Buyer’s FAQs (frequently asked questions)

The following questions are the ones we hear most frequently from those considering purchasing property on the Vineyard.

Should I buy or rent? Some people buy a vacation home with the idea of turning it into a permanent retirement home down the road. Others like the tax benefits or wish to expand or diversify their investment portfolio. Most people who decide to buy on the Vineyard understand that this is a special place and have come to love it here. Owning brings the benefit of having your own place, becoming part of the community, blending into the daily fabric of the island, and living in all its seasons. Ownership brings great benefits, but also the responsibilities of home management and maintenance.

Are there tax benefits to a vacation home? Today, a vacation home can be purchased for investment purposes as well as enjoyment. And yes, there are tax benefits. Visit www.irs.ustreas.gov or talk with your tax planner for information on the tax benefits of owning a second home.

What costs I will encounter? As with ownership of any property, there are mortgage, utilities, insurance, and maintenance and repair costs. If you’re thinking of renting your property, or using the property seasonally, it’s best to have an on-island property manager or caretaker who can check in on the property and deal with issues that arise. If you’ll be renting the property, you will also have agency commissions associated with each group of tenants. Many owners prefer to have lawn care and cleaning services to keep the place in ready-to-use condition.

Where do I start? The first step to any major transaction is to get informed. Since you’re reading the information on this site, you’re already on your way! Take the time to read through the information in this section and be sure to look through the Sales & Trends and The Island sections of the site so you can better understand the six island towns, availability in those areas, and prices. The Real Estate Articles and Real Estate FAQs also provide good information for potential buyers. When you’re ready, browse our properties database or contact us and we’ll conduct an island-wide search for you that meets your criteria.

Back to Top

Determining What You Can Afford

The amount you can spend on a home depends on how much you have saved for a down payment, your income, and your debt. In general, lenders don’t want borrowers to spend more than 28% of their gross income per month on a mortgage payment or more than 36% on debts. Your total debt-to-income ratio should be in the 34% to 38% range.

It pays to check with several lenders and get pre-qualified before you start looking for a home. Online, we like the information on Intuit’s site at www.quickenloans.com, which includes a mortgage calculator and lots of good details on qualifying for a mortgage. There’s also information on the different types of loans available. Many people prefer working personally with a lender, which can be at your local bank or one here on the island. If you would like us to refer you to a qualified loan officer, please contact us.

Most lenders are more than happy to roughly calculate what you can afford and pre-qualify you for a loan. Whether you prefer to work in person, online, or through a combination of the two, be sure you select a reputable source and one you feel comfortable with.

It often pays to shop around for mortgage options. Even if you are pre-qualified, there are no guarantees your loan will process without a hitch. Having an established relationship with a lender and working through your financial situation early in the shopping process can alleviate headaches when you’ve found your dream property and are ready to make an offer.

Some real estate experts tell borrowers facing mortgage rejection to compensate for negative factors by saving up a larger down payment. Mortgage loans requiring little or no outside documentation often can be obtained with down payments of 20% or more of the purchase price. Talk with your lending officer about various loan options.

Back to Top

Choosing an Agent

There are a number of factors to consider when you select an agent to help you through the buying process, including experience, personality, and market knowledge. Of course, we believe we can do a great job to serve your needs, and would love to have you select the agents of Coldwell Banker Landmarks as your island representatives. We work together as a team to serve our clients’ needs, and we’re committed to helping buyers find just what they are looking for. The information we have compiled on this site is just one of the many things we do to help our clients make informed buying decisions.

As a potential buyer, any island agent can show you almost any property available, whether or not they are the listing agent, even if it’s an exclusive listing. (Click here to learn more about the different ways properties can be listed for sale on Martha’s Vineyard.) In a few rare situations, very high-end properties may be offered privately to select agency customer lists, but by far the majority of the properties available will be included in the LINK network, the multiple-listing service here on the island.

Coldwell Banker Landmarks participates in LINK and works with other agencies island-wide to ensure that all properties that meet your criteria are presented to you. If we are unable to locate what you are looking for through published resources, we will call other brokers and work through our broad network of contacts to find a property that fulfills your dreams. As long-time island locals, with an established reputation for quality and integrity, the agents of Landmarks have helped hundreds of buyers find the homes they were looking for. Please read more about us in the About Us section of the site.

