Category: Real Estate

It may seem like an understatement, but life completely changes when you have kids. They’re so tiny, yet so powerful that they impact our lives more than anything that came before.

Years ago, you may have lived in an apartment, never thinking about buying a house. With kids, that changes, doesn’t it? They need room to grow, to play and to build memories.

So, Mom and Dad, today we take a look at what constitutes a “kid-friendly” neighborhood.

Safety is at the top of the list

Parents’ concerns about their child’s safety are reflected in the popularity of the cul-de-sac.

“From the beginning, builders noted that  . . . they prevented strange cars from speeding by on their way to somewhere else. Ads for cul-de-sacs often pictured children riding bikes and tricycles in the street,” claims NPR’s John Nielsen.

He goes on to state the irony in those statements because “cul-de-sac communities turn out to have some of the highest rates of traffic accidents involving young children.”

Rather than a home on a cul-de-sac, consider a home on a street located away from a major thoroughfare and one that lacks an exit that allows drivers to use the area as a shortcut.

But safety from vehicles isn’t the only concern when we have kids; there are human predators to consider as well. We aren’t allowed to address that concern directly, but we can point you to the local police station for crime rates.

And, the FBI’s Sex Offender Registry is online, so you can learn if there is a dangerous predator living in a neighborhood you have your eye on. The U.S. Department of Justice also offers an online database.

Are there opportunities to socialize?

Are there other children living in the neighborhood? Kids need to socialize and use their imagination in play with their peers.

If there are few or no other children in a neighborhood, your child’s opportunities for this critical developmental milestone are curtailed.

Sure, they can socialize and play at school, but, let’s face it, a neighborhood without other kids to play with just isn’t kid-friendly.

You’ll know there are other children in a neighborhood by checking out the other homes. Look for basketball hoops, bikes and other toys that children sometimes leave outdoors.

The best time to tour a neighborhood is on weekends or just when school lets out on a weekday.

Kid-friendly amenities nearby

A neighborhood within walking distance to a park is ideal for children, and their parents.

Parks are handy places for socializing, whether it’s parent-on-parent or kid-on-kid. Barbecues, birthday parties and other get-togethers at the local park are signs of a kid-friendly neighborhood.

What recreation you enjoy as a family? Bike rides? Look for bike paths. Swimming? A community pool nearby will be handy.

Does a kid-friendly neighborhood have to be in the suburbs?

You’ll find fabulous, vibrant neighborhoods in urban centers, many with a surprisingly suburban vibe. In fact, many parents prefer city life for their children.

“I grew up in a small apartment sharing a room with my sister so it never fazed me to live in a small space and not have a backyard—the city is our backyard,” mom of three Amy tells Michelle Cohen at 6sqft.com.

If many of your family’s favorite activities are located downtown, by all means, search for a kid-friendly neighborhood nearby.

No neighborhood offers everything a family wants but when considering whether the one you have your eye on is kid-friendly you can’t go wrong if it’s safe, walkable and has lots of playmates for your children.

Funny thing about houses – we often outgrow them. Especially in the throes of family-building, pretty soon a house is like our kids’ shoes – it gets tighter and tighter until it’s time for a new one.

The new year promises to bring a different real estate market than we’ve grown accustomed to. Hopefully, multiple offers on homes are a thing of the past and homebuyers can slow down and take their pick from among several homes, priced attractively.

If you’re considering moving up, we think 2019, especially the early part, before the Feds hike interest rates again, will be the ideal time to sell that cramped home and set your family free in a larger space.

Naturally there is more to moving up than merely needing to. So, let’s take a look at some of the factors you’ll want to consider.

Consider the financial aspects

“Bigger,” when it comes to homes at least, generally means “more expensive.” That in and of itself shouldn’t scare you away from your hunt for more room.

The equity you’ve built up in your current home may surprise you. Consider using it to make a larger-than-20 percent down payment on the new home. This may just bring your monthly mortgage payments close to what you’re paying now.

But, as we both know, there’s more to homeownership than a house payment.

