The Battle for Affordable Income Property in Boston

Katie Beth - 07/18/12

The last seven days at Charlesgate Realty Group have been pretty crazy.

Lucky for me, the madness has finally stopped after three hundred emails, countless phone calls, and numerous offers on our new listing from buyers who haven’t even personally seen the place themselves. So, I guess the question is now “why were REALTORS and buyers transforming into a hungry stampede of piranhas over our new listing?”

Well, this was not just any listings folks, it was a Boston Redevelopment Authority Affordable Income Property. Still a little bit confused? Let me explain…

The Boston Redevelopment Authority is committed to creating affordable home ownership and rental opportunities in the city of Boston while also promoting public health, safety, convenience, welfare and to continue the expansion of the City’s housing stock. Whenever there is a new housing development in Boston on public land, the development is required to have minimum 15% affordable income units.

So why was my phone ringing off the hook? Well, our affordable income unit was priced by the BRA at 50% less than what it would sell for at market value. When affordable units are originally built, buyers are chosen through a lottery system. Since this unit is a resale, the current owners were allowed to choose which offer to accept – as long as the offer met BRA guidelines.

Before you read any further, check out our listing here so you can know exactly what i’m talking about.

Now that you know the asking price was $217,000, you must also keep in mind that no one is allowed to offer more than that price. The BRA sets the price based on two things:

The property appreciates in value by at most 5% each year since it was purchased.
You are allowed to recapture up to 1% per year towards any improvements made.

Hold onto your chairs when I tell you similar units in the same building that are not affordable income units are selling for around half a million dollars (the buyers are “saving” more than 50% on their new home compared to the market rate units)! They also have lower property taxes and condominium fees are prorated accordingly.

And now for the question that everyone is asking:

“How can I buy an affordable income unit?”

Well, every condominium project is different so I will talk about our listing located at 2400 Beacon Street. First, there are a few things that you must have to qualify:

Can not have more than $75,000 in assets, excluding approved retirement accounts.
If you are single your annual income can not exceed $54,750
If you are married, your combined income can not exceed $62,600
Contact Ravi Pahuja, our preferred mortgage specialist, for more information.

If you qualify, then your next step is to write an offer that will grab the attention of the sellers. We had three offers the first day Charlesgate listed 2400 Beacon and they were from people who had never been inside the unit! Three days later, without even holding a general public open house, we were flooded with offers. The most common questions were “how to sell my house fast Miami ?” and “how will the sellers decide which offer to accept if every offer is practically identical?”

Let me reassure you, it was not easy for the sellers. They began by eliminating offers that did not meet their preferred closing date. Next, they disregarded offers from buyers who did not put at least 20% down. Then it just came down to the strongest combination of down payment, assets (without going over the 75K), and flexibility to work with the sellers regarding their needs in terms of timelines, fixtures, etc. Many of the buyers wrote personalized letters stating why they wanted the property and how much it would mean to them to be selected. This is always a nice touch to do as a buyer, and sadly for the sellers, made it even more difficult that they could only select one offer.

This unit is now under agreement, and each affordable unit is somewhat different in terms of qualifications and guidelines, but we’re happy to chat with you to help you through the process. If you have any more questions regarding affordable income units, or if you need help finding one let us know.