"It's a small world after all"

If inflation moves lower or is expected to move lower — rates must go lower as well. That's the situation right now.

The financial markets and interest rates also follow inflation on a global scale. Why is this important to you?

If disinflation or the rate of inflation moderates in places like Europe, interest rates in those countries move lower and tend to drag US interest rates lower as well.

This past week we watched home loan rates revisit one-year lows upon news that the European Central Bank or ECB downgraded their economic outlook and inflation expectations.

The ECB said they now expect 2019 economic growth to come in at a paltry 1.1%, down sharply from a previous forecast of 1.7%. Moreover, ECB officials said inflation, which is already very low, could move lower still.

Again, if inflation moves lower in large countries around the globe — we tend to see improvement in long-term US interest rates...that is the current trend.

Interest rates don't buy houses, jobs do!

The Bureau of Labor Statistics reported that just 20,000 jobs were created in February, well below expectations of 175,000. This was a disappointing number, but the unemployment rate fell to 3.8% and wages grew by 3.4% year over year...the highest level in a decade. Overall the labor market continues to expand and wages are rising — all good news for housing.

The standard guide to select a refrigerator size is to allow for 4 to 6 cubic feet per adult in the household. This is the first thing you should determine before buying a fridge. I suggest you consider the size of your family and allow for a little more extra room. Then, once you have determined the appropriate size, you can consider style options. The following are approximate measurements and prices for a variety of different refrigerator models.

Gain Storage Space with a Top Freezer

Size: 28–33 inches wide
Capacity: 23 cubic feet
Price: $479 to $2,199
Pros: Good amount of storage for small place
Cons: Doors swing wide, need to bend to access the refrigerator

Keep Fresh Food at Eye Level with a Bottom Freezer

Size: 24–36 inches wide
Capacity: 30 cubic feet
Price: $999 to $1,899
Pros: Fresh food is at eye-level and frozen food is down below
Cons: Must bend to reach freezer

Avoid Bending with a Side-by-Side Option

Size: 33–36 inches wide
Capacity: 28 cubic feet
Price: $1,149 to $3,099
Pros: Fridge on one side, freezer on the other—no bending; exterior ice and water dispenser; narrow doors fit a small kitchen
Cons: Too narrow to fit a pizza box into; not as energy efficient as other models

Save Energy with a French Door

Size: 28–36 inches
Capacity: 34 cubic feet
Price: $1,599 to $3,999 ($4,500 to $8,000 if you want a slimmer depth that looks built in)
Pros: Only open half the fridge when storing small items
Cons: Priciest option

Other Considerations

Most consumers do not buy a refrigerator on style alone. Here are some other factors that may be more important.
Energy efficiency: A refrigerator with the Energy Saver label means that it's in the top 25% of the market for efficiency, which means lower energy bills. Just be aware that buying a different style of fridge may also save you the same or more.

External water and ice dispensers: This is one of the most popular features; but be wary that fridges with this feature often require the most repairs.

Adjustable shelves and drawers: Space options ensure that you're always organized.

Air purifier: This feature can keep foods fresh for longer by eliminating bacteria.

Dual-cooling system: Dual cooling enables the fridge and freezer to keep cool air separate.

Control pad: Controls allow you to set the temperature and customize features.

Smart refrigerator: Optional features include energy monitoring, voice control, and displays for cooking timers, recipe, and family calendar, also can play music.

Prioritize the features that matter to you and identify the style you love and you will have found the perfect refrigerator. Refrigerators should last for 13 years, so make an investment that will pay off every day.

When you buy a home, do you know what will come with it?