• Larger homes cost more to heat and cool.
• Your property taxes and homeowner insurance may be higher
• More space comes with the cost of more money spent on home maintenance.

If it looks like a larger home may negatively impact your budget, take a look at where you can cut expenses. Put your budget on paper (or created digitally) to make it easier to scrutinize every penny you spend.

Good credit will help you afford the larger home

Depending on when you bought your current home you may find that the lending landscape has changed. Rates are still relatively low, although they aren’t expected to remain this way for long.

While lending standards tightened significantly in the wake of the housing implosion, over the past few years they’ve become more relaxed.

Credit scores, however, are still relied on when it comes to the rates offered to homebuyers.

Order your credit reports from all three major credit reporting agencies. By law, every American is entitled to one free credit report every 12 months from AnnualCreditReport.com.

Because mistakes are common, financial experts agree that even those of us who aren’t planning on buying on credit should check their reports annually.

Check yours for discrepancies in your name, address, date of birth and other personal information. Then, go over each account, looking for errors. ConsumerFinance.gov has a walkthrough of what to look for when checking your report.

If you find mistakes, file a dispute with the credit reporting company. Learn how to do so at USA.gov.

There’s more to financing than a credit score

Lenders use what is known as a DTI, short for debt-to-income ratio when calculating how much you can safely pay each month for a house payment.

You can determine your DTI by adding up how much you pay in debt payments every month. This includes items such as your car payment, the minimum amount due on your credit cards each month and all other recurring monthly debt payments.

Take the sum of these payments and divide it by your monthly gross income and then multiply that result by 100.

The last step expresses your DTI as a percent, which is what lenders look at, and, as a rule of thumb, it should never exceed 43 percent, although some experts say that the ideal DTI is no higher than 36 percent.

If yours does, consider ways to lower it. These include raising your income (taking on a part-time job) or paying down debt.

Learn more about the importance of your debt-to-income ratio at the U.S. government’s Consumer Financial Protection Bureau website.

Your current home

Lucky you if the home is paid off because you’ll have lots of equity to spend on the new home. It is estimated that 63 percent of U.S. homeowners have a mortgage payment, however, according to Lending Tree.

We’ve come a long way since the housing bubble burst. In fact, “homeowners gained more than $15,000 in home equity between the fourth quarter of 2016 and the fourth quarter of 2017,” according to CoreLogic, a property analytics provider.

Most economists expect 2018’s numbers to be even more stunning, but we’ll have to wait until spring for study conclusions to be published. The bottom line is that you may be pleasantly surprised by just how big of a nest egg you’re sitting on.

As we move into 2019, we’re facing a changing real estate market. Home prices have slowed their previously skyward trajectory, the tight inventory of homes for sale is easing and the year looks like it will be far kinder to buyers as we move forward.

Upsize your home before the Feds raise rates again and you’ll have made one of the wisest financial moves of your lifetime.

Speaking of which, we aren’t tax or financial experts, so consult with yours about upsizing.

When you want to sell your home, don’t bother asking Alexa because when we asked Google how to find a listing agent it gave us more than 6.5 million results.

Read some of the results and you’ll walk away only more confused. It seems like every real estate agent on the planet, even those who deal primarily with buyers, is an “expert” when it comes to helping homeowners sell their homes.

What they fail to let you know is that a listing agent’s primary duty is to market his or her client’s home.

So, while it’s important to feel comfortable with the agent you choose, you aren’t looking for a friendship. You are looking for an ace marketer who gets results.

We’ve learned that good listing agents share three qualities.

1. Good listing agents are exceptional communicators

The biggest complaint about real estate agents is that most are unresponsive. Calls, texts and emails go un-returned, or agents take forever to get back to their clients.

Here’s how we look at this: that period of time that your home is on the market is stressful, especially if this is the first time you’ve sold a home.

The last thing you need is to be cast adrift, with no support from the expert you hired to guide you through the process. That’s just downright wrong.

