Browsing Category

hoa

What Is a Condo? Condo vs. Apartment vs. House, Explained

September 30, 2020

what is a condo

golero/iStock

Table of contents: 

  • What is a condo?
  • How condos work
  • How much are condo fees?
  • What is an assessment?
  • Condo vs. apartment: What’s the difference?
  • Condo vs. house: What’s the difference?
  • How to buy a condo
  • Questions to ask a condo board

 

What is a condo?

What is a condo? Short for “condominium,” a condo is a private residence within a larger building or complex.

The first condo in the United States was built in Salt Lake City in 1960, according to Matthew Gordon Lasner, author of “High Life: Condo Living in the Suburban Century.” Since then, this residence style has truly taken off. Currently, there are approximately 17 million privately owned condominiums in the U.S.

Condos might look like a lot of other types of real estate you may have heard of—like apartments, co-ops, or townhouses—but condos have their own distinct features, rules, pros, and cons. Here’s what condos are all about, and how they’re different from other structures in which you can live.

How condos work

Since a condo is part of a larger residential structure (although “detached condominiums” also exist), condo residents typically share certain common areas and amenities with their neighbors.

So what does this mean for a condo owner? It means you and your neighbors might park in a common parking lot or garage. You might use the same rec room or roof deck, or bump into one another at the condo complex’s swimming pool or gym.

Furthermore, these shared areas and amenities are enjoyed by all condo members without the need to maintain them on their own. Instead, condo owners pay dues to a board (typically made up of elected condominium owners) who then handle the hiring of landscapers, pool cleaners, and other professionals for anything that must be maintained or fixed, from faulty elevators to gopher infestations in common areas.

How much are condo fees, and what do they cover?

Average condo fees range from around $100 to $700 per month, although these fees can go much higher based on what amenities they cover. If the condo complex has high-end shared features such as a swimming pool, gym, and spa, condo fees can be several thousand per month.

what is a condo
Some condo complexes come with swimming pools.

typhoonski / Getty Images

Generally, condo fees pay for the maintenance of any amenities outside your personal living space that you share with your neighbors.

“Condo fees are your percentage share of the costs to run the building as a whole,” explains Janice Pynn, president of Simerra Property Management.

And in case you think your condo fees are too high, know this: No one pockets a cent of your checks or is getting rich off condo dues.

“They are not a profit source for building management; in fact, each building is registered as a nonprofit corporation,” Pynn points out. In other words, these fees go solely toward enhancing the value of your real estate, which is a good thing!

Here are the services and amenities you can expect your condo fees to cover:

  • Interior maintenance: Condo owners share the cost of maintaining common building areas like parking structures, storage rooms, laundry rooms, game rooms, fitness centers, saunas, and hallways, as well as mechanical systems like heating, cooling, electric, gas, plumbing, and elevator maintenance. If a crew comes regularly to clean the common spaces, its fees are also included.
  • Exterior maintenance: Condo owners also share the cost of exterior common areas like fences, walls, gates, pools, landscaping, and window cleaning, and seasonal expenses like snow removal, winterizing, and cleaning out rain gutters. If a gardening crew comes regularly to take care of the landscaping, its fees are also included.
  • Security: This could range from cameras at the entrance to full-time guards patrolling the grounds. If visitors have to be buzzed in to the building, this system will be covered by your condo fees.
  • Utilities: Most developments’ condo fees cover utilities such as water, sewer, and trash. Some buildings even include heat, electricity, cable, and Wi-Fi. Remember that the more utilities covered, the higher your condo fees will probably be.
  • Insurance: Most condo fees include a homeowners insurance policy that covers exteriors and shared common areas. Depending on where the condos are located, the insurance policies might also cover flood and/or earthquake damage. The nice thing here is that condo owners need only to purchase insurance policies that cover the interior of their home and their possessions.
  • Reserve fund: There are expenses that don’t come up on a monthly, or even an annual, basis that will need attending to, so a well-managed condo board will charge owners a certain amount per month that will go into a reserve fund. It would cover things like paving, reroofing, replacing water heaters, exterior painting, hallway and lobby flooring and redesign, and more.

What is an assessment?

In addition to your monthly condo fees, special assessments might arise. Every once in a while something big (e.g., a roof or an elevator) gives out, and there aren’t enough reserve funds to cover it. In that case, the condo owners will have to pay an extra fee for these additional expenses, typically tacked on to the usual monthly condo fees in small amounts until the assessment is paid off.

At times like these, it’s best to remember that, as with any type of homeownership, unforeseen expenses arise, and making the necessary repairs is in your best interest. In other words, you get out what you put in.

In addition to collecting dues, a condo board also enforces rules and regulations that owners agree to abide by when they purchase their condominium. The board can regulate everything from the size and number of pets you’re allowed to the ages of the people living in your unit. Retirement condo communities, for example, can legally require that all long-term residents be over the age of 55.

So if you’re looking into buying a condo, make sure to study up on the condominium association rules (called covenants, conditions, and restrictions, or CC&Rs) and fees.

Condo vs. apartment: What’s the difference?

While condominiums and apartments might look exactly the same—a residence in a larger building—the key difference has to do with who owns the property. Condos are homes you can buy, own, and sell when you wish. Apartments are places you can rent, but do not own.

Another key difference between a condo and apartment has to do with property’s maintenance and repairs. With a rental, the apartment’s owner—often called a landlord—is typically responsible for any maintenance and repairs inside the unit as well as out. So for instance, if a renter’s faucet drips or they’ve got pest problems like mice or roaches, all they need to do is call the landlord to come fix the problem.

Condo owners, in contrast, are responsible for any repairs or maintenance inside their unit.

Condo vs. apartment: Which is better for you?

Whether you should buy a condo or rent an apartment can be a tough decision, since each scenario comes with distinct pros and cons. For instance, renting an apartment is great if you’re not sure how long you’ll stay in the area, or don’t want the hassles of maintaining your residence.

Buying a condo, however, makes more sense if you plan to stay in an area for at least a few years, and are willing to maintain your property (by paying repair professionals or by doing the work yourself).

Here are some other factors to consider.

  • Cost: Condos are meant to be purchased. Even if you get a mortgage, condos will typically require a down payment (typically anywhere from 3.5% to 20% of the price of the property). If you lack a chunk of money to offer upfront, then you’ll probably have to rent, which typically requires lower upfront costs (like first and last month’s rent and one month’s security deposit). That said, depending on the inventory available in a particular area, the monthly costs of renting vs. owning could be similar. As such, it’s worth comparing these two options with an online rent vs. buy calculator.
  • Home equity: Probably the main advantage for being a condo owner over a renter is that condo owners gain equity in their real estate over time. As they slowly pay off their mortgage and owe less on their property, they own bit more of their condo free and clear, month by month. Once the mortgage is fully paid off (which can take up to 30 years), they own the property in full. This is in stark contrast to renting, where you pay your landlord rent every month but do not gain equity.
  • Freedom: Condo owners are able to make changes to the property from painting the walls to renovating the kitchen. Meanwhile, renters are not allowed to make any permanent changes without their landlord’s permission.
  • Housing quality: Since homeowners tend to care more about their property than renters, condos tend to be better built and maintained than rentals.