Back to Top

Types of Agency Representation

In Massachusetts, the state mandates that real estate brokers disclose their agency representation to you. Before showing you any properties, a broker must disclose their representation and have you sign a form that confirms that you have been properly notified. Following are the state-defined designations.

Seller’s Agent: When a seller engages the services of a listing broker, that seller becomes the broker’s client. This means the broker, and his/her subagents, represent the seller. They owe the seller undivided loyalty, utmost care, disclosure, obedience to lawful instruction, confidentiality and accountability. They must put the seller’s interests first and negotiate for the best price and terms for their client, the seller. (The seller may also authorize subagents to represent him/her in marketing the property to buyers.)

Buyer’s Agent: When a buyer engages the services of a broker then that broker becomes the broker’s client. This means the broker represents the buyer. The broker owes the buyer undivided loyalty, utmost care, disclosure, obedience to lawful instruction, confidentiality and accountability. They must put the buyer’s interests first and negotiate for the best price and terms for their client, the buyer. (The buyer may also authorize subagents to represent him/her in locating property.)

Disclosed Dual-Agent: A broker can work for both the buyer and seller on the same property provided such broker obtains informed consent of both parties. The broker is then considered a disclosed dual agent. The broker owes the seller and the buyer a duty to deal with them fairly and honestly. In this type of agency relationship the broker does not represent either the seller or buyer exclusively and they cannot expect the brokers undivided loyalty. Also, undisclosed dual agency is illegal.

Back to Top

Understanding Market Trends

A real estate transaction is a big purchase, and it’s important to understand what you will be buying. Martha’s Vineyard has experienced a very strong housing market for the past few years, but we’ve moved off the “peak” that occurred in the summer of 2000. Although we’re not in a buyer’s market, some price reductions are beginning to occur, and the overall market has softened somewhat.

Bear in mind, however, that the Vineyard is not a typical housing market. As an island, our space is limited, and as popular resort location, people from around the world want to own property here. Prices from town to town vary greatly, with the average sale in Chilmark over $1,200,000 versus Oak Bluffs where the average is between $300,000 and $400,000. We’ve compiled by-town sales information for you, for both residences and land, in the Sales & Trends area of the site. You can also expand your understanding of the market by reading through the real estate articles we’ve chosen for you. If you’d like additional market information, please do not hesitate to contact us. With interest rates at or near 10-year lows (for current interest rates go to www.quickenloans.com), and local property prices slightly more negotiable, it’s a great time to buy on Martha’s Vineyard.

Back to Top

Choosing a Location

The old adage that there are three factors to consider in real estate — location, location, and location — carries tremendous merit. When purchasing on Martha’s Vineyard, you’ve achieved the first part of that goal. Next, you need to think about the specific location of the property you buy. Each town on the island has a dramatically different character, appealing to different types of people. Familiarize yourself with the different towns and look at the by-town sales history provided on the site.

It’s also important to match your objective with your location. Are you looking for a home to keep and ultimately retire in? If so, try to envision your life at retirement — do you want to be able to walk to town, or is it more likely that you’d prefer a rural setting? If you’re planning to rent your property, you can look at most any location. The summer rental market has been quite strong for many years on the island, and as long as you book your rental with reputable rental agencies, you’ll be able to rent a property in almost any location. (See the Landlords section of our site for more information.)

The island has a large number of very remote locations, down long winding dirt roads. If you’re looking to get away from it all, this may be just what you’re looking for. On the other hand, if you like to frequent shops and restaurants, the extra time it takes to get to the main road may ultimately wear on you. There are also a number of lovely neighborhood associations that offer private living space combined with the benefits of shared amenities (tennis courts, private beaches, etc.) and shared maintenance. Talk with your Coldwell Banker Landmarks agent for a better understanding of the many location options available to suit your personal preferences.

Back to Top

Renovating or Building

If you’ve found a location you love but can’t find a home that’s quite right, you may want to consider building or renovating an existing home. There are a number of excellent builders and architects on Martha’s Vineyard who can work with you to help you create your dream home from an existing property or on your parcel of land.

However, as the popularity of the Vineyard has grown over the years, locals and conservationists have exerted pressure to cap building in many areas. This is good news for those of us who love the pristine beauty of the island, but it can present delays and challenges for those looking to build or renovate. Please refer to the Building on Martha’s Vineyard area of this site for details on building permits and restrictions in various towns.