It’s too bad so many real estate agents are unable to put themselves in their clients’ shoes. So, look for an agent who does. Seek out a listing agent who responds quickly to your calls and is able to effectively communicate the sometimes-complicated aspects of the home-selling process.

2. The best real estate listing agents have abundant experience in pricing homes like yours

The homeowner has the final say in how much a home is listed for and, naturally, buyers have the final say in how much the home eventually sells for.

The listing agent, however, analyzes the market to determine a home’s current market value and makes a pricing suggestion to the homeowner.

This is a critical decision for the homeowner. Price the home too high and there will be little interest in it. Price it too low and you’ll leave money on the table.

Beware of the listing agent whose price suggestion is significantly higher than expected or higher than other agents have recommended.

It’s an old trick, performed by dishonest real estate agents, and it’s known as “buying the listing.”

What happens is that the homeowner falls for the ruse, lists the home too high and when buyers are uninterested in viewing the overpriced home, the listing agent then pesters the homeowner for price reductions.

Thankfully, this isn’t a common practice, but it does happen.

3. The best listing agent is a marketing master

Marketing masters laugh at the lazy real estate agents who employ the “list and pray” strategy. They’ll do the basics, like installing a sign at their listings, affixing a lock box to the door and, of course, taking five minutes to add a cursory listing in the Multiple Listing Service database.

Then, they’ll sit back and pray that another local agent brings in a buyer and sells the home.

Pretty pathetic, isn’t it? And, in some real estate markets, it may even work. But, why take a chance?

Marketing requires knowledge of the ideal potential buyer for your home and then laser-targeting that group. It often requires a multi-pronged approach, including a robust online plan.

It’s the most important facet of a listing agent’s job, which is why we take our marketing plan so seriously.

As you interview listing agents for the job of marketing your home, pay close attention to how they market themselves, both online and off. Ask for information on how each agent plans to market your home.

Call the agents to find out how responsive they are.

Avoid those who don’t return your calls, can’t clearly answer all your questions and those who offer amateur marketing examples.

This is an important job you’re interviewing for – take your time and hire smart.

The process of buying your first home involves a steep learning curve. From how to get started to understanding the roles of the various players in the process, it can be confusing.

Probably the most misunderstood aspect of the home buying process is the mortgage. Sadly, it’s also the most important. We see far too many real estate consumers who, in their haste to get it over with and get on with house hunting, don’t pay attention to exactly how much the loan will cost.

We don’t want this to happen to you, so let’s take a look at how to avoid overpaying for your home loan.

1: Dig deeper than the loan’s interest rate

When comparing home loans, most inexperienced homebuyers use the interest rate as a benchmark. Why not? It’s what the media focuses on and what lenders advertise.

But which interest rate are they talking about? There are two that you need to consider when shopping for a loan.

The advertised rate is typically what you’ll see first, with the APR, or annual percentage rate, located in the fine print. Because it represents the total cost of the loan, including points, fees and other loan costs, it’s the APR that you want to compare across loan offers.

Learn more about this by visiting the Consumer Financial Protection Bureau’s website.

What are points?

As you learn more about the mortgage process you’ll hear a lot about “points.” There are two types that you need to pay attention to: origination and discount points.

Origination points are often referred to as “origination fees” and it’s what the lender charges for its services. These are negotiable and represent yet another way to save money on your home loan.

Discount points, on the other hand, offer a way to “buy down” your interest rate. Each point is worth 1 percent of the loan amount. For example, for a $200,000 mortgage, one discount point equals $2,000.

And, each point that you purchase will lower your rate “from one-eighth to one-quarter of a percentage point,” according to Dona DeZube at interest.com.

When comparing loans, ensure that you are comparing “offers that include points to those that don’t and determine how much you’re really saving by paying thousands of extra dollars up front,” cautions DeZube.

To simplify the process, request that each lender put the loan’s points in dollars instead of percentages, according to the Federal Trade Commission. Not only does this help you compare loans, but it helps you understand the total cost.