Condo vs. house: What’s the difference?

But what if your real estate debate is whether to buy a condo vs. house? Take a look at the differences between these two popular residential options, and the benefits each can provide to you and your family.

  • Price: Condos are usually more affordable than a house, and are thus great starter homes for younger home buyers. To figure out how much you can realistically spend, try using an online home affordability calculator.
  • Location: If you want to be in the heart of the city, condos will be more prevalent. Single-family homes at around the same price could be found, but likely farther out from metro centers, which might entail a longer commute.
  • Privacy: Having complete privacy is possible in a single-family house, while condo living means neighbors will be quite close. Condos may not offer private outdoor space.
  • Freedom: Many condo communities have strict rules about everything from paint choices to the hours when you can take out your trash cans. As a result, a condo complex isn’t a great idea for fiercely independent homeowners who don’t want anyone telling them what they can and can’t do with their property. Single-family home communities tend to be more lenient.
  • Maintenance: With a house, the homeowner will have to take care of any maintenance, whereas condos include maintenance fees that cover landscaping and (sometimes) exterior maintenance on the unit. As such, condominiums are often ideal for people who want to own a piece of real estate but don’t want to worry about yardwork and repairs.
  • Budget: How much do you want to spend on the property? Condos are usually more affordable than a house. Give this point considerable thought. The last thing you want is to overextend financially. Try using an online home affordability calculator to help pinpoint a budget.

How to buy a condo

what is a condo
Condos are often more affordable than houses, which attracts first-time home buyers.

ablokhin / Getty Images

We totally get why people buy condos: They’re cheaper and require less maintenance than a traditional house (no mowing the lawn). Plus, they’re often stacked with cool common amenities from pools to gyms. What’s not to love? Yet while condo living might seem carefree, buying one is not necessarily a simple task.

Here’s how to buy a condo, how it’s different from buying a house, and a few insider tips to pave the way to ownership.

Consider your unit’s surroundings

While the condo unit itself is a key consideration, it’s also important to carefully check out the environment around it—particularly when it comes to noise. Remember, you’ll be sharing walls with your neighbors, and perhaps even ceilings and floors.

“I always suggest my buyers book a showing during typically ‘louder’ times of the day, such as dinnertime when kids are home, to see how well the walls actually dampen the noise,” says David Nelson with the Imperial Home Team in Minneapolis. He also recommends asking a few of the neighbors about general property noise, such as how loud the traffic and surrounding neighborhood are, and if they can hear their neighbors through the walls.

The unit you choose can play a large role as well.

“End units share fewer walls than those in the middle, which can lessen neighbor noise,” says Nelson. Of course, that’s also one of the reasons why end and top-floor units are more coveted—and often pricier—but if you’re sensitive to noise, that could be money well spent.

Check out the condo board and association

When you buy a condo, you’re buying into the entire community—including its rules on everything from when and where it’s OK to let your dogs off the leash to whether RVs are allowed in your driveway. Most states will have a designated rescission period to peruse relevant documents. During this period, you’ll want to carefully read through the community’s covenants, conditions, and restrictions, or CC&Rs, as well as penalties for not following them.

“When a buyer agrees to the association documents, he or she is automatically bound to the condo board’s rules,” says Nelson. These typically entail parking space allowances, regulations related to pets, and homeowner responsibilities for repairs and maintenance.

“If there is something in the association bylaws that you as a buyer don’t agree with, and it is still within the rescission period, you can back out of the home purchase and usually get a full refund of any earnest money,” says Nelson.

Prospective condo buyers should also do their due diligence on the condo association’s finances, because this will affect your odds of getting a loan (more on that next).

Secure condo financing

In some cases, it can be trickier to secure a mortgage for a condo than a traditional home because the health of the condo development hinges on multiple owners paying their bills. Your mortgage lender is apt to conduct a thorough review of the condo complex as a whole, including documents relating to the overall health of the building and the condo association. The good news is that you can consider this an extra layer of due diligence to protect your own investment.

Prep for your condo interview

Sure, you’re checking them out, but they’re checking you out, too. Once your offer is accepted, many condo associations require prospective buyers to interview with the condo board. Don’t worry: These interviews must comply with all regulations against unlawful discrimination—the goal is to ensure that you can afford the home and fully understand condo rules. This is also your chance to ask questions about any of those rules, and also get a feel for some of the people you’ll be living with—so consider it less of a firing squad and more like a first date.

Questions to ask a condo board

“One of the biggest considerations when purchasing a condo is who manages it,” says Nelson. That’s why, before you sign on the dotted line, you should arm yourself with these questions for the condo board to make sure it’s the right fit for you.

  • What are the fees? Most condos have a monthly fee that can range from $200 to $400 (an upscale development with tons of amenities will cost more). Ask the board exactly what that fee covers—after all, you’ll be shelling out month after month, and year after year. What’s usually included is anything outside your condo, from cleaning public areas to removing snow to maintaining the community pool. Owners themselves generally pay for whatever is inside the walls of their condo, like painting and appliances. Make sure what you’re getting is on par with what you’re paying for, says Nelson. And always ask if the board sees the fee rising anytime in the near future, and how much it’s risen in the past.
  • Can I see the financial statements? A condo’s financials should be an open book (or, more accurately, a spreadsheet). And don’t worry if you’re not an accountant. You should quickly be able to determine if a condo’s income and expenses match up—a red flag would be more money going out than coming in. Also eye the condo’s reserve funds to see if it’s healthy enough to cover any unforeseen expenditures. If not—and the pool pump breaks—that could result in more money coming out of your pocket to fix the problem via an assessment (see our next point).
  • Are there any upcoming assessments? Assessments are periodic, one-time payments made to the association above and beyond the monthly fee, usually to cover capital improvements or repairs. So if the association plans to replace all the windows in the common areas or add a gym, you could end up blindsided by a huge extra bill—unless, of course, you ask ahead of time.
  • What are the rules? Each association has its own unique bylaws and regulations, which all buyers should review before their purchase, as they have to live by them afterward. So make sure you read every single one. Many of the rules are mundane, dictating where residents or guests can park. But some condos have rules that can range from no holiday decorations on your front door to limits on hours for barbecuing. Another biggie in condo rules is whether a homeowner is allowed to rent out their home, and for how long. While you may not want to rent it out, the ability to do so—or not—could affect your resale value. Did we mention that you should read the rules? Read the rules.
  • Are there any pending lawsuits? Lawsuits are a potentially huge financial drain on any condo board that loses in court. And even if there are no pending suits, a quick check of a condo’s liability insurance to make sure it’s up to snuff can’t hurt.
  • Who is the caretaker? Properties generally have a manager on-site to oversee day-to-day tasks. An employee who has been with a condo for a long time is generally a good sign your calls will be answered in case a maintenance issue pops up.