Do you get to keep all the appliances, the art on the walls or the bird bath in the garden? Determining what will stay with the home and what will go with the seller will vary from transaction to transaction. Here’s how to determine what conveys with the home you’re considering, as well as tips to safeguard yourself when negotiating those extra items:

1. Check the listing information in the MLS. Ask your broker if the property has been on and off the market, and if it has, ask to see the original listing. Hopefully the seller specified the items included in their home’s asking price in one or the other of the printouts.
2. When in doubt, know the screwdriver rule. For the most part, if it takes a screwdriver to remove something, it’s considered real property - which is to say, a part of the property. This includes shelves, light fixtures and even curtain rods. But, if it’s hung on a nail and is removable, it's considered personal property and likely not included in the sale.
3. But, whether real or personal, all terms in a real estate transaction is negotiable. Negotiate with the seller if there’s something you’re interested in that isn’t declared part of the sale... or even if it is expressly excluded from the sale. Remember, the answer is always no until you ask! For example, when something is obviously personal property like a riding lawn mower or pool table, include it in your offer as the seller might not want to deal with moving/selling them.
4. Important Caveat - if the seller agrees to include big-ticket items, like a riding mower, you’ll want to discuss this up front with your mortgage lender. Depending on the type of loan you have, it could affect the appraisal or change the value of the property where you might have to pay cash for the item instead of being able to roll it into the mortgage. 

So, here are a few things you should know: unless the seller specifies that the washer, dryer and/or refrigerator convey, you should assume they’re not included. Same goes for the bird bath or anything else sitting on the ground, patio, or porch. You only get what is built in or fastened to the property. This said, I've seen sellers remove curtains/rods and even dig up plants/flowers. Both sellers and buyers need to be informed as to what is real and what is personal property!

“Governor Baker seeks big real estate sales tax hike to fund climate programs“

reads the headline in the Boston Globe. This is a totally bogus claim by Baker. What he is really saying is he wants more money to spend on infrastructure but he doesn’t want to come across as raising taxes on us because his recent re-election campaign opposed tax and fee increases. This latest tax hike is camouflaged as a “climate-change” necessity in order to make the tax hike more palatable to our climate-change sensitive citizenry. There is already so much waste in our state budget and now there’s going to be more; and this latest round of tax hikes is going to affect you more than others. If you have sold a property in Massachusetts, you know that sellers pay a sales tax from the proceeds of the sale.

Under current law, a home seller in most parts of the state pays $4.56 in transfer taxes per $1,000 of a purchase price. That means for a $500,000 home sale, a seller pays a $2,280 tax bill. If Baker’s proposal passes, the transfer tax rate would jump to $6.84 per $1,000, meaning for the same $500,000 sale, the tax bill balloons to $3,420. On Cape Cod, where the excise tax is lower than the rest of the state, the increase is actually more dramatic under Baker’s proposal. The $3.42 per $1,000 of a purchase price home sellers currently pay would jump by 67 percent to $5.70, or $5,700 on a $1,000,000 sale. Regardless of where you live, this is a problem that Charlie has not thought through.

Greedy Charlie has seen property values reach their highest levels and so now he thinks that this is a cash cow ripe for milking. Here’s why this is an unfair tax:

1. No one else is contributing to the cost of improving the things Baker says is needed "because of climate change" - not renters, not tourists, not anyone else besides property sellers.
2. If you bought your house 30 years ago for $150,000 and finally paid off your 30-year mortgage with a 5% interest rate, you will have paid $140,000 in interest on top of the $150,000 purchase price. Therefore, you won't really see a nickel of profit unless you are paid more than $320,000 for your property. It would appear that you can afford to pay $2,736 sales tax on a $400,000 sale price. However, what if you need every penny of the proceeds for medical care?
3. However, assume you buy this same house for $600,000 today. Assume the house appreciates 4% per year = $75,000. Assume you need to sell in 3 years. With a 5% interest rate, you will have paid $88,000 in interest after 3 years which means you will have invested $688,000 in your home. If you sell it for $675,000 less $37,000 cost of sale expenses, you only end up with $638,000 vs the $688,000 you would have already invested in home ownership - virtually a $50,000 loss. Thankfully, your mortgage balance would only be $572,000 so you wouldn't have to pay to sell your property. With Baker's new tax hike, that would increase your loss to $51,600.
4. BUT, short-sighted Charlie doesn't realize that market values are about to drop, or perhaps doesn't care if they do. There won't be a 4% appreciation rate to factor in over the next 3 years. In 3 years, values will be less than they are now and possibly dropping by 4% annually!! Your $600,000 property might only be worth $550,000 when you go to sell it. Assume the same mortgage figures and a sale price of $550,000. You will be UNDER WATER! You won't be able to afford to sell because you will have less than $520,000 to pay off your $572,000 mortgage... unless you can afford to write a check for $52,000 to sell. Oh, and don't forget Charlie's additional $1,600 climate change tax. You now have to write a check for $53,600. Your only reasonable option in this scenario is to rent your property out... hopefully for more than your mortgage payment.
5. Then you have ignoramuses who think that sellers will have to ask for more in order to cover the cost of the additional tax. WRONG!! Property values are not determined by what the seller wants or needs. Sellers can only get what buyers are willing to pay. 

