The Gatto Agency
Insurance and Real Estate

FAQ & Glossary of Terms


Q. How is the market value of a house determined?
A. The best way to learn about current market values is to look at recent comparable sales. Just as banks rely on recent sales data when they appraise a house before making a loan, Realtors can help you know the current value of property by doing a Comparative Market Analysis (CMA.) We look for recent sales that are the most closely related in terms of age, style, room count, square footage of living space, lot size, and location. This is a critical first step in deciding how much to sell your home for, or how much to pay for a home you may want to buy.

Q. Why do Buyers need a "pre-approval letter" from a bank before they buy?
A. Sellers of property want to be confident in a Buyer's ability to get a mortgage before they accept an offer that will take the home off the market. A pre-approval letter states that the bank has reviewed the Buyer's financial statements (like tax returns) and will be willing to make a loan of a specified amount provided any further information is favorable. This is not a guarantee but a good faith judgement by a third party (the bank) that the Buyer appears credit worthy for a certain scale of mortgage financing. Realtors typically advise Sellers not to accept an offer until a pre-approval letter can be provided by the Buyer.

Q. How long does it take from an accepted offer to the property closing?
A. A common time period would be between six to eight weeks, although the schedule may vary depending on the needs of the two parties. The usual elements during this time would include home inspection, signing a Purchase and Sale agreement, the Buyer securing a mortgage commitment, and the Seller obtaining final documents needed for closing such as smoke/CO2 detector certificates.

Q. What are the most important steps to take in preparing a home for sale?
A. The first step is to choose a trustworthy Realtor to assist you in the process. Our staff at The Gatto Agency will help you price your home competitively, and recommend ways to showcase your property so Buyers will find it attractive. Properties that are neat, clean and free of clutter on the inside, and also well-maintained on the outside, are the ones that will bring the best value to the Seller.

Q. What is the role of a Buyers' Broker?
A. A Buyers' Broker will represent the Buyers' interest in all aspects of a real estate transaction. The key job is helping to evaluate properties and what they are worth, making sure the Buyer doesn't pay more than necessary to get the home they want. Our Buyers' Brokers will help you conduct a thorough and systematic search, so that all available options in your areas of interest are considered. Making sure you get the other professional help you need, such as mortgage lenders, home inspectors and lawyers, is also a role we take seriously.

Q. Do I need to hire a lawyer to sell or buy property?
A. Although you are not required to have a lawyer, we feel it is definetly in your best interest to do so. Offers to Purchase and Purchase and Sale agreements are legally binding contracts, often with large sums of deposit money at risk. Whether you are buying or selling it is worth a relatively small fee to be sure your legal rights are protected. The Gatto Agency staff can recommend great attorneys who are both reasonable and reliable.

Glossary of Terms

Adjustable Rate Mortgage (ARM)

The adjustable mortgage has a rate that is subject to change after a given time period, such as one, three or five years. This may be an affordable option for Buyers if the circumstances make sense, but it calls for careful planning and consideration.


The process of spreading equal monthly mortgage payments over a period of years is called amortization. A mortgage amortized over thirty years will yield a lower monthly payment than a shorter term mortgage, such as ten or fifteen year terms. The consumer will pay more interest to the lender over the course of a longer term loan.

Back-up Offer

In a situation where a property Seller has accepted an offer to purchase the property, Buyers can sometimes make an additional offer to purchase that takes effect only if the first offer falls through. Deals sometimes fall apart because of home inspection issues, inability to secure financing, or failure to agree on the details of a Purchase and Sale Agreement. Having an accepted Back-up Offer puts a Buyer in first position to step in to purchase a property if it comes back on the market.

Buyers' Agent

Realtors often represent Buyers directly by helping them qualify for a mortgage, search for suitable properties, make Offers to Purchase and find legal help when necessary. The Buyers' Agent will help clients find the best value and avoid pitfalls when purchasing a home.


The meeting where a property legally changes hands from Seller to Buyer is called the Closing. Also referred to as "passing papers," the closing often includes Realtors and attorneys who represent the two parties, as well as an attorney who represents the lending institution chosen by the Buyer.

Fixed Rate Mortgage

The fixed rate mortgage does not change interest rate during an agreed upon term, often fifteen, twenty or thirty years. For Buyers who want long-term stability of their monthly mortgage payment the fixed rate can be the best option. Changes in interest rates in the market will not effect a fixed rate mortgage at all.

Home Inspection

Buyers often choose to have a Home Inspection conducted by a professional inspector who will examine the property to be purchased. If the inspection shows major defects in the systems such as plumbing, heating, electrical service, roof, etc. the Buyer may sometimes decide against purchasing the property and ask for their deposit money to be returned. Sometimes Buyers and Sellers reopen negotiations to take account of new information found in the inspection, and agree on adjustments in price or repairs to be made.

Listing Agreement

A property Seller hires a Realtor to assist with the sale of property by entering into a Listing Agreement. This contract will specify the asking price, time period for the Realtor's involvement, and agreed upon compensation in the form of commission to the Broker if and when the home is sold.

Offer to Purchase

Most often in Massachusetts the first official step in buying a home takes place when the Buyer presents the Seller with an Offer to Purchase. This becomes a legally binding contract when signed by both parties, and it typically specifies the purchase price, deadline dates for inspections, financing and closing. A deposit is made by the Buyer to bind the offer and is not refundable unless specific conditions in the contract are met.


In order to obtain a mortgage, a homebuyer sometimes has to pay a fee to their lender called "points." One point is equal to one percent of the mortgage amount, so if $400,000. is being borrowed one point would be $4000. Lenders offer a wide variety of loan programs, some with "no points and no closing costs," so it helps Buyers to educate themselves about the options.

Purchase and Sale Agreement (P&S)

After an accepted Offer to Purchase, the common next step in Mass homebuying is the execution of a Purchase and Sale Agreement between the Buyer and the Seller. The P&S takes the basic agreement from the Offer to Purchase and goes into much greater detail regarding the rights and responsibilities for Buyers and Sellers in the transaction. The P&S also customarily triggers a second and larger deposit made by the Buyer to bind the sale, and the total deposit is held in escrow until it is made available to the Seller at the property closing.

Title V

Properties that have septic sytems for sewage disposal are subject to the Mass law commonly referred to as Title V. The law provides for a process of inspection and certification by licensed professionals to insure that the septic system is adequate and working properly before the sale of the property takes place.


A type of insulation that was installed in some homes is called urea formaldehyde foam insulation (UFFI). A property Seller must disclose the presence of UFFI, and tests may be conducted to make sure there are no harmful emissions from the product coming into the home. UFFI has not been used in home construction since 1979 and many professionals believe its effects have diminished down to nothing in the present day. Disclosure of the presence of UFFI is still required.