2: Lock your Rate

Just as a loan pre-approval isn’t binding on the lender, neither is the interest rate offered. If you like the rate, lock it in. Rate locks typically last for 30 days but the costs depend on the number of days.

When comparing loans, ensure that you compare quotes with the same rate lock period.

Should you decide to lock your rate, ensure that it clearly states not only the length of the lock period, but the interest rate and number of points as well.

Your mortgage payment will likely become the largest check you write each month, so take all the time you need to ensure that you’re saving the most money possible.

From Ikea product hacks to painting kitchen cabinets and refinishing countertops, Americans are absolutely hooked on the DIY craze.

There are some things, however, that only a pro should tackle and that includes determining a home’s current market value.

In fact, a National Association of Realtors’ survey of for-sale-by-owners found that determining an accurate price for their home was the homeowner’s most challenging task.

Pricing your home too high or too low are both disastrous to your pocketbook.

Real estate agents and professional appraisers pretty much use the same process to determine a home’s market value. The purpose behind the two, however, is what differs, albeit slightly.

Agents are determining market value whereas the appraiser’s sole purpose is to ensure that the lender isn’t loaning more than the home is worth.

Both will compare your home to others. These other homes are known as “comps,” short for “comparable.” Let’s take a deeper dive into how a particular home qualifies as a comp for your home.

What is “market value?”

Businessdictionary.com defines market value as “The highest estimated price that a buyer would pay and a seller would accept for an item in an open and competitive market.”

Well, that’s just swell. But how do we know what a buyer will pay?

By investigating what recent buyers have paid for similar homes

Sold homes, then, are the comps agents use when preparing a comparative market analysis. Appraisers, too, use sold homes when working on figuring out how much a home is worth.

Typically, we’ll look back no more than six months for sold homes, similar in age, style and size, within a one-mile radius of yours. Yes, there are times we need to look further back in history or extend the radius, but not often.

Now you get to find out why we say it three times

Proximity is an important factor when searching for comps. So important, in fact, that some lenders require that their appraisers search no further than one-mile in all directions if the subject home is in the suburbs and five miles in rural locations.

We, as real estate agents, have a bit more flexibility. We typically start our search for comps close to the subject property and work our way out until we have at least three comps that have sold in the past six months or so.

Then, there are additional “location, location, location” aspects to compare.

A home’s location can positively or negatively impact it’s value. Positive nearby amenities include:

• Parks
• Schools
• Shopping
• Cemeteries (A national real estate company found that homes within 100 to 200 yards of a cemetery sell for an average of $17 more per square foot than those located more than 500 yards away).
• Access to freeways and highways

There are additional proximity amenities, some of which are specific to certain regions, such as proximity to the beach or golf course.

Negative influences include:

• Neighborhood condition (if the neighborhood is rundown)
• Neighbors (hoarders, sexual predators and homeowners in foreclosure)
• Traffic, train, airport or other noise
• Schools (homes in poor-performing school districts are worth less than those in high-performing districts)
• Oversupply of homes for sale
• Crime

These are just a few of the ways the location of your home impacts its value.

Comparing the condition of the home

With both the real estate agent and the appraiser, the condition of your home will carry a lot of weight when viewing the comps.

First, we’ll determine if there are any deferred maintenance issues, such as leaky plumbing, overgrown or neglected landscaping, damaged flooring, cracked tiles or window glass, among others.

Then, we’ll deduct value if comparable homes are in better condition or add value if they aren’t.

Determining how much a home will sell for in the current real estate market depends on how much buyers are willing to pay for similar homes. Those homes, as you now know, are called “comps.”

Moving is bad enough, but moving in wet, muddy, sloppy weather should be illegal.

Alas, it’s not, and if you have no choice but to move during winter, do yourself a favor and hire professional movers.

If that’s not possible, pay heed to 5 of the most important tips from the pros.

1. What will you do with pets and kids?

You’ll need to work quickly during a winter-weather move and, since children and pets tend to get in the way during periods of excitement, find a place to “stash” them during the process.

