. Question: What advice would you offer someone looking to buy their first investment property should they flip or hold?  Thank You! 

@Account Closed It depends entirely on your goals.  

Here in my market, the landlord/tenant laws are tilted WILDLY in favor of the tenant, so I'm not a fan of buy & hold.  That said, tens of thousands of landlords do it successfully.

Originally posted by @Charlie MacPherson :

@Daniel Ortiz I get some off MLS. The key to success there is to be able to act very quickly.  You should be prepared to get to a newly listed property and put an offer in the same day.  You'll need a good agent to run comps at a moment's notice.

You might think that it's smarter to put an offer in sight unseen, but many agents (including me) will discourage sellers from accepting offers until the buyer has seen the property, as these offers are a lot more likely to be withdrawn. If you want to go this route, consider making at least part of your EMD non-refundable.

Of course, the strongest offers are all cash with the fewest contingencies.  If you can get your contractor / home inspector to view the property with you, and if you're OK with the obvious risk, you might consider waiving the home inspection.

By the way, a sharp agent will see right through the kinds of proof of funds documents that hard money lenders let you print out on your own. We know that there's still a strong chance that the deal will blow up at appraisal if the HML doesn't see sufficient value in the property. If you really want the best chance of locking a deal up - especially at any kind of a discount - show cash in the bank.

I agree that speed seems to be one of the most critical aspects of a sale right now in this hot market. However it seems like a lot of the MLS sellers I'm finding are refraining from letting people view the property until the first open house, resulting in a bidding war. The property then ends up selling for anywhere from $15k - $25k over asking. Tough for a first timer to compete against all cash buyers and buyers who are not investors that purchase a multi to live in with their entire family. That's why I was curious if you had been using any off market techniques successfully. As a first timer, I definitely don't plan waiving my home inspection.

@Daniel Ortiz   That is the smart strategy for the seller's agent, and it's one component of the formula I to help @Johnny Quilenderino to sell his SFR rental in Quincy at $59,600 over asking with a waived home inspection.  I just used it in Hyde Park to get another SFR under contract for my seller at $52,000 over asking.

I do get some off-market deals from wholesalers. Look in local REIA groups and call the numbers on bandit signs. Be prepared to show that you're serious about making a purchase.

There are lots of people - real estate agents included - who won't even call a newbie back, simply because so many are time wasters.

Originally posted by @Charlie MacPherson :

@Daniel Ortiz  That is the smart strategy for the seller's agent, and it's one component of the formula I to help @Johnny Quilenderino to sell his SFR rental in Quincy at $59,600 over asking with a waived home inspection.  I just used it in Hyde Park to get another SFR under contract for my seller at $52,000 over asking.

I do get some off-market deals from wholesalers. Look in local REIA groups and call the numbers on bandit signs. Be prepared to show that you're serious about making a purchase.

There are lots of people - real estate agents included - who won't even call a newbie back, simply because so many are time wasters.

 Wow, nice work Charlie!

What are you looking for in a newbie to illustrate that they are not a time waster if you’re a seller?

@Daniel Ortiz   Daniel,  the equivalents of the communities that Charlie listed in your (our) area are  Lowell, Lawrence, Methuen, Haverhill... and in my opinion, portions of Dracut, Billerica, and Pelham, NH.

PS-- @Charlie MacPherson, nice analysis.    

@Daniel Ortiz What I'm looking for in ANY investor I work with (not just a new investor) is someone who is willing to make offers that are realistic.

I've had lots of discussions with newbies who have taken one of the many "guru courses" out there, and they really come away with some horrible information.

For example, homes in Plymouth County sold in the last month averaged 98% of list price.  If an investor wants to submit an offer at 80% or even 90% of list, and that list price is properly supported by the comps, we are wasting our time.

There are times when the list price is just unreasonably high and 80% can make perfect sense, but that's by far not the norm.

Likewise, if the property is listed on MLS I'm especially reluctant to submit "creative financing" offers. MLS listed properties get maximum market exposure and will sell at actual market value, +/- 3%.

When the market eventually shifts from what is now an almost unimaginably strong seller's market, it will be a different story.

For now, a savvy investor who is willing to take the risks involved, has the best chance of winning a property by doing a walk-through and then offering all cash, a high, non-refundable earnest money deposit, quick close (or seller's preference for a date) and no contingencies.  

That kind of offer will get you some discount, but probably not a ton.

Originally posted by @Charlie MacPherson :

@Daniel Ortiz What I'm looking for in ANY investor I work with (not just a new investor) is someone who is willing to make offers that are realistic.

I've had lots of discussions with newbies who have taken one of the many "guru courses" out there, and they really come away with some horrible information.

For example, homes in Plymouth County sold in the last month averaged 98% of list price.  If an investor wants to submit an offer at 80% or even 90% of list, and that list price is properly supported by the comps, we are wasting our time.

There are times when the list price is just unreasonably high and 80% can make perfect sense, but that's by far not the norm.

Likewise, if the property is listed on MLS I'm especially reluctant to submit "creative financing" offers. MLS listed properties get maximum market exposure and will sell at actual market value, +/- 3%.

When the market eventually shifts from what is now an almost unimaginably strong seller's market, it will be a different story.

For now, a savvy investor who is willing to take the risks involved, has the best chance of winning a property by doing a walk-through and then offering all cash, a high, non-refundable earnest money deposit, quick close (or seller's preference for a date) and no contingencies.  

That kind of offer will get you some discount, but probably not a ton.

 Very sound advice, sounds like I’m on track. Thank you for the info Charlie!