I could go on and on but this post is already too long. Suffice to say, this is a bad tax and should not be passed even if it's dressed up as a desirable climate-change necessity.

If you should find yourself in a divorce situation or needing to divest the property of a deceased family member, it can be a bumpy ride, even though it shouldn't be. Here are a few points to consider if you find yourself in such a situation:

1. I had clients whose mother had passed and left the family her house. As with all transactions, my goal was to sell the house for the most the market would pay. To get to that point, the family had to agree upon a realistic listing price for the condition the house was in. This took some doing because several of the family members lived in other states and thought that they knew what the property should sell for. Although it might be best to have an appraisal done to determine value, you should know that appraisals determine value based upon past sales - going back as far as a year. Since the market is always changing, it is just as wise to have a REALTOR^®'s opinion of value.
2. Market value is usually stated as a gross figure and does not take into account sale's or transfer of ownership expenses. These should be taken into account before "splitting the proceeds" between the divorcing couple or among inheritors.
3. Prior to selling an estate, be sure you have a court-approved right to sell. Your estate attorney should procure this for you.
4. Prior to listing the property for sale, family members should already have decided upon how the proceeds are to be split and to whom paid. All parties should agree in advance as to what "costs of sale" are to be deducted from the total proceeds at closing or which might be paid separately by whomever. You should have a letter signed by all parties so stating and given to your attorney so funds can be distributed quickly and efficiently upon closing.
5. If there is a mortgage on the house, learn what its ramifications have on you. If there is a reverse home equity mortgage in place, they usually give you perhaps 6 months to pay the mortgage off. On the other hand, if it's a purchase-money mortgage with a due-on-sale clause, they will want to be paid right away. However, it takes time to foreclose which means you have time to re-finance or sell.
6. If multiple parties are concerned with different ideas, there's usually an amicable solution available. For example, if one wants to keep the home but the other wants to sell, options include an immediate buyout by the one wanting to retain the property (a short or long-term promissory note might be held by the party wishing to sell while the buying party gets finances in order to take out a new loan); or, perhaps renting the property short-term or long-term is wiser for both with everyone splitting the rental income each month. Worst case scenario, a court can order the sale of the property and the proceeds split among the parties.

Each option comes with certain costs, including:

• Selling - Listing, staging and closing costs
• Renting - Property management and maintenance costs
• Not Selling/Moving in - Maintenance and HOA fees

** Each option discussed also comes with potential state, federal and capital gains taxes. To this end, you might want to find a trusted estate planning attorney.

Just in from Greater Boston Real Estate Board

Meeting Tonight! 5:30 p.m., Cambridge City Council Meeting, Sullivan Chamber

The City of Cambridge is considering enacting a local by-law to establish a new sales tax on homes. The Cambridge City Council will hold a public hearing tonight! Monday January 7 at 5:30 pm, Cambridge City Hall, 2nd Floor, Sullivan Chamber, 795 Massachusetts Avenue.

Policy Order #10 on Monday's Cambridge City Council agenda will begin the process towards establishing a real estate transfer tax in Cambridge. The Policy Order will initiate a home rule petition from Cambridge asking the Massachusetts legislature to allow Cambridge to create the tax. The adverse economic impact and inequity inherent in real estate transfer taxes make them a bad tax policy for a number of reasons.