Patience, creativity, and a well-established local builder can result in your dream home being completed. Talk with your Coldwell Banker Landmarks agent for a list of local contractors and more about what’s required to build or renovate on the island.

Back to Top

Tax Considerations

Land Bank Taxes: The Martha’s Vineyard Land Bank was established in 1986 to support island conservation efforts. Across the island, thousands of acres have been purchased by the Land Bank, preserved in their natural, unspoiled state, and opened for selective public access. These areas include beautiful beaches, hiking trails, and farmlands. All island real estate transactions are subject to a 2% Land Bank tax, paid by the buyer at closing. These taxes are used by the Land Bank to fund additional property acquisition and preservation efforts. Visit www.mvlandbank.com for more information on Land Bank properties and access.

Town Taxes: Annual town taxes are used to operate local services, schools and roads. The local tax rate is expressed in dollars-per-thousand of assessed value. The fiscal year runs from July 1 to June 30, and final tax bills are mailed when all information and procedures are completed.

State law requires that all real estate is assessed at full market value, and all properties are re-appraised at least every three years. Generally, professionals are employed to make these appraisals, basing assessments on actual sales 2-years preceding to establish values as of January 1 of the re-appraisal year. The assessors hold hearings for taxpayers who feel their assessments are incorrect. Appeal from the assessors’ rulings at these hearings may be made to the State Appellate Tax Board. Property tax rates vary by town, as shown below.

Back to Top

Like Kind Exchange

If as a potential buyer you are also planning to sell a property, either on- or off-island, you may benefit from the tax savings associated with a Like Kind exchange. Click here for more information on how this tax shelter may benefit you.

Back to Top

Making an Offer

Once you have found the property you wish to purchase, the next step is making an offer and negotiating a mutually agreeable price. Understanding your negotiating position and current market trends is key to understanding how to position your offer. Although no one wants to pay more than necessary to close a deal, you also don’t want lose the house of your dreams over a few thousand dollars.

Your Coldwell Banker Landmarks agent will work with you to help you position your offer. Also, bear in mind that there are typically two to three (or more) rounds of offers and counteroffers before both parties agree on a price. Remember that the listing price is what the seller would like to receive, but it’s not necessarily what they will settle for. Before making an offer, review the sold properties section of our database and ask your agent to provide you with “comps” of similar properties and what they have recently sold for.

The following considerations often affect the value of an offer and your negotiating position:

What are the contingencies of the offer? Although home inspection and mortgage approval are often standard, other contingencies, such as the sale of your current home, may make the offer less appealing to the seller. Fewer contingencies make the offer more appealing, but they also mean you carry a greater risk.

Are you making an offer on a house as-is, or do you want the seller to make repairs, changes, or other modifications to the property? Again, the less required of the seller, the more he/she may be willing to negotiate on price.

Are you able to make a cash offer? Cash offers are not an option for most buyers, but since these offers eliminate the need for a mortgage, they can have appeal to a seller and may result in a greater discount from the asking price.

Are you flexible on a closing date? Many sellers are looking to sell either before or after the summer season. If you are willing to be flexible on your closing date, you may be able to negotiate a better price.

What is the seller’s motivation? The more you know about a seller’s motivation, the stronger negotiating position you are in. For example, a seller who has already purchased another property may be more willing to negotiate on price.

What is included in the offer? Fixtures and any type of personal property that is permanently attached to a house (such as drapery rods, built-in bookcases, wall-to-wall carpeting, and most appliances) automatically stay with the house unless otherwise specified. However, you can consider anything negotiable and include it in your offer. Many homes on the Vineyard are sold furnished or partially furnished.

Should I include other inspection contingencies? In addition to the overall inspection for structural soundness, you can inspect for pests, lead paint, or potential environmental hazards such as asbestos or radon gas. If you plan to use the property for a rental, you may wish to have the paint tested for lead. You will have to provide lead paint certification unless you qualify for a vacation lease exemption to lead-paint laws (talk with your Coldwell Banker Landmarks agent for more information on lead-paint). If the property has a septic system, state regulations require that the seller have the system inspected according to Title V guidelines and disclose the condition to the buyer. You have the right to choose your inspectors, but you are responsible for paying for the inspections.