The post What Is a Condo? Condo vs. Apartment vs. House, Explained appeared first on Real Estate News & Insights | realtor.com®.

If COVID-19 Closed Your Pool or Gym, Can You Skip Paying HOA Fees?

June 1, 2020

hoa fees

MARC SOLOMON / Getty Images

Buying a home in a community with a homeowners association comes with many perks—such as a maintenance crew to take care of the lawn, gym, swimming pool, or other shared areas enjoyed by HOA members.

But the COVID-19 pandemic has forced many HOA-run facilities to close. In a recent survey by the Community Associations Institute, or CAI, 79% of HOA communities said they had closed common areas and amenities.

Which begs the question: Do you still need to pay HOA fees?

HOA fees to maintain these facilities, after all, typically run between $200 and $300 a month, but can be as much as $1,000. So if they’re closed, it stands to reason you don’t have to pay for them, right?

As much sense as that might make, the answer is typically no.

“There are very few associations, if any, that are waiving fees” because of the pandemic, says Dawn Bauman, senior vice president of government and public affairs at CAI.

Granted, some HOAs have waived late fees or are working with homeowners unable to pay during this pandemic, she explains. But no, they’re not granting full-fee reprieves—and could even raise fees during this time. Here’s why, and what to do if you can’t pay your HOA fees. (And since much of the same is true for many condo associations, condo owners should take note, too.)

Why you still have to pay HOA fees during COVID-19

More than 25% of the U.S. population lives within an HOA, according to CAI. Living in these communities comes with rules, referred to as covenants, conditions, and restrictions, or CC&Rs.

“When an owner purchases a home in an association, the deed of that home is restricted,” Bauman says. “It’s restricted because they are part of the homeowners association, so there are restrictions that come with ownership of that home. So, they sign saying, ‘I will pay my assessment and I’m obligated to conform with the rules in the community.’”

In short, homeowners likely have no legal recourse for not paying their fees—even when amenities are closed. However, this doesn’t mean that HOAs are just raking in your money and getting rich off the profits.

How HOA budgets work

Community associations aren’t set up to rake in cash; the fees collected pay the association’s bills, says Jim Slaughter, real estate broker and partner in the law firm Black, Slaughter & Black in North Carolina.

“Monies collected by an HOA or condo typically aren’t retained, but are forwarded to others, such as the power company, plumber, and insurance carrier,” he says.

Bauman says HOAs operate on a “zero-based budget.” HOA fees may also be put in reserves for current or future maintenance or capital improvements for the community. Lowering these fees, however, is typically not possible. This is because most HOA expenses are fixed, and will continue through the pandemic.

“For instance, association pools must be treated even if closed, and some associations have increased costs due to increased cleaning of common areas such as lobbies and elevators,” Slaughter says.

Plus, associations are usually under contract with vendors for repairs and maintenance. As such, expenses can’t be temporarily canceled or reduced unless the vendor allows it, which is unlikely.

Another possible expense HOAs may need to compensate for are any homeowners within the community who may not be able to pay dues right now, due to layoffs or otherwise.

“With the extended health and economic crisis, many HOA and condo association boards are concerned about association finances and how to possibly assist owners financially,” Slaughter says.

In fact, the CAI’s survey found that 50% of HOAs are expecting fee delinquencies to grow in 2020.

Why HOA fees might rise due to COVID-19

In some cases, if certain homeowners can’t pay their HOA fees for an extended period of time, the HOA could raise the rates for those who can pay, Bauman says, “because there’s nowhere else for this money to come from.”

Furthermore, the pandemic is prompting many HOA communities to buy more supplies, such as masks and hand sanitizer, and conduct extra cleanings of common areas. As such, they might even raise fees to cover these expenses as well.

Another potential fee hike down the road may involve their reopening amenities that were closed, only with added safety measures that cost more money to maintain.

“Most associations are trying their best to determine how to open these amenities in a way that is manageable for the residents in their communities,” says Bauman. “And that will then lead to potentially additional expenses on the community.”

What to do if you can’t pay your HOA fees

If you can’t pay your HOA dues, don’t panic—Bauman says many communities will work with you through payment plans or delayed payments.

More than 90% of homeowners were still paying their HOA fees at the beginning of May, according to CAI’s survey. However, about 20% of communities have said they’ve seen more homeowners ask for payment plans or other kinds of reprieve, and many communities are waiving late fees.

Homeowners struggling to pay their HOA fees should reach out to the community’s board of directors or management to discuss their situation and find out what their options are, Bauman suggests.

Many associations have dealt with this situation before, during the Great Recession of 2008, she says, and likely have policies for payment plans and other ways to help residents.

High rates of delinquency could have long-term effects on the community as a whole, however. Lenders, including Freddie Mac, Fannie May, and Federal Housing Administration, will not back mortgages in communities with a delinquency rate of 10% or higher, Bauman explains. This could influence home buyers’ decisions to purchase in the area.

“Most HOAs are not pursuing aggressive collection tactics,” Bauman says. Instead, “they are trying their best to make it more manageable for the residents who are unable to pay while balancing the interests and the financial need of those residents that are paying.”

The post If COVID-19 Closed Your Pool or Gym, Can You Skip Paying HOA Fees? appeared first on Real Estate News & Insights | realtor.com®.

HOA Ruining Your Life? 8 Things It Can’t Do—and How You Can Fight Back

January 15, 2020

Living with a homeowners association (HOA) can come with a legion of perks—like gorgeously manicured common lawns, swanky amenities, and some rad Fourth of July barbecues.

But there’s a reason that a stigma exists against homeowners associations: Board members on a power trip can institute and enforce some ridiculous restrictions.

Ridiculous, like “restricting the color of trampoline covers” ridiculous.

Like “You must keep your garage door open during the day” ridiculous.

Like “You must carry your cocker spaniel through the lobby” ridiculous. (Come on!)

Even when you feel as though your HOA rules have turned into an implacable steel trap determined to ruin your life at every turn, find comfort in this: Homeowners associations are bound by the rule of law, no matter what the president of the board says.

State and federal law restrict the homeowners association’s abilities to restrict you.

Below, find eight things HOAs can’t enforce on homeowners.

1. Discriminate undiscriminatingly

Your homeowners association board might like to play at being tyrants, but here’s a line it can’t cross: the Fair Housing Act.