• Subverts Prop 2 1/2: The tax would subvert the voter approval process inherent in a Proposition 2½ override in which voters can decide for themselves whether to increase their own property taxes to fund affordable housing.
• Community Wide Responsibility: Community-wide responsibilities should be paid for by the entire community. The proposed tax scheme is inequitable and discriminatory as it would single out a small segment of the population, specifically home buyers and sellers, to pay for a community wide need/responsibility.
• Unstable Source of Revenue: The real estate market is highly sensitive to economic downturns; this tax would provide an unstable source of revenue for a current and ongoing community need.
• Exclusionary: The tax is exclusionary because it would in effect create an additional barrier to entry. It would establish an entrance and exit fee for each community that adopts it.
• Increased Cost: Additional taxes and fees are a major burden to buyers and sellers particularly at the time of closing. Taxes and fees have a negative impact on housing costs and economic development.
• Equity Stripping: It is important to remember that, unlike a home purchase which can be financed, payment of a sales tax cannot be financed. Such a tax would cost thousands of dollars due at closing from the buyer or taken from the seller’s proceeds. This transfer tax could be viewed as a municipal “equity stripping” of the value of one’s home.

Are you planning on re-decorating your home to get it ready to sell? Or, are you looking for ways to improve life in your home? In the modern world, it's hard to find peace in our busy lives. Your home is your sanctuary and should be a place of relaxation. Here are some tips you might consider to prepare your home to appeal to those who follow Feng Shui principles, and perhaps enjoy the benefits Feng Shui is supposed to effect.

Briefly put, each area of your home is linked to a different part of your life, known as baguas, and your job is to balance each of those parts to create a harmonious whole.

De-clutter

For a balanced Chi (universal energy) in your home, it's important to declutter 'stuck energy'. This is hard for many people, but once you clear out items that you no longer need, you will find that your home's energy has been boosted because you are more organized and efficient. The North Bagua in your home is attached to your career, so this area is especially important to organize and declutter to maintain strength in the workplace.

Include Natural Elements

The East Bagua area of your home is related to your health and family. Implement water, wood and Earth Feng Shui elements into your décor. Paint a focal wall a warm brown color to represent the Earth, add a large mirror to reflect water and add plants and greenery to represent wood. These elements are supposed to help strengthen your health, well-being and your family's connection.

Implement Power Tones

The South Bagua should have fire and wood elements in the décor. Include a bright red pillow or paint a focal wall red. Then add brown and green elements to the room with plants, photos or art to maintain the wood element in the room and balance the Chi. The South Bagua represents your reputation and needs to balance both power and honesty, represented through fire and natural wood.

Add a Touch of Metal

A white or gray color scheme will help you balance the West Bagua in your home, which represents creativity. Rooms in the west area of your home should be simple and clean with metal elements in photographs, art and visual representations of what inspires you and sparks your creativity. This area of your home is meant for you to unleash your personality and expose the things that make you tick.

Feng Shui is meant to balance your home's energy and give you a sense of peace at home; and so, light candles that have comforting scents, dim your lights at night and truly get in touch with your inner peace. Leave work at work and make your home a place of relaxation by balancing your baguas in each area of your home. With these four ways to improve your home's energy with Feng Shui, you just might feel calmer and more productive in your home... whether you plan on selling or not!

Learn more ideas to implement Feng Shui into your home and life here.

Everyone makes mistakes—even the most seasoned real estate professionals. Perhaps what sets the great listing agents apart from the not-so-great ones is that that they learned from their mistakes early on.

Here are six common home-selling mistakes that new real estate agents face:

