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A Massachusetts Consumers Guide To
BUYING AND
SELLING
A HOME IN MASSACHUSETTS
PREFACE
The
purchase or sale of a home is one of the largest
transactions that an individual makes during a
lifetime. Following years of planning and saving, a
buyer begins the process of finding the home of the
buyer's dreams. The search can provide a challenge and
an opportunity. The assistance of a qualified real
estate agent can transform complex negotiations into a
most rewarding endeavor for buyer and seller. This
pamphlet is provided as a consumer service to the home
buying and selling public and demonstrates the
Massachusetts REALTORS'® commitment to promoting home
ownership opportunities for all citizens of the
Commonwealth.
For additional information on the home buying and
selling process, we invite consumers to browse the
public side of the Massachusetts Association of
REALTORS®(MAR) web site at
http://www.marealtor.com/.
Community profiles and practical information and
guidelines for buyers and sellers of residential
property are available on this site.
ROLE OF THE REAL ESTATE AGENT
Exclusive Listing Agreements
Although there are several different types of listings
for the sale of real property that an owner may give a
broker, the most common in Massachusetts is an
"exclusive right to sell" agreement. Under an
"exclusive right to sell" agreement the listing broker
is given the right to earn a fee for professional
services if the property is sold by anyone, including
to a buyer located solely through the efforts of the
owner.
Multiple Listing Service
Where a buyer works with a real estate agent
who participates in a multiple listing service
("MLS"), the agent can cooperate in showing a buyer
any property in the MLS, even though it may have been
listed through another office.
Agency Relationship
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. If you
are a seller you may authorize your listing agent to
cooperate with agents from other firms to help sell
your property. These cooperating agents may be
subagents who represent a seller or be agents of
buyers. A seller can generally obtain broader exposure
for a property by authorizing a listing broker to
compensate a cooperating agent who successfully
procures a buyer. If you are a buyer you have the
option of working with a seller's agent or buyer's
agent. The decision will depend upon the types of
services you desire and the method of compensating the
agent. A broker who is representing a buyer and shows
that buyer a property listed with the broker's office
is said to be a "dual agent". Dual agency is
permissible provided that both buyer and seller have
given informed consent. The duties of a real estate
licensee do not relieve the consumer of the
responsibility to protect his/her own interest. If
advice is desired regarding legal, tax, insurance or
other matters, a professional in those areas should he
consulted. Regulations of the Board of Registration of
Real Estate Brokers and Salespersons require that
written notice of the agency relationship of a real
estate agent be provided to buyers and sellers at the
first personal meeting to discuss a specific property.
The buyer and seller are asked to sign an
acknowledgement of receipt of the notice.
Real Estate Agents Are Not Inspectors And Do
Not Guarantee Property Condition
Real estate agents are not trained to find
structural, electrical, plumbing, septic and other
problems with a home or land and do not guarantee the
condition of property they sell. In general, agents
have no duty to inspect a property for defects and
have no duty to verify information received from
sellers, municipal departments or other reputable
sources. Naturally, real estate agents may not
"knowingly (make) any substantial misrepresentation" (MGL
c. 112 section 87AAA(a)). Agents have no liability for
innocently passing along to buyers information from
reputable sources, even if it is later determined to
be inaccurate. Agents who provide buyers with names of
lawyers, accountants or other professionals do not
automatically guarantee the accuracy of the reports of
those professionals. Since May 1, 2001 home inspectors
have been required to be licensed by the commonwealth
and to carry errors & omissions insurance. REALTORS®
can provide you with a list of inspectors.
SELLER'S RIGHTS AND RESPONSIBILITIES
Right To Accept Terms Of Listing
The seller has the absolute right to set the listing
price. The real estate agent may prepare an "opinion
of value" to assist the seller in setting the price.
An agent may refuse to accept a listing for any lawful
reason.
Right To Have All Offers Presented
By law, real estate agents are required to
present all offers to a seller. The Massachusetts
Board of Registration of Real Estate Brokers And
Salespersons interprets this obligation as continuing
until an agreement has been signed. Normally real
estate agents will not solicit buyers or continue to
show property after acceptance of an offer, unless
otherwise agreed. Even if a buyer makes an offer for
the full listing price, the buyer cannot usually
require the seller to accept, since listing prices are
considered invitations to bid.
Nature of Seller's Duties to Condition of the
Property
Every seller has the duty to respond fully and
accurately to any request for information about a
property. This is true whether the information is
requested directly by a prospective buyer or by a real
estate agent who, in turn, may pass along the
information to a prospective buyer. Answers that are
misleading or are half-truths are improper. If a
seller is unsure of information, the seller should not
guess, but should qualify his answer. Otherwise, the
buyer may be misled. Sellers may be required to
provide information about the presence of lead paint
or urea formaldehyde foam insulation, where
applicable.
Septic Systems And Cesspools
Massachusetts environmental regulations require that a
property which is serviced by a septic system,
cesspool or other private waste disposal system be
inspected within two (2) years before sale (three (3)
years if pumped at least once each year) or within six
(6) months after sale (if weather conditions prevent a
pre-sale inspection). Only licensed inspectors and
soil evaluators may conduct such inspections. Should a
system fail an inspection, the buyer and seller may
negotiate who will pay to repair or replace the system
or, if the agreement for sale contains a contingency,
the buyer may decide to withdraw. The fact that a
system passes a Title 5 inspection is not a guarantee
that the system will continue to function properly.
Even a properly maintained system may only last an
average of 15 to 20 years.
Smoke Detector Certificates
Massachusetts law requires that all
residential structures be equipped with approved smoke
detectors upon sale. The local fire department will
issue a certificate to prove compliance.