“An association must be careful enacting and enforcing rules that would single out or disadvantage any group identified in the Fair Housing Act,” says Craig T. Smith, a lawyer in Hilton Head Island, SC.

That means that your homeowners association can’t fine you or keep you from purchasing a home in the neighborhood because of your ethnicity or race.

It also can’t kick you out because members of the board hate your religion, or don’t like Germans, because you have children, or because you wear a Make America Great Again hat on a regular basis.

States often have additional protections safeguarding the homeowner. For example, California law protects sexual orientation and gender identity.

2. String you out on the (clothes)line

Nineteen states have laws on the books to prohibit a funny HOA restriction: your right to “solar drying.” (That’s a fancy term for using a clothesline.)

This time-honored tradition saves money and protects your clothes, but to your eagle-eyed HOA board, all those fabrics blowing in the breeze may not look “uniform.”

Too bad, buckaroos: Since almost half of states protect your right to dry, any anti-clothesline additions to the covenants, conditions, and restrictions (CC&Rs) are downright unenforceable. Feel free to let your denim wave in the wind.

(There’s one caveat: If your backyard is shared with another homeowner, the HOA might have the right to restrict your strung-up lines.)

3. Fine you for fun

Fines are the lifeblood of a malicious HOA—and we cannot, unfortunately, tell you that they’re blatantly illegal. But they “must be set forth in the association’s rules and bylaws,” says Barbara Jordan, a real estate lawyer in Columbus, OH.

Are threatening letters making an appearance in your mailbox, telling you to trim that rosebush or face a fine? Check the community’s CC&Rs before complying. If that fine isn’t listed, you might not need to pay.

Of course, that doesn’t mean your HOA board will roll over, either; you might need to appeal the fine.

If so, first scrutinize those CC&Rs to make sure you have standing. Then, gather all the evidence you have and present it at the next board meeting. (Your HOA may have specific instructions for this process—make sure you follow them!)

If your argument is sound, it could pull back the charges.

4. Make decisions on the fly

Your community’s HOA treasurer can’t suddenly decide she hates pink mailboxes. Next time Shirley Homeowner comes over complaining, practice these magic words: “Is that mentioned in the CC&Rs?”

And slipping HOA rules in under the cover of darkness is a big no-no. The regulations for how new rules can be enacted should be outlined in your CC&Rs—and if the HOA isn’t following its own stipulations, you have a valid complaint for any secret swashbuckling.

If you do suspect something shady is afoot concerning what is included (and what isn’t included) in your HOA rules, start requesting documents and attending public meetings.

5. Demand you take down your dish

Your cable TV decisions are protected, thanks to the FCC’s Over-the-Air Reception Devices Rule. No matter how ugly your HOA thinks your space-gray satellite dish is, the board members can’t force you to take it down. Hello, cheap cable!

You might find that some HOAs still have antenna restrictions written into their covenants. These may be retro artifacts from pre-1997, when the FCC rule came into play.

If you spot these curious addenda in your CC&Rs, take your concerns straight to board members. After all, you have the federal government on your side!

6. Nix native plants

Not all states protect your right to grow an environmentally friendly garden abundant with native plants. But if you’re in Texas or California, you can push back if the board’s not savvy with agave.

Florida, too, has its own homeowner-friendly rules: HOAs can’t restrict plants simply because they’re not in the community’s overall design plan.

If you’re a homeowner in one of those states, persuading your HOA to embrace eco-friendly policies isn’t impossible. With the right attitude and enough evidence of go-green benefits, you might just convert the entire neighborhood.

7. Keep you out of court

Snippy HOAs might make you think they’re above the law—but if you’re truly in a bind, you can challenge that assertion.

Chances are good (although not certain) that you’ll have the upper hand in a proper court of law, Smith says, especially if the board of directors acted in an underhanded manner.

If the association’s governing documents allow it, start by demanding a hearing before the board. If that demand is met with silence, take it one step further: to the actual courts.

“This is typically a move of last resort,” Smith says.

But if you’re past the point of mild frustration, a lawsuit might do the trick. Homeowners have sued their board for the right to display a sign critical of the HOA.

One Olathe, KS, homeowner successfully filed a lawsuit to keep his elaborate landscaping—which another resident said was the “nicest-looking [landscaping] in the entire neighborhood.”

8. Beat you down

No matter how many letters and fines the board throws at you, you still have rights.

“Show up,” Jordan says. “Go to the meetings. Be on record as objecting to the issues. Write letters.”

Just make sure to follow the process for objections.

“Do not miss deadlines or forgo opportunities to be heard,” Jordan says. “That will only hurt your case.”

And do what you can to get your neighbors on board. Together, you can call for new elections or push to scrap excessive or unnecessary rules.

The post HOA Ruining Your Life? 8 Things It Can’t Do—and How You Can Fight Back appeared first on Real Estate News & Insights | realtor.com®.

A Homeowner’s Guide to HOAs: Homeowners Associations, Explained

August 30, 2019

A Homeowner's Guide to HOAs: Homeowners Associations, Explained

Bartek71/iStock

Table of contents: 

 

Many homes across the United States are part of an HOA, or homeowners association. So what does that mean?

In a nutshell, an HOA helps ensure that your community looks its best and functions smoothly. If you’re buying a condo, townhouse, or free-standing home in a neighborhood with shared common areas and amenities (such as swimming pools, parking garages, and security gates), odds are high these areas are maintained by a homeowners association.

The number of Americans living in homes with HOAs is on the rise, growing from a mere 1% in 1970 to 25% today, according to the Foundation for Community Association Research.

Is buying a home with an HOA right for you? We’ll help you decide by laying out the pros, cons, and costs of an HOA.

What is a homeowners association?

What is an HOA?
WHAT is an HOA anyway?

designer491/iStock

Let’s say, for instance, that the pump in the community swimming pool stops working. Someone has to take care of it before the water turns green and toxic, right? Rather than expect any one homeowner in the neighborhood to volunteer his time and money to fix the problem, homeowners associations are responsible for getting the job done.

You can think of the purpose of an HOA as similar to real estate property taxes that a homeowner pays for city and state services—except that in this case, these fees go to pay for amenities and maintenance in your own community or condo building.

How much are HOA fees?

To cover these property maintenance expenses and repairs, homeowners associations collect fees or dues (monthly or yearly) from all community members. For a typical single-family home, HOA fees will cost homeowners around $200 to $300 per month.

HOA fees can be lower or much higher depending on the size of your house or condominium and the services provided. The larger the homeowner area, the higher the HOA fee—which makes sense, because the family of four homeowners in a three-bedroom condominium is probably going to be using the common facilities more than a single resident living in a studio condo.

Many HOAs pay property managers to oversee maintenance and deal with other real estate–related property issues. HOA fees might also include insurance payments to cover common areas.