1. Mispricing a Home. Especially at the upper end, mispricing a home can end in disaster for the seller. Agents who specialize in luxury homes have to know how to price those homes. Hear what Michalene Lanzito-Melges, who was with Keefe Real Estate (Lake Geneva, Wis.), warns how agents who don’t manage their clients’ expectations and don’t go the extra mile to price a home accurately could seriously damage their reputations. “The most common mistake I see homeowners make,” says Lanzito-Melges, “is to mistrust the figures the broker or the appraiser shows them and insist on listing the property at a price they feel in their heart is right. “For example, you might insist that your house is worth $2 million when your broker advises that $1.75 million is closer to reality. If you insist on listing it at $2 million, it’s likely that you’ll have to adjust the price downward in a few weeks—and perhaps by that time, the peak selling season will have passed, and a home that might have been snapped up immediately for $1.75 million will languish during the off-peak months at $1.5 million. “When I list a property and it isn’t sold within 30 days, it’s because of the price. Period.” Readjusting the price is an expensive process, Lanzito-Melges says. When you adjust the price of a home, you don’t just revise the listing; you have to relaunch your entire marketing program, including the website. She advises hosting a special “broker open” event if forced to reintroduce a property, but admits it’s tough to get agents to attend these.
2. Skipping the Pre-Listing Inspection. Not going the extra mile to determine the right price is another common-home selling mistake. If the home is in a neighborhood where there haven’t been any recent sales, and/or the property is unusual for that neighborhood, comps might be sketchy and might paint an inaccurate picture. Agents should insist that the seller get the home into tip-top shape, and have it inspected, before listing it. The seller will sometimes dispute the inspector if something comes up as “substandard.” Of course, if the seller disagrees with the inspector, they should tell you—but they need to know that the inspector’s word is final.
3. Poor Timing. Agents should also be certain that this is the right time for the client to sell. If they sell now, will they be hit with a tax event that they could avoid by waiting? Are they really eager to sell, and motivated, or will they be content to let the house linger on the market - which is to no one’s benefit. Will they be ready to move out quickly, if necessary? Do they have a deadline?
4. Providing Unexceptional Home Staging. Poor staging of the house is another common mistake. Each room should have some furniture and decoration, but it shouldn’t look like it belongs to anyone. Also, agents must remember to sell the outside of the home as well as the inside. Many agents forget about a home’s curb appeal, so they don’t bother to suggest making the lawn, porch, garage and deck look beautiful; and then, worse, post inferior photos when they should have hired a professional photographer who knows how to make a home look good on the internet.
5. Offering Mediocre Advertising. As soon as a home is ready to be put on the market, but before it’s listed, the agent should have a list of several potential buyers or broker contacts and should call them in person. Equally important, though, is to use all marketing avenues—especially the internet—to the fullest.
6. Keep Sellers Away During Showings. It’s best that sellers absent themselves for showings. Buyers and brokers are uncomfortable when the seller or the listing agent is present and will not linger as long if someone else is following them around. Also, it’s annoying when sellers insist on commenting on ‘their’ home or making suggestions as to how a certain room or feature might be used. Instead, you want to make prospective buyers feel that the home is already theirs.

Today Governor Baker signed into law a bill regulating and taxing short-term rentals. The timeline for implementation of the law will pose significant challenges for Realtors® conducting short-term rentals in 2019. The following Q&A should provide you with an overview of the new law. MAR has provided the following documents to help manage short-term rentals: an updated Short-Term Rental Lease, a Community Impact Fee Form, a 14-day Exemption Form, and a required Insurance Disclosure Form. These documents can be found at marealtor.com/ShortTermRentals The website will be updated as new forms and information becomes available. At this time, these forms are not part of our online forms library, but we will be working to have them included as soon as possible. New Short-Term Rental Laws in Massachusetts Q&A

What does this new law require?

The new law expands the state's hotel and motel tax to include the short-term rental of homes (condominiums, single family, multifamily, etc.). Massachusetts is one of the last states to adopt this type of tax. The tax applies to all rentals for a period of 31 days or less, regardless of whether the rental is for recreational, personal, or business use. At the insistence of MAR, the new law only applies to short-term rentals, meaning ordinary tenancies, such as an annual lease or a tenancy-at-will, are not covered by this bill.

Tax Structure

The short-term rental rate varies by locality and is the total of the following rates:

• State: 5.7%
• Local: up to 6% (Boston 6.5%)
• Cape Cod & Islands: includes additional 2.75% to fund Cape Cod and Islands Water Protection Fund
• A community impact fee of up to 3% may be assessed locally on professionally managed properties (Owners of two or more units in one town).

The law requires regulations to minimize the administrative burden on tax filings for those who only rent their unit five (5) months or less each year.

Are there any exemptions in the law?