What happens if I decide I want to withdraw my offer? As soon as the seller accepts and signs your written offer, the document becomes a legally binding contract. (Which is why it’s a good idea to have an attorney review all documents before signing.) The purchase and sale agreement can be written to include contingencies for any of the items listed above, as well as items found during inspections.

Items stipulated in the offer, or regulated by towns or the state, generally must be corrected by the seller prior to closing. However, there may be items found in the inspection process that the seller is unwilling to remedy. If the repair is not required by regulation or stated in your agreement, and you decide to back out of the sale, you could lose part or all of your deposit. There may be costly legal implications stemming from backing out of a contract, so speak with your attorney to protect yourself.

Back to Top

Securing A Mortgage

If you’ve already been pre-qualified for a mortgage (see Determining What You Can Afford) applying for your mortgage is a fairly simple process. Once your offer has been accepted, advise your lender of the property you have chosen, and they will take from there.

Typically, you will be required to provide recent income tax, investment, and bank records as part of the mortgage approval process, as well as income verification documentation. Having these items readily available can make the process smoother. If you’d like to learn more about mortgages, try www.quickenloans.com for an online reference, or contact us and we can provide you with the names of quality lenders.

Back to Top

Home Inspections

A home inspection is when a paid professional inspector, often a contractor or engineer, inspects the home, searching for defects or other problems that might later plague the owner. They represent the buyer and are paid by the buyer. The inspection usually takes place after your offer has been accepted, before a purchase and sale agreement is signed.

Having your home inspected is an important step in making sure you know what you are buying. As of May, 2001, all home inspectors are required to be licensed in Massachusetts. You should select your inspector from the Massachusetts Division of Professional Licensure list of approved inspectors. You may choose an on-island or off-island inspector. This list, and additional information on home inspection for consumers, can be found at www.state.ma.us/reg/consumer.htm.

If your home was built prior to 1978, it may have lead-based paint (which can be removed). In order to rent a home with lead-based paint you must either meet the requirements of the vacation lease exemption to Massachusetts lead-based paint laws, (rentals for less than 31 days with fully intact paint—no peeling, chipping or cracks) or have the lead paint removed. Talk with your inspector or Coldwell Banker Landmarks agent for more information on what to do about lead-paint. Most inspectors can test for lead paint at the time of inspection if requested.

Back to Top

Homeowners Insurance

Before you close on your property, your lender will require that you obtain homeowners insurance (also known as hazard insurance). Most policies, called “all-risk” policies, cover the majority of potential disasters with the exception of earthquakes, floods, war, and nuclear accidents. A basic policy can be expanded to include additional coverage for floods, earthquakes, and even workers’ compensation for employees or contractors.

It is generally preferable to insure your home for full replacement value. For personal items, you can increase coverage beyond the depreciated value of items such as televisions or furniture by purchasing a replacement-cost endorsement on personal property. If you have an existing insurance agent (on-island or off), speak with them about the best way to insure your new home. If you need assistance locating an insurance agency on-island, your Coldwell Banker Landmarks agent will be happy to assist you.

Back to Top

Obtaining a Title Report

Prior to closing, make sure your attorney has reviewed the Title Report for your property with you. This report ensures that there are no liens placed against the property that restrict ownership or use. When reviewing the report, your attorney will check the extent of your ownership rights (called “interest”). The most common form of interest is “fee simple” or “fee,” which is the highest type of interest an owner can have in land. Liens, restrictions, and interests of others excluded from title coverage will be listed numerically as exceptions in the report.

You also may have to consider interests of any third parties, such as easements granted by prior owners that limit use of the property. Some buyers attempt to clear unwanted items prior to purchase. A list of standard exceptions and exclusions not covered by the title insurance policy may be attached to the report. This section includes items you may want to investigate further, such as building and zoning regulations. Be sure to discuss any easement issues with your attorney.

Back to Top

Searching for properties in our online database

Included in our online database are all of Coldwell Banker Landmarks Real Estate’s exclusive and shared listings, as well as properties that we have obtained permission to include on our site.

These properties give you a good representation of pricing and availability by town, but are not a complete listing of all properties currently available for sale on the island. We work with a broad network of island agencies, and can show you most any property which is currently for sale. Please contact us, and we will conduct an island-wide search of all properties which meet your criteria.

Back to Top