HOA fees are usually divided into two parts: One portion goes toward monthly expenses, and the remaining money goes into a reserve fund. This reserve fund serves as a safety net, to be tapped for emergency expenses that arise when natural disasters or vandals strike—or just the unavoidable wear and tear. They’re also used to cover long-term repairs and replacements such as roofs, plumbing, and exterior paint.

What is an assessment?

Be aware that when your community is hit with extreme maintenance expenses—like a flood in the underground parking lot due to a broken water heater or a pipe bursting—homeowner insurance will cover some of it, but whatever’s left will have to be paid by your HOA.

Typically in these cases, the HOA will tap the reserve fund, which may become depleted as a result. Or the association may not have enough in reserve to cover necessary expenses. In either case, your HOA board may require you and your fellow homeowners in the community to pay a special assessment bill above and beyond your monthly HOA fee.

For example, if the elevator in your condo building goes out and it’s going to cost $15,000 to replace it—but the HOA reserve account holds only $12,000—you and the rest of the residents are going to have to pony up at least an additional $3,000 in dues, divided among you, to make up the difference. And yes, you as a resident still have to contribute your share of dues, even if your property is on the first floor.

Luckily, though, these assessments are typically temporary until the reserve is back up to a comfortable level.

HOA rules: What to expect

All HOAs have boards made up of homeowners in the complex who are typically elected by all homeowners. These board members will set up regular meetings where owners can gather and discuss major decisions and issues with their community. For major expenditures, all members of the HOA usually vote, not just members of the board.

In addition to management of the common areas, homeowners associations are also responsible for seeing that its community members follow certain rules and restrictions. These rules will be spelled out in the covenants, conditions, and restrictions, or CC&Rs.

What are CC&Rs? Common restrictive covenants

Simply put, CC&Rs are just the rules you’ll have to follow if you live in that community. Unlike zoning regulations, which are government-imposed requirements on how land can be used, restrictive covenants are established by HOAs to maintain the attractiveness and value of the property.

Restrictive covenants differ from community to community, but there are some you can expect to see:

  • Permissible colors for exterior house paint
  • Minimum property and landscaping standards
  • Types of fencing allowed
  • Types of window treatments allowed
  • Limitations on the type of security lights you can attach to the house
  • Controls on installing sporting equipment such as a basketball hoop in the driveway
  • Restrictions that limit vehicle storage or recreational vehicle parking
  • Curbs on property uses that generate noise or smells (e.g., raising livestock)
  • Rules on commercial or business uses of land reserved for residences

 

When to review your CC&Rs

After your offer to buy a home is accepted, you are legally entitled to receive and review the community’s CC&Rs over a certain number of days (typically between three and 10). Warning: Some CC&Rs can be hundreds of pages, but given these are the laws you’ll have to abide by, this is required reading that you skip at your own peril.

If you spot anything in the restrictive covenants you absolutely can’t live with, you can bring it up with the HOA board or just back out of your contract completely (and keep your deposit). It may seem extreme, but if this is the place you hope to call home, living with rules that seriously cramp your style may just not be worth the trouble.

Can you change restrictive covenants?

Restrictive covenants, however, aren’t set in stone. They can be contested and changed with a majority vote of the shareholders, aka neighbors in your development. This can work for or against you depending on where you stand.

Bruce Ailion, a real estate agent and attorney for Re/Max Town and Country in Atlanta, says he has seen neighborhoods tighten regulations by issuing fines for cars parked in the streets, bicycles left outside the garage, nonstandard mailboxes, and other potentially petty problems.

“Yes, restrictive covenants keep the appearance of the property up and can prevent eyesores such as wrecked cars, unkempt lawns, and oddball home colors,” Ailion says. But he admits there are times when CC&Rs can be so restrictive that they start infringing on the rights of their residents.

But even in that case, there are things you can do. In January 2016, for instance, when an HOA in Keizer, OR, wouldn’t allow a family to park their RV in their driveway—a necessity for their disabled child—the family fought back with a lawsuit, arguing that the Fair Housing Act requires HOAs to make “reasonable accommodations” for people with disabilities.

The bottom line: Restrictive covenants are meant to protect residents, but they can be changed if they’re out of line.

What happens if you violate HOA rules or can’t pay your HOA fees?

First off, rest assured that most lending institutions take the HOA fee into consideration when they write up your mortgage. In other words, they evaluate your monthly income compared with your monthly expenses, and they won’t make a loan on the desired property unless they feel you can safely cover everything: your mortgage payment, taxes, and HOA fees.

But life happens. If you lose your job or are unable to pay your HOA fees, you might be able to work something out with the HOA board. Be sure to talk to the board before you miss even one payment.

If you break your HOA’s rules, the consequences could be severe, and potentially, HOA management could evict you from your property. Fall too far behind on paying HOA fees, and the penalty could be the same as if you fail to make your mortgage payments.

Bob Tankel, a Florida attorney specializing in HOA law, says the board may have the right to foreclose on your property.

Pros and cons of an HOA

Home shoppers weigh a laundry list of factors before purchasing a home. Location, price, size, and style are all taken into consideration. But for some, a home in a community with a homeowners association could either sweeten the pot or be a major deal breaker.

“I have had clients who specifically want this type of situation, and others who refuse to buy in a community that has one,” says Bill Golden, an independent real estate agent with Re/Max Metro Atlanta Cityside.

Want to know what makes buyers swing one way or the other? The following insights will illustrate the best and worst qualities of HOAs and help you decide if living in this type of community is right for you.

Pro: HOAs maintain common areas

HOA maintains common areas
HOA maintains common areas like the pool.

emreogan/iStock

Your community’s HOA will be responsible for handling all maintenance of common areas and repairs for the amenities outside your home. It’s perhaps the biggest perk of living in an HOA community.

“Based on maintenance fees collected, an organized HOA maintains a comfortable balance in their fund to offset maintenance costs or unexpected issues that need to be fixed,” says Drew Scott of HGTV’s “Property Brothers” and co-founder of Scott Brothers Global.

An HOA’s level of involvement varies and might depend on the type and size of the community.

“The HOA will take care of the common areas like the pool, clubhouse, walking paths, or other amenities that provide value to the residents,” says Mark Ferguson, a Greeley, CO–based real estate agent and investor.

Sure, homeowners already taking on a mortgage may hate coughing up more money for HOA dues. But they actually let you off the hook for a ton of home maintenance work. So before you start kvetching, consider all that HOA fees can do for you.

Pro: HOAs help keep uniformity

HOA helps keep uniformity
If they were supposed to look different, they’d be built different…

jhorrocks/iStock

Each HOA has its own declaration of covenants, conditions, and restrictions, or CC&Rs, which explain what homeowners can and cannot do—this includes streamlining the appearance of each property.