Consider asking a family member to watch the kids or hire a sitter. Pets can be placed in boarding where they’ll be safe.

2. What does the weather service say?

The best way to remain updated on weather conditions is with an app on your phone.

AccuWeather offers a free weather app and also a brilliant Road Trip Planner (you’ll need your laptop for this).

Many local TV station news departments offer apps that provide local weather alerts. In Minnesota, for instance, movers can download the CBS Minnesota app, or get road condition information from the Department of Transportation.

Check their websites or search iTunes or Google Play for a region-specific app.

3. Pack the necessities first

The last thing you’ll want to do after slogging through messy weather is to have to go through all those boxes to find the essential items you’ll need right away.

Before packing anything else, fill a box with the following:

• Old towels and rags to wipe wet floors.
• Snow/ice removal items, such as a shovel, ice scraper and a walkway de-icer
• A change of clothing for all family members (including dry shoes or boots)
• Snacks
• Food for the pets (don’t forget the bowls)
• Several large bottles of drinking water
• Any medications you take daily
• Bathroom items such as a shower curtain, shampoo, soap, toilet paper
• Valuables
• Coffee maker and everything to go with it
• Things to keep the kids occupied

Place the box in the trunk of your car.

4. Protect your electronics

“Electronic components can develop condensation as the temperature decreases,” according to the experts at Bekins. “This condensation can cause water damage or even short circuiting,” they caution.

Think “insulation” when considering how to protect your electronics. First, wrap each item in bubble wrap, then in a blanket. Place each item in a bubble-wrapped box and seal it tightly. Then, wrap the box in either bubble wrap or a moving blanket.

5. Use extra care when moving appliances

As soon as you move in, you’ll be tempted to get the washing machine and dryer set up, but don’t give in to the temptation.

Appliance manufacturers say that washers need to sit for at least 12 hours. This is to ensure that any traces of water that remained in them while moving hasn’t turned to ice, which could damage the appliance.

And, yes, the dryer needs to come to room temperature as well. Otherwise, the igniter and heating element may become brittle.

Sudden changes in temperature can also be lethal to your electronics, so unwrap them and allow them to sit for a while.

After the boring stuff is out of the way – the loan application process, choosing a lender and then hiring a real estate agent, it’s time to go shopping, the truly fun part of buying a home.

Have you started your wish list yet? The first section should be all about location – where you want to live, right down to several neighborhoods that you find appealing.

We believe in the “Google Earth” method of finding anything – start wide and then narrow down the search radius.

At the wide end of the spectrum, you’ll need to decide whether you want to live downtown, in the suburbs or a more rural area. Let’s walk through some of the terminology you may see while shopping for a neighborhood and the pros and cons of each.

1. Urban Core

The most common name for living in the heart of a city is “downtown,” but the media have introduced another term, “urban core.”

In some areas of the country, such as Austin, Texas, the word “central” might be placed before the name of the city. So, if you live in an apartment in downtown Austin you would most likely tell folks you live in “central Austin.”

Housing choices in the urban core also depend on region. They can range from luxury penthouse condos to warehouse conversion lofts and apartments that sit atop businesses.

Your neighbors will be diverse as well, including a mix of low-to-middle income folks, the affluent and seniors.

Urban core residents like their neighborhoods because the housing is affordable (again, depending on region), it’s typically easy to get where you need to go on foot, they’re close to nightlife attractions and these neighborhoods generally lack the shopping malls so prevalent in suburbia.

Drawbacks to downtown living include trying to find parking, more crime and lots of transients.

Popular urban core neighborhoods include downtown Los Angeles, Battery Park City in Manhattan and downtown Seattle.

2. Suburbs

There are as many different descriptions of the suburbs as there are neighborhoods within them. One thing most can agree on is that the suburbs are located outside of the urban core.

Sometimes called “bedroom communities,” the suburbs offer a quieter, slower pace yet lack the uber-close proximity to many conveniences and entertainment venues.

