你的 Monthly HOA DUE 涨了吗？

For those live in town house / condo, has your HOA assessment gone up starting from January? If it hasn’t, congratulations! 60% of the properties I help manage or have myself, HOA has gone up from as little as $ 3-5 to as much as $ 30-50.

HOA assessment is up-front fee every month, it is also known as HOA due or HOA fee. If the property is your primary residence, HOA assessment is NOT tax deductible.

San Diego is the most HOA-dominated county in the state after Los Angeles. For history and operations of HOA as well as various horror stories, you can pretty much get them by searching internet. Here I’m just going to focus on things that you should pay attention when buying a home.

First, you need to know what HOA assessment covers for a particular home. Seller agent does not necessarily specify in entirety in a listing. I would suggest you contact HOA Management directly to get that information, asking what are included, such as water, trash pickup, exterior termite, HO-6 (a few HOAs cover this one, or before the close of escrow, as long as you mortgage, lender mandates you purchase HO-6 coverage). HOA fee runs roughly between $ 250 to $350 if water  bill is included. An HOA fee of $ 350/month is considered above average. If you could find a home with low month HOA due below $150 and that home owners are responsible for their own water and HOA is only responsible for common area, it would be fantastic, though sometimes you don’t have much choice.

Then, you have to confirm the fee in the listing is really the one. Recently I saw a condo in Carmel Valley listed $ 200/month HOA due, but in reality it is $ 310. The seller agent wrote "Up to buyer and buyer agent to verify all information" to unload her job at ease. There is another situation that if the property was listed last year, you better call to find out if there is any change in the new year. 
 

Some buyers may not aware about special assessment. When there is something comes up that needs expensive repair and replacement and was not budgeted in the reserve fund, after board approval, special assessment will be placed to each home owner either based on unit or number of sqt. Special assessment ranges somewhere between 2-3 grand to 7-8 grand. If the special assessment has been approved, you should be able to read that from the HOA Documents seller provides you during transaction. However, if it is still in discussion, you might or might not find it in the HOA document’s meeting minutes. But even if you happen to see that, you’re already in escrow, and most possibly, you have had home inspection done and the loan process started, money has been spent and effort has been made … now you’re in dilemma as to stay or move on. I won’t blame you if you didn’t detect that in the HOA documents at all. After all, how many people would take time to read through hundreds of pages of HOA Documents?! Again, call the HOA no later than offer acceptance, explain that you are purchasing a unit in this complex, and then ask about HOA due, what it contains and not contain, if there is any special assessment, and any pending special assessment. Such homework is very necessary.

For those who are buying investment properties, it’s even more so crucial as this part of the costs is paid by home owner.

Short Sale is Not A Good Buy Anymore

Unlike 2 years ago, short sales are not a good buy any more from the 3rd quarter of last year.

Lenders normally use 6-month's data to come up with their BPO price. 2 years ago, when the market was experiencing a sudden surge from the down turn, the previous 6 month's data gave a lower than then current market price, so buyers got very good deal from short sales. But now, lenders not only are appraising the value according to 6-months back data which was literally the highest of 2013 (In 2013's May, June and July, properties were priced the highest), but also factoring the appreciation thinking that the properties ought to appreciate every month which pushes the final approval price even higher. No wonder I heard a lot now that lenders are getting greedier. I've seen bunch of listings recently that the previous buyers walk out because bank's final approval price was way above the offer price and in a few cases even higher than that of a traditional sale and the properties had to be put back onto the market.

It's a pity to see that banks are legging behind on the appraisal process. When the market was up, their appraisals didn't reflect the up trend, and when the market is gradually running towards the course of balancing, they think the property value is going to be up double digits as what happened in the last year or two.

I recently had a case with Chase. With my previous experience with Chase, this bank is quicker on approval and lenient on the appraisal price. My client offered the full asking price @353K with all cash. Both the listing agent and I used the same comparable of a very same one sold as a regular sale @351K, so we thought this price is reasonable and should be approved without problem. 2 months later, the approval price came back @380K. Listing agent and I were appalled. Of course, the listing was back to market and is still in the market after weeks.

In short sale, homes Sell "As Is", lenders ask buyers to purchase the home in its present condition. Lenders typically will refuse to pay for suggested repairs disclosed on a home inspection, termite inspection or work necessary to issue a clear pest report. Lenders don't pay for home warranty. And buyers incur higher closing cost because lenders rarely pay for any extras (like a seller would be willing to do) if you want any of those extras, you will pay for them yourself. Sometimes lenders will refuse to pay for standard seller closing costs such as transfer taxes and HOA documents too. If you want specific inspections, home warranties or a termite treatment you will more than likely pay for them yourself.

So, when you see a short sale that is priced well, it doesn't mean you will get it. The sellers' bank may not accept it. These types of listings receive many offers. To get your offer accepted, it will need to be priced near or at market value. If you're not prepared to pay above a superficial price on a lowball short-sale listing, then pass. In my opinion, short sale is not worth waiting any more.