“Your neighbors can’t paint their house bright purple or put an unsightly addition on the front of their house,” Golden says. The CC&Rs make sure “the community retains the look and feel of the way it was built.”

Other common no-nos are parking vehicles on the lawn or keeping inoperable vehicles in the driveway.

“You won’t have to worry about that one neighbor that has decided to let his front yard grow into a wild jungle,” says Golden.

Pro: HOAs help homes retain their value

“Ultimately, the HOA helps the homes within the neighborhood retain their value,” explains Patrick Garrett, real estate broker at H&H Realty in Trussville, AL. “When there are rules and guidelines governing how homeowners should keep their property’s appearance, it helps keep the neighborhood looking desirable for the consumers perusing the neighborhood in search of a new home.”

Pro: HOAs mediate problems on your behalf

HOA can mediate disputes between neighbors
HOAs can mediate disputes between neighbors, like lawn care matters or who looks better in plaid.

JackF/iStock

An HOA can also reduce conflicts and unpleasant exchanges. If your neighbors haven’t cut their lawn in several weeks, or decide to turn their driveway into an auto repair shop, you don’t have to confront them, because the HOA will. When anyone is engaged in activity that violates the CC&Rs, the HOA sends a friendly notice and follows up with a stern warning.

“A reasonable HOA is like heaven,” says Ailion. Several years ago, he represented a builder of family homes that were sold to investors; with no restrictive covenants in place, the community looked terrible two years later. By contrast, a nearby community that had instituted an HOA to oversee lawn care and home exteriors was thriving.

“Those properties looked like new, and year after year, the gap in price between the two communities has grown,” he says.

But HOAs come with some distinct downsides, too:

Con: Those pesky HOA fees

If you move into an area with an HOA, membership is mandatory, and so are the monthly or annual fees. Plus, “the fees can change, based on decisions that you don’t have total control over,” Golden says. “Fees can also be a detriment to resale, if potential buyers don’t want that extra cost in addition to their house payment.”

Con: There’s a lot of red tape

Building that new second-floor addition will be especially difficult in an HOA community.

Any exterior modification—even a minor one like a play area for your kids—has to be approved by the HOA.

You must submit plans describing the height, colors, location, shape, and materials to the HOA board for approval.

“This can really slow down the process or limit the type of work you can do,” Scott says.

Ferguson says the approval process can be downright unreasonable.

“It once took my HOA nine months to approve a basketball hoop that had already been approved by them for the previous owners,” he says.

Con: HOAs can be overbearing

Remember those CC&Rs? While they come in handy for preventing rowdy college students from moving in, they also might be off-putting for homeowners who like their autonomy.

“Many folks believe that buying your own home should give you the freedom to make the changes you want to make and express your own individuality,” Golden explains. “They don’t want decisions about their own home made by a committee.”

HOA-mandated restrictions can be set on swimming pools (e.g., in-ground swimming pools can be built in the back of the house, but above-ground pools are prohibited), pets (e.g., they are allowed, but they can’t be bred or kept for commercial reasons; livestock or poultry are not allowed without permission), and rentals (e.g., you might be prohibited from renting out rooms or the entire home).

In extreme situations, some HOAs can evict the tenant and hold the homeowner responsible for any eviction costs or any damage caused by the tenant.

Just keep in mind that an HOA’s goal is not to meddle; it’s merely to maintain a neighborhood aesthetic. However, if you don’t like being told what to do with your home, living under the bylaws and rules of an association may not be for you. Make sure to read your CC&Rs carefully and weigh the pros and cons of any particular HOA before you buy.

Michele Lerner, Cathie Ericson, and Lisa Johnson Mandell contributed to this article. 

The post A Homeowner’s Guide to HOAs: Homeowners Associations, Explained appeared first on Real Estate News & Insights | realtor.com®.

What Is a Homeowners Association? HOAs—Explained

June 18, 2019

Xavier Arnau/iStock

What is a homeowners association? If you’re buying a condo, townhouse, or free-standing home in a neighborhood with shared common areas and amenities—such as swimming pools, tennis courts, parking garages, or even just the security gates and sidewalks in front of each residence—odds are high these areas are maintained by a homeowners association, or HOA.

What is a homeowners association, and how will it affect your life?

Homeowners associations help ensure that your community looks its best and functions smoothly, says David Reiss, research director at the Center for Urban Business Entrepreneurship at Brooklyn Law School.

For instance, if the pump in the community swimming pool stops working, someone has to take care of it before the water turns green and toxic, right? Rather than expect any one homeowner in the neighborhood to volunteer his time and money to fix the problem, homeowners associations are responsible for getting the job done. Think of it as similar to real estate property taxes that a homeowner pays for city and state services, except these fees go to pay for amenities and maintenance in your own planned community or condo building.

The number of Americans living in a home with an association is on the rise, growing from a mere 1% in 1970 to 25% today, according to the Foundation for Community Association Research. So, it’s wise to know exactly how such an association of homeowners works.

How much are HOA fees?

To cover these property maintenance expenses, homeowners associations collect fees or dues (monthly or yearly) from all community members. For a typical single-family home, HOA fees will cost homeowners around $200 to $300 per month, although they can be lower or much higher depending on the size of your house or condominium and the services provided. The larger the homeowner area, the higher the HOA fee—which makes sense, because the family of four homeowners in a three-bedroom condominium is probably going to be using the common facilities more than a single resident living in a studio condo.

Many HOAs pay property managers to oversee maintenance and deal with other real estate property issues.

In addition, most homeowners associations charge their members a little more in dues than monthly expenses require, so that they can build up a reserve to pay for property emergencies, amenities, and big-ticket items like repairing the roof and water heaters, or acquiring new carpeting, paint, and lights for the hallways.

If the association doesn’t have enough fees in reserve to cover necessary expenses, it can issue a special “assessment,” or an extra fee, in addition to your monthly dues, so that the repairs can be made.

For example, if the elevator in your condo building goes out and it’s going to cost $15,000 to replace it—but the HOA reserve account holds only $12,000—you and the rest of the residents are going to have to pony up at least an additional $3,000 in dues, divided among you, to make up the difference.

And yes, you as a resident still have to contribute your share of dues, even if your property is on the first floor.

HOA rules: What to expect

All HOAs have boards made up of homeowners in the complex who are typically elected by all homeowners. These board members will set up regular meetings where owners can gather and discuss major decisions and issues with their community. For major expenditures, all members of the HOA usually vote, not just members of the board.

In addition to management of the common areas, homeowners associations are also responsible for seeing that its community members follow certain rules and restrictions. Homeowners receive a copy of these rules from the HOA board, known as covenants, conditions, and restrictions (CC&Rs), when they move in, and they’re required to sign a contract saying that they’ll abide by them.