Zillow.com finds that more than half of millennial homebuyers are choosing the suburbs, so if you plan on selling your suburban home, you may want to target this group of buyers.

Money magazine studied suburbs and, in February 2018 came up with a list of “the best” in the U.S. They include:

• Peters, Missouri (a suburb of St. Louis)
• Vinings, Georgia (outside Atlanta)
• Schaumburg, Illinois (a suburb of Chicago)
• North Arlington, New Jersey (a New York suburb)
• New Berlin, Wisconsin (outside Milwaukee)

You can find the rest of the list at cnbc.com.

If you count yourself among those who dream of buying a home in the suburbs, plan on having a wide choice of home styles from which to choose: apartments, condos, townhomes and single-family homes.

Tip: Consider your commute before settling on the suburbs.

3. Subdivisions

Whether you long for the small-lot subdivisions that became popular in the Los Angeles area a few years ago or are seeking a large lot with manicured lawns and mature landscaping, subdivisions are still in great demand – especially among families.

They may be located in the suburbs or near the urban core.

Subdivisions typically offer residents amenities and what is offered depends on region, developer and the price of the homes.

Larger subdivisions may have a park or three for residents, a clubhouse, community pool, and bicycle or pedestrian trails. But the sky is the limit – literally – in some subdivisions.

Just outside of Charlotte, North Carolina you will find Aero Plantation, home to 90 families. It’s what is known as a fly-in subdivision and light aircraft have the right-of-way on all the roads. Lots are huge – 2 acres minimum – and there’s also a forest and lake in the community.

Trying to describe the typical subdivision home is futile as the variety is huge. Those with cul-de-sacs, however, typically house lots of families with children.

4. Rural areas

If you’re seeking a sense of community and want to put down “roots,” choose a rural area in which to buy a home. According to Pew Research, 40 percent of rural residents know their neighbors.

Only 28 percent of suburban dwellers can say the same while 24 percent of urban core residents know their neighbors.

This is a surprising finding, considering the sparse population of most rural communities.

Choose a rural setting for your new home and you’ll find that your neighbors exhibit a sharp divide in values and politics from the urban core dweller, according to Pew Research.

The populations of rural communities have been on the decline, so many are using incentives to attract new residents, according to a Zillow study. For instance, Tribune, Kansas, in its desire to attract new college graduates, offers the Rural Opportunity Zone program.

“They’ll help you pay off your student loans — up to $15,000 over the course of five years,” according to Brittan Jenkins at Business Insider.

Once you’ve decided on the type of “developed human settlement” (as Wikipedia calls them) that best appeals to you, narrow your home search to the neighborhoods that include the type of home you want and the price range.

Contact us, we’re happy to help.

Whoever coined the phrase “Bridezilla” must’ve been referring to the bride (or groom) who was juggling wedding planning with homebuying.

Believe it or not, many couples avoid the chicken and egg scenario (what comes first, the wedding or the house?) and decide to do both processes simultaneously.

It sounds crazy, but if you have a system and some professional guidance,  you can be successful.

Read on for our tips to get you from chaos to homeowning spouses.

It all comes down to money matters

Since the first step in a home purchase is getting a loan, you’ll need to decide if you should both apply or just one of you.

If you go for the joint mortgage, the lender will combine both applicants’ income, assets and debts. If one of you has a lot of debt, it will weigh down the application.

If, on the other hand, you’re like the average couple, where one of you looks better on paper than the other, perhaps that one should apply for the loan.

In many cases, one half of the couple has good credit but a lower income than the other. The lower income limits the amount of loan you’ll qualify for, while the high credit score may help you get a better mortgage rate.

You may want to sit down with your financial professional for the best advice on how to approach the mortgage application process.

You must consider the unthinkable

Although it may be unthinkable right now, there is a chance that you may not make it down the aisle. If you don’t, you will be among the nation’s 25 percent of failed engagements (according to Time magazine).

So, even though it’s unthinkable, you should be prepared for it, just in case. The best way to do this is to meet with an attorney about how you should divide the property, should a breakup occur. This is especially important if only one of you is on the home’s title.

