The HOA and your real estate transaction
It doesn’t matter whether your next transaction is a short sale or an equity sale: if the subject property is part of a Homeowner’s Association, you may be in for a rude awakening. That’s right: Homeowners’ Associations are becoming the latest deal killer.
When the recession began several years ago, distressed borrowers had to make sacrifices when paying bills. And, many of those distressed borrowers with properties in Homeowners’ Associations started skipping their monthly HOA payments as a means of making ends meet. As a result, many Homeowners’ Associations across the nation are still facing high delinquency rates due to these defaulted payments.
Top 4 Ways that the HOA Can Kill Your Deal
It doesn’t matter whether you are involved in a short sale or a traditional transaction, here are the top 4 ways that an HOA can hamper your next closing:
- Some Homeowners Associations file liens against the property for the unpaid dues and legal fees in order to compel the distressed borrower to make good on their debt. These HOA liens (depending upon your state) could be upwards of $20,000, and usually must be satisfied at or prior to closing. (If you are involved in a short sale and the short sale lender does not agree to pay the HOA balance, you may not be able to close.)
- Some Homeowners Associations are filing Notices of Default (since homeowners have defaulted on their HOA dues) and even foreclosing on properties—leaving the mortgage lenders and homeowners behind.
- Buyers obtaining loans to purchase in certain condominium communities are faced with lots of challenges. High delinquency rates, bad HOA balance sheets, and low owner-occupancy are red flags for mortgagors. Many lenders do not approve mortgages because the underwriters cannot qualify the property due to the HOA situation.
- Buyers obtaining FHA loans may find that their complex is not on HUD’s list of approved condos any longer. The U.S. Department of Housing and Urban Development maintains a list (which is constantly being updated and changed) of FHA-approved condominium projects. If buyers are purchasing a short sale, the complex may be on the list one month and then three months later (when the short sale is finally approved), the property may not be on the FHA-approved list any longer.
If you are a listing agent or a buyer’s agent purchasing a property in an HOA community, it’s best to do a lot of research prior to putting a home on the market. It’s a good idea for listing agents to discuss the HOA issues with sellers, so that no unfortunate situations arise when you are approaching the closing date.
Austin tops the list of best places to buy a home
When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?
Looking at the bigger picture
(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).
That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).
They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.
“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”
Average age of houses on the rise, so is it now better or worse to buy new?
With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.
The average home age is higher than ever
(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.
With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.
Prices of new homes on the rise
Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.
Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?
The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.
Why Realtors are vulnerable to these rapid changes
(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.
Note: We’ll let you decide which company plays which role in the image above.
So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.
1. Zillow poaches top talent, Move/NAR sues
It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.
Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.
2. Two major media brands emerge
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Ladies and gentlemen, the U.S. National Anthem
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