DECEMBER #4

REAL ESTATE NEWS

FOR ALL OF YOUR REAL ESTATE NEEDS
R

2011

HOA Troubles are Growing

The news has been covering the recent troubles of both state and local governments, but these arent the only ruling bodies facing financial difficulties. Homeowner Associations, often known as the mini-government of a community, are facing increasing financial distress. Across the country, over 60 million people live in over 300,000 communities covered by some sort of homeowner association. These associations rely on periodic (usually monthly) assessments to pay for services such as landscaping, maintenance, trash pickup and some utilities and to fund amenities, such as pools or tennis courts. These associations are responsible for keeping the community running and saving money for future major repairs (i.e. installing new roofs). Associations are supposed to, and expect to, collect assessments from all unit owners. In a recent survey, about a quarter of community managers said more than 5 percent of their units are empty. About 30 percent of the managers report vacancy rates of 3 to 5 percent. In most cases, these vacancies are because of foreclosures, nonresident owners being unable to sell or rent their properties or owners just walking away from their home and mortgages (because they cant afford it or are underwater). Unfortunately, these situations usually lead to non-payment of homeowners assessments. In fact, since 2005, assessment delinquency rates have almost tripled. Currently, 63 percent (this is up from 22 percent six years ago) of associations have delinquency rates which exceed 5 percent. About 33 percent of associations have a delinquency rate over 10 percent. But this problem isnt simply attributable to individuals. In fact, over 70 percent of bank-owned properties are not making assessment payments to their associations on time. These high delinquency rates make it very difficult for homeowner associations to meet all of their obligations and keep the property running properly. Other homeowners are often forced to make up this difference through higher periodic assessments or a one-time special assessment. As a potential buyer, it is important to understand the health of the homeowners association where you are considering purchasing.

The address: 3200 Retreat Court, Malibu, CA 90265 Beds: 8 Baths: 8 full Square Feet: 9,130 Lot Size: 1.5 acres Asking Price: $15,950,000 History: Britney Spears and Kevin Federline reportedly purchased this property in 2004 for around $7 million, shortly after getting married. Spears put the house on the market after the two separated in 2007 for $13.5 million and later reduced the price to just under $12 million. In August of 2007, this home finally sold to director Stephen Sommers for around $10 million. Sommers is now trying to sell the home at a significantly higher price tag (good luck!). Features: This 2-story home is located on a secluded, gated compound on a private cul de sac. It features a game room, 2 wine storage areas, and a master suite with 3 walk in closets (and the spacious bathroom above). Spears and Federline also added a recording studio and dance/work-out studio to the property. Outside of the home, there is a pool, outdoor lounge with fireplace and fire pit, tennis/basketball court (lighted), a separate 1 bedroom guest house, an air condition childrens play house, and a five car garage.

Things To Think About Before Buying A Home:

Most people realize they want to buy a home long before they know what they want in a home (or if its even a realistic option). Starting the process can be a daunting task so here are some things to think about as you get started: Is your life -and job situation - stable enough right now to take on the responsibility of a home? How long would you stay in your new home? What monthly payment can you afford? What is your price range? You may want to consult a lender to discuss these. Where do you want to live? What do you want to live near? Jobs, schools, transportation, entertainment, and shopping/retail are all important things to consider. What do you want and need in a home? What type of home do you want? (house, condo, duplex, etc.) Do you want a brand new home or an older home? How much space do you need? Consider both square footage and number of bedrooms/bathrooms, as well as other needs (i.e. office). Do you want a garage? Do you want a yard? Does it matter how many levels your home is? What amenities do you want? Do you want a turn-key home or a fixer upper? Which of these items are you least and most flexible on? What interior features are important to you?

Reader Question: When we bought our first home, the sellers agent told us to bring any offer and that the owners would take $450,000 even though the home was listed for $500,000. Now that were selling our home, were concerned the same thing could happenwhat do we do? Is that even legal? First of all, what the sellers agent did is a violation of the agents fiduciary duty to their client. The fiduciary duty requires the agent to work for the clients benefit and best interest. The agent is not allowed to give away information that could harm the seller - this is not only unethical, but illegal. Unfortunately, this is a rather common occurrence and demonstrates why it is important to hire an agent you trust.

However, keep in mind that the opposite is okay. A buyers agent is Understanding what you want in a home can help you narrow down your options. A real estate agent can help you navigate through all of these allowed to try and get such questions. information from the sellers agent (or Top 5 cities with the worst drivers The top 5 rudest cities according to a seller) and a sellers agent is allowed according to a Travel & Leisure survey: to try and get information from the Travel & Leisure survey: buyers agent or the buyer. So while 1) Miami, FL 1) Los Angeles, CA many agents will try to get information 2) Atlanta, GA 2) New York, NY from a party on the other side of the 3) New York, NY 3) Philadelphia, PA transaction, it is your agents 4) Boston, MA 4) Miami, FL obligation to keep that information 5) Washington, D.C. 5) Washington, D.C. private and secure.

A Quick Riddle:
Two spies are trying to get into the enemys military base. To get in, they have to give the correct countersign to the guard at the gate after he gives them the sign. They hide nearby, so they will overhear the signals from other soldiers. One soldier comes and the guard gives the sign: "6".The soldier answers "3".The guard lets him pass. Another soldier comes and the guard says "12." The soldier gives the answer "6" and the guard lets him pass. So, the first spy goes at the gate and the guard asks says "10".The spy, sure that he knows the answer, says "5". Immediately, the guard shoots him dead. The other spy, after seeing the first spy get killed when he gave the wrong countersign, now understood the pattern. So, he walks to the gate and the guard says "8." The spy gives the correct answer and the guard lets him in. What was the answer that the spy gave? Check out next weeks issue for the answer.
The information in this newsletter is not meant as legal, financial, or any other type of recommendation. Please consult a qualified professional to discuss the details of your individual situation.