CC&Rs can cover everything from your type of mailbox to the size and breed of your dog. Some HOAs require you to purchase extra homeowners insurance if you own a pit bull, for example. Others have covenants and restrictions prohibiting certain breeds entirely. Many associations even have rules about what color you paint your house, what kind of curtains you can hang if your unit faces the street, and how long your lawn can grow. Its goal is not to meddle—it’s merely to maintain a neighborhood aesthetic. However, if you don’t like being told what to do with your home, living under the bylaws and rules of an association may not be for you.

What happens if you violate HOA rules?

That varies from place to place, but if you break the rules—or fall behind in paying your HOA dues—the consequences can be severe. The management could evict you from your property, or worse. Some HOAs have the right to foreclose on your property if you don’t pay your monthly fees or don’t follow the rules, says Bob Tankel, a Florida attorney specializing in HOA law.

So make sure you read your CC&Rs carefully so you know what to expect, and know the pros and cons of living in an HOA community before you buy real estate with a homeowners association.

The post What Is a Homeowners Association? HOAs—Explained appeared first on Real Estate News & Insights | realtor.com®.

What Is a Condo? No, It’s Not Just a Fancy Apartment

June 15, 2019

what is a condo

golero/iStock

What is a condo? If you ask most people to explain, they’ll tell you, “It’s like an apartment or townhouse, but you own it.” Or, “It’s like a home, but without a yard.” Both of these descriptions are mostly true, but there’s a lot more to the condominium meaning and the condos versus apartments debate, especially if you’re trying to decide where you should live.

What is a condo?

A condo, which is short for “condominium,” is a private residence owned by an individual homeowner or family in a building or community with multiple units or townhouses. Although they are usually part of a larger high-rise building, “detached condominiums” also exist.

What all condos have in common is that they share common areas—such as yards, garages, tennis courts, swimming pools, rec rooms, or gyms—with other units that the condominium owners don’t have to maintain themselves, making home upkeep that much easier.

For this convenience, owners pay dues to a board—typically made up of elected condominium owners—who handle the hiring of landscapers, pool cleaners, and other professionals for anything that must be fixed, from faulty elevators to gopher infestations in the common areas. This is much the way a homeowners association, or HOA, functions. (Leaky pipes and plumbing and/or roof repairs fall into more of a gray area, but generally if it’s outside the walls of your unit, it’s the board’s responsibility to fix.)

Matthew Gordon Lasner, author of “High Life: Condo Living in the Suburban Century,” adds this twist to the meaning: The first condo in the United States was built in Salt Lake City in 1960—and since then, this residence style has truly taken off. Currently, there are approximately 17 million privately owned condominiums in the U.S., which may have you wondering: Should you be a condo owner, too?

Should you consider condo ownership? Here’s how to decide

You can see why condominiums would be ideal for people who want to own a piece of real estate but don’t want to worry about yardwork and maintenance. The condos versus apartments conundrum is often an easy choice for retirees, young adults without kids, or anyone who would like to own property in more densely populated areas where detached, single-family homes just cost way too much. You might also be looking for a coveted amenity or the services of an HOA or property management company. There’s also more of a community to be found in a condo association compared with an apartment building.

And the advantage of buying a condominium over renting an apartment or townhouse? One, condos tend to be better built and maintained than rentals and they likely have an attractive amenity package. Plus, condo owners or unit owners will gain equity in their real estate over time—so why not invest your money in a home rather than throw it away on rent?

“Mortgage interest rates in today’s market are extremely low. Most individuals seeking a $2,500-a-month apartment or townhouse could easily afford a mortgage of $500,000. Monthly payments would be similar if not the same,” points out Jessica Peters, a Realtor® with the Peters-O’Brien Team at Douglas Elliman. “Depending on the area and whether or not the buyer is savvy, the unit would appreciate during the length of residency. Whereas in a rental, there is no opportunity for a return on investment.”

Condominiums vs. apartments: The deciding factor

On the other hand, a condo complex isn’t a great idea for fiercely independent homeowners or tenants who like their own privacy and space, and don’t want anyone telling them what they can and can’t do with their real estate. That’s because in addition to collecting dues, a condo board or HOA also enforces rules and regulations that owners agree to abide by when they purchase their condominium. The board can regulate everything from the size and number of pets you’re allowed to the number, the color of your townhouse exterior, and the ages of the people living in your unit. Retirement condo communities, for example, can legally require that all long-term residents be over the age of 55.

So if you’re looking into buying a condo, make sure to study up on the condominium association rules (called covenants, conditions, and restrictions, or CC&Rs) and extra costs such as HOA fees or association fees. Also, be sure to check out each amenity before you contact a real estate agent or commit to a purchase.

The post What Is a Condo? No, It’s Not Just a Fancy Apartment appeared first on Real Estate News & Insights | realtor.com®.

What Is a Special Assessment? Condo and Co-op Buyers Beware

November 28, 2018

What is a special assessment? It’s an added fee that can crop up for owners of a condo, co-op, or home belonging to a homeowner’s association (HOA).

Trust me on this: As vice president of my own condominium’s board of directors, I can assure you no one likes getting wind of a special assessment—which, put plainly, is a charge that homeowners must pay to fund a renovation on the property or to replenish an underfunded reserve.

Even just uttering the words “special assessment” makes my neighbors cringe! Let’s take a look at why.

What is a special assessment?

Most condo or HOA homeowners pay monthly fees. These fees typically range from $100 to $700 per month, but they can vary greatly based on what they cover. Some fees only cover exterior maintenance, while others are more comprehensive, and may also cover utilities (water, trash, sewer) and even security guards.

Typically, a portion of the condo fees is allocated to the association’s reserve fund—essentially a rainy-day fund for larger, occasional expenses such as paving, re-roofing, replacing water heaters, exterior painting, or hallway flooring.

Yet unexpected expenses can also occur. Every once in a while, something big gives out, like a roof or an elevator, and homeowners insurance may not cover the costs.

If your association’s reserve fund is low or depleted when disaster strikes, you and your fellow homeowners will have to pay a special assessment. In some instances, assessments are tacked on to the monthly condo fees in small amounts until the debt is paid off; in other cases, the assessment is a one-time charge that must be paid by each homeowner as a lump sum.

If you live in a well-run condo association or HOA, your community should have enough cash set aside in reserve funds to cover emergency repairs. But, alas, not every condo board is managed well.

Naturally, this raises the question: How much money belongs in the reserve fund? Unfortunately, there’s no magic number. It can range significantly depending on a number of factors, such as the number of homes in the community and their ages.

The good news? There is a formula, so to speak.

Many condo boards order an annual or biannual “reserve analysis study,” where a qualified engineer performs an architectural and engineering study of the entire complex—including a projection of the remaining life of items like the roof, boiler, or elevator—and reports back to the board with a recommendation on how large the community’s reserve fund should be. Though it’s not an exact science, this professional estimate is generally a good benchmark.