BUYER'S RIGHTS AND RESPONSIBILITIES
Condition of Property
A buyer may wish to employ a professional home
inspector, lead paint inspector, termite/pest
inspector, sewage/septic system inspector, engineer or
other expert of his choice to evaluate the property as
a condition of an offer. Massachusetts law does not
automatically give buyers the right to a home
inspection, however at the time of the signing of the
first written contract to purchase you will receive a
document entitled "Home Inspectors: Facts For
Consumers About Home Inspections." If the buyer
desires that the obligation to purchase be contingent
upon an inspection, the buyer should include an
inspection contingency in any offer. The buyer may
also wish to check public records to verify
information concerning taxes or assessed value, zoning
and history of work performed.
Lead Paint, Hazardous or Toxic Materials
In purchasing any property the buyer may wish to
conduct special tests to determine the presence of
toxic or hazardous materials. These include lead
paint, radon, airborne asbestos, oil spillage etc.
Information from the Department of Public Health will
be supplied to you concerning lead paint and urea
formaldehyde foam insulation, where applicable. For
residences built before 1978 Massachusetts and federal
law provide that buyers be given the right to take up
to ten (10) days to inspect a property for the
presence of lead paint. This right may be waived. High
levels of lead may result in brain damage or other
serious injuries to children. Massachusetts law does
not prohibit the sale of properties containing lead
point or other potentially hazardous substances.
Fair Housing Laws
Real estate agents and sellers are required
by state and federal law to treat all parties in a
property transaction equally and without regard to
race, religious creed, color, national origin, gender,
sexual orientation, age, genetic information,
ancestry, marital status, presence of children,
military service/veteran status or receipt of public
assistance or physical or mental disabilities. If you
believe you may have been the victim of unlawful
discrimination, contact the Massachusetts Commission
Against Discrimination.
LEGAL REQUIREMENTS FOR TRANSACTION
Contract Requirements
Agreements for the purchase of real property
generally must be in writing and be signed to be
enforceable. An offer signed by the buyer that
includes all essential terms and which is accepted and
signed by the seller can constitute a binding
contract. A written counteroffer made by the seller
that is accepted in writing by the buyer can also
constitute a binding agreement. Many real estate
agents have forms of such agreements for use by
clients and customers. Often a more detailed agreement
known as a "Purchase And Sale Agreement" ("P&S") will
be signed by the buyer and seller after an offer has
been accepted. The P&S will then replace the earlier
agreement. If you are unsure of your risks and
responsibilities under any proposed agreement you
should contact a qualified attorney to assist you.
Deposit By The Buyer
It is customary for a buyer to give a deposit or
binder as a show of good faith at the time an offer is
presented. While the amount is negotiable, it is
typically 5% to 10% of the purchase price. Normally
this deposit is held in escrow, but not deposited
until the seller has accepted the buyer's offer.
Mortgages And Financing Contingency
If it will be necessary to obtain
institutional financing for the purchase, the buyer
must fall within lender's guidelines to qualify for a
loan. Loan packages, mortgage interest rates, points
(pre-paid interest or administrative fees) and terms
vary from one financial institution to another and
will be adjusted from time to time. If institutional
financing for a purchase is required, the buyer may
wish to make an offer contingent upon receipt of a
mortgage commitment within a specified period of time.
Careful compliance with the exact conditions in a
mortgage contingency clause is crucial.
Title Examination And Title Insurance
Most banks and mortgage lenders require that an
examination of the seller's title to the property he
conducted to determine if the property is marketable
and will provide adequate security for the loan it is
making. Lenders generally require title insurance up
to the amount of the loan and for an additional fee,
title insurance can be obtained to protect the portion
of the purchase price that the buyer paid.
MISCELLANEOUS INFORMATION
Zoning And Building Code Compliance
Zoning refers to the right of a local city or
town to regulate the use of a particular property. It
can include whether the use may be residential,
commercial or industrial; the number of dwelling units
which may be located on a lot, the minimum lot size;
the minimum amount of street frontage; the minimum
distance a structure must be set back from the street,
from the side lot line or from the rear lot line.
Structures which conformed to zoning at the time they
were built may be "grandfathered" in under current
zoning, while structures which did not conform when
built usually require a "variance" from the city or
town in order to be legal.
Often
homes are advertised as containing extra apartments.
Such an apartment may be called an "in-law" apartment,
an "au pair" suite or by some other name. Generally
this refers to a structure which has been converted to
add a separate dwelling unit. The buyer may wish to
determine from the city or town whether such use has
been approved.
WHO IS A REALTOR®?
All licensed real estate agents should act in a fair,
professional and ethical manner. However, not all real
estate agents are REALTOR® . Real estate agents who
are REALTORS® subscribe to a national code of ethics
that helps to assure the fairness, integrity and
professionalism of all REALTORS®. In addition, they
are members of the Massachusetts Association of
REALTORS® a trade organization comprised of real
estate professionals from every city and town in
Massachusetts.
REALTORS® may also hold professional designations,
such as, Graduate REALTORS® Institute (GRI), Certified
Residential Specialist (CRS), and Certified Buyer
Representative (CBR) which demonstrate additional
industry training or a concentration in a specialty
area of real estate practice.
NOTICE
This pamphlet is published for voluntary use and
distribution by members of the Massachusetts
Association of REALTORS®. Distribution is not
required, but is entirely discretionary. Publication
of the information contained in this pamphlet does not
create an attorney client relationship and is not a
substitute for consultation with a qualified real
estate attorney. In any transaction there may be other
obligations you may have and measures you may wish to
take to protect your interests. You should consult an
attorney for legal advice concerning any particular
transaction.
©
Copyright 2002 Massachusetts Association of REALTORS®
, All Rights Reserved
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