The tax imposed by the new law does not apply to properties rented for fewer than fourteen (14) days per calendar year. It is important to note that these properties are still subject to the other requirements of the law, such as insurance and registration.

When will this law take effect?

July 1, 2019

What about the 2019 rentals I already booked?

The law exempts from tax any 2019 rental that is booked on or before December 31, 2018. Rentals booked on or after January 1, 2019 for stays on or after July 1, 2019 will be subject to the tax. We anticipate that the Department of Revenue will issue guidance on how to handle the tax on bookings made on or after January 1, 2019.

Does this apply to the units I rent?

As stated above, the new law applies to all rentals for a period of 31 days or less. Ordinary rentals, such as an annual lease or a tenancy-at-will are not covered. The new law applies regardless of whether the owner rents the property themselves, hires a Realtor® to rent the property, or uses an online platform to facilitate the rental.

Do I need to collect the tax?

Most likely, yes. The law requires intermediaries (which includes Realtors® who post the property for rent online) who enter into a written agreement with the owner or operator to collect rent or facilitate the collection or payment of rent on behalf of the operator to collect and remit the tax. The Department of Revenue will issue regulations to clarify how often the tax should be remitted to the Department. This also means that a Realtor® who does not collect or facilitate the collection of rent on behalf of the owner or operator does not need to collect and remit the tax.

Do I need to carry insurance for the listed properties?

No. Although part of earlier versions of the legislation, the final law does not include a requirement that Realtors® provide any liability insurance for listed properties. This requirement was removed due to the advocacy of MAR. Owners, however, are required to maintain $1 million dollars in liability insurance to cover each short-term rental. Realtors® should be sure to confirm that any property they list for rent is properly insured by the owner. The coverage is required to defend and indemnify the owner or operator and any tenants in the building for bodily injury and property damage. Realtors® may elect to offer insurance coverage as part of their services but are not required to.

Before offering a property for short-term rentals, a hosting platform (including Realtors®) must provide notice to the owner or operator that standard homeowners or renters insurance may not cover property damage or bodily injury to a third-party arising from the short-term rental.

Do the properties need to be registered with the state or city/town? Each rental unit will need to be listed with the state short-term rental registry. Additionally, each city and town is permitted to create a registration requirement for short term rentals. Check with your municipal government office for details. Are there any inspections required? Cities and towns may implement a health and safety inspection requirement and set the frequency of inspections. Short-term rental operators are required to cover the cost of inspections and will likely face a fee to cover registration costs as well. What are some best practices I can apply as the new law gets implemented? Realtors® would be wise to disclose to prospective renters that any booking made on or after January 1, 2019 may be subject to a tax and that the tax rate may change before the rental period. Realtors® may want to postpone the collection of rent until the community tax rates are finalized. Develop a policy to verify the number of units owned by each client in a municipality and that those units are properly insured. Stay tuned for more information and please do not hesitate to reach out with any questions that you may have. Justin Davidson General Counsel & Director of Government Affairs Massachusetts Association of Realtors®

Just announced...

On Wednesday, December 26, the Federal Emergency Management Agency (FEMA) notified insurers that they would not be able to sell or renew flood insurance policies under the National Flood Insurance Program (NFIP) during the partial government shutdown. Insurers could however still pay claims on existing policies.

The National Association of REALTORS® (NAR), together with most of the insurance groups, responded strongly and swiftly, noting that on Friday, December 21, Congress and President Trump enacted legislation specifically reauthorizing the NFIP through May 31, 2019. NAR is working with FEMA, the White House and Congress to find a way forward and resolve this situation.

FEMA made the announcement under the Antideficiency Act, which generally prohibits federal spending in excess or advance of appropriations, except in cases of "emergencies involving … protection of property." This is one of the few federal laws where a violation carries penalties up to and including imprisonment of federal employees.

FEMA has asked NAR for any property sales data that would justify an exception to the Antideficiency Act and allow NFIP to resume selling flood insurance policies. NAR has provided our research confirming 40,000 home sales are at stake each month NFIP cannot write policies, and will be following up with additional data.

Update as of January 3... FEMA will now underwrite new policies!!