How much is a special assessment?

The fee depends on the cost of the repairs. For example, let’s say your condo building’s roof caves in and the board immediately needs $30,000 to install a new roof. If there are 40 unit owners, each owner would be required to pay about $750. Often the precise fee will vary, depending on the size of your condo or house. Generally, the larger your property is, the higher your portion of the assessment will be.

What’s my likelihood of receiving a special assessment?

If you’re searching for clues for whether a special assessment is in your future, you’ll want to review your association’s financial statements. These documents which will show you how much money is currently in the reserve fund. If the fund is relatively low, you may be at risk of a special assessment in the event of an emergency expense.

Also, take a look at the governing documents of your development. These are called “restrictive covenants”—also known as the Declaration of Covenants, Conditions, Restrictions, and Easements (CC&Rs), and they usually outline procedures that the association must follow in order to levy a special assessment. In some cases, the entire community (not just the board of directors) votes before there’s an assessment.

In addition, some states have laws that restrict the amount of money an HOA can collect in special assessments in a calendar year.

Can I protest a special assessment?

Technically, you can protest a special assessment by filing a complaint with your board. However, if you don’t have buy-in from your fellow homeowners, your request is likely to be denied, in which case you’ll have to pay the fee. Also, bear in mind that rejection rights usually don’t apply to assessments for projects that are necessary for the health and safety of residents.

Your best odds of a successful outcome is when there’s a special assessment on the table for an unnecessary project, like adding a swimming pool or a fitness center, in which case, other unit owners may have your back in helping you revoke the assessment.

The bottom line

Special assessments are an inherent part of being a homeowner in a condo or HOA. No one likes them, but sometimes they’re necessary—and you just have to cope with the circumstances.

The post What Is a Special Assessment? Condo and Co-op Buyers Beware appeared first on Real Estate News & Insights | realtor.com®.

7 Promising Signs the Home You’re Buying Will Have Good Resale Value

September 13, 2018

While it might seem premature to think about selling a home before you even buy it, it’s important to remember that a house is an investment. And in an ideal world, investments make money—not lose it.

That’s why resale value should be an important consideration when house hunting. No, it shouldn’t supersede your must-have requirements (if you demand 20 acres and lakefront access, prioritize that). But if you do your best to predict how the house you’re buying—and the neighborhood it’s in—will appeal to future buyers, then future-you will be a whole lot happier. And possibly richer.

Considering resale value “also saves the buyers a lot of money, as they will not need to spend big on renovations or updates,” says real estate agent Lukasz Kukwa.

But one caveat: Good resale value is never a promise.

“It is almost impossible to guarantee that a home will retain its full resale value, as the local market and economic factors have a large effect on the housing market,” Kukwa says.

In short: Resale value is anybody’s guess if the economy tanks. But there are some indicators to watch for that could be the difference between barely squeaking by or coming out ahead. As you hit the house-hunting trail, look for these promising signs that suggest your investment will be a smart one.

1. The neighborhood’s hopping…

Pay attention to your surroundings when house hunting. Is the neighborhood walkable? Or is a trip to the grocery store so onerous it requires snacks for the road? Meanwhile, are there restaurants nearby for those nights you simply just can’t?

“If you buy in an area that is not well-developed and doesn’t have good infrastructure—like shopping close by—you will not have a high rate of return on the home,” says Realtor® Patricia Vosburgh.

“The more amenities, the higher chances the home will sell faster and for more money,” she explains.

Even if there are development plans in the works, don’t bank on that to prop up property values; construction can stall or be scrapped entirely. When calculating your home’s future worth, focus on what exists now.

2. … but the street itself is quiet

Buying a home is a study in contrasts: You want a gorgeous kitchen—and good delivery options, too. You need five bedrooms—and a decent hotel around the corner, because no way is your mother-in-law staying with you. You want things to be hopping—but not in your backyard.

“We advise against buying on a busy street or purchasing a home surrounded by commercial properties nearby,” Vosburgh says.

Not that there aren’t buyers—possibly even you—who love living in the middle of the action. But before you buy the bungalow next to your favorite watering hole, consider that future buyers might not be so keen.

3. The home’s systems are in good shape

Many people consider return on investment to be the sum of a simple calculation: Will the home sell for more than you paid?

But it’s a little more complex than that. You have to factor in how much you’ll spend on the home while living there—even if the market becomes red-hot. And if the home’s vital components are falling apart, you’ll be spending a lot.

Your inspector can give you a rundown of your future home’s health, but keep a close eye on the roof, water heater, HVAC system, windows, and foundation. Pay attention to the plumbing and electrical, too. A problem with any one of these major systems can require a costly repair—and take a bite out of your payday.

“When these items are new or in good standing, that’s a great sign,” Kukwa says.

4. The schools are great

If you’re child-free, this one might seem entirely irrelevant. But a word to the wise: If you think you might someday sell your home, you’ll want to factor in the school district before you buy.

“Even if buyers personally don’t have children, for resale it is imperative that they buy in a great school zone,” Vosburgh says. (You can check school ratings at GreatSchools.org.)

Just make sure to do your research and determine where the home sits in relation to the school district boundaries.

“Often agents will advertise a property as being near such-and-such school area, but not necessarily specify the district, which can be very confusing,” explains Tina Maraj, a Realtor with Re/Max North Orange County in Fullerton, CA. “It can be a real eye-opener if a buyer closes and they’re on one side of a main street that is the dividing line between the top-rated and the lowest-rated high schools.”

5. The light is inspiring

“Any apartment in any neighborhood that has good light will sell—and will always sell,” says New York City broker Noemi Bitterman.

With good light, “there is always a good feeling—a feeling of embracing and belonging,” she continues. “When [a home] is dark, no matter how nice and new it is, it doesn’t feel inviting, it takes a much longer time to sell, and the price reflects the lack of light.”

Whether you’re shopping for a condo, apartment, or house, visit the property at different times of the day to see how the light affects the space.

6. The floor plan is family-friendly

Again? asks the child-free reader. Must all my housing decisions be dictated by families? No. But if you’re hoping to sell that home for a profit down the road, you should keep kid-friendliness in mind.

“Look for a home with a floor plan that will appeal to families,” says broker Kris Lindahl. That means at least three—if not four—bedrooms on the same level, an open concept kitchen, and at least one bathtub.

And always pay attention to the number of bathrooms. You want “enough to avoid fights in the morning,” Lindahl says.

On a related note: No matter how much you love that gloriously unique Frank Lloyd Wright spiral house, it’s often best to stick to a more traditional floor plan if you’re worried about selling later.

“Buying a home that is too quirky or has very untraditional features can result in a decreased ROI and smaller pool of potential buyers in the future,” Kukwa says.

7. The community is restrictive