To be extra safe, have your lawyer prepare a written agreement that both of you can sign.

While it’s not nearly as romantic as planning a honeymoon, planning for the successful purchase of a home before you tie the knot is important.

Feel free to reach out to us with any questions you may have. We love to talk about real estate!

A Sacramento area HOA created a requirement that insisted homeowners keep their garage doors open from 8 a.m. until 4 p.m., Monday through Friday. If they refused, they would be fined $200.

Apparently, the HOA hoped this invasion of homeowners’ privacy would prevent them from renting out their garages as living spaces. The requirement was later rescinded.

An Orlando area HOA ordered Robert Brady, a 70-year-old Vietnam veteran who has lived in his current home for 45 years, to get rid of his dog.

Brady, who has a letter from the VA stating that the dog is a mental-health therapy dog and helps keep the man’s problems in remission, was told that “Bane” exceeds the HOA’s weight restriction of 35 pounds. The dog weighs 40 pounds.

Say the words “homeowners association” and most of us come up with an image of a gang of power-hungry, nosy, petty despots.

The reality

Despite what we read in the media, 63 percent of Americans who live in communities managed by homeowners associations say they are satisfied with their communities, according to the Community Association’s Institute 2018 Homeowner Satisfaction Survey.

Only 38 percent of those surveyed, however, say members of their elected governing board “absolutely serve the best interests of their communities.”

Obviously, there is a distinction with one being satisfied with a community overall yet dissatisfied with their HOA.

Whether their reputation is over-hyped or well-deserved, HOAs offer both disadvantages and advantages to their members.

 

Dues: the most obvious disadvantage

One of the most obvious disadvantages of buying a home in a HOA-governed community is the monthly fee you’ll be required to pay. Don’t pay it and the association can (and most likely will) slap a lien against your property and, possibly, push your home into foreclosure.

These payments are a lot easier to tolerate if you consider them as helping to ensure your property’s value.

A 2017 Trulia study puts the average HOA fee, nationwide, at $331. Of course, the fee varies, depending on the services provided by the HOA and the community’s amenities.

When you pay the fees also varies, from monthly to yearly and, sometimes, quarterly or semi-annually.

The HOA uses this money to maintain and improve the common areas, to pay for taxes and insurance on the common areas, to enforce the rules and to pay legal fees. They will also use a portion to fund the reserve account – monies put aside to pay for unexpected major expenses or planned long-term projects, such as roof replacement or landscape upgrades.

 

Then there are the special assessments

Sometimes the HOA doesn’t have the funds to remedy an unexpected expense. Ideally, the reserve fund will have sufficient money in it, but, when it doesn’t, it falls to the homeowners to fork over what’s needed.

How the assessment is determined depends on the HOA’s governing documents. Most often, the governing board will make the decision while some HOAs require that the membership be given a vote before the imposition of a special assessment.

 

If you are considering buying a home in a managed community

Once your offer is accepted, you’ll receive a package of HOA documents to examine. It’s often a huge stack of paperwork, filled with legal terminology.

We urge our clients to consult with an attorney to help them decipher the documents. Once you accept them, you have no recourse but to abide by what’s in them.

Pay special attention to the Declaration of the Covenants, Conditions & Restrictions, or the CC&Rs for short. This document outlines how you can use the home, and how you can’t. For instance, it may contain a weight limit for pets, it may dictate your front yard landscaping and what window coverings are allowed.

The meeting minutes might also be of interest to you. Look for homeowner complaints. More important, look for the same complaints repeated over a number of meetings. This is an indication of an unresponsive HOA.

The financial documents can give you an idea of how the board handles the HOA’s finances. How much money is in the reserve fund? Check the history of special assessment impositions and the HOA budget as well.

When you buy a home governed by an HOA, you’ll not only pay a fee each month, but your use of the home and the property on which it sits will be decided by people you may not even know.

For those reasons, it pays to read the documentation carefully and see an attorney with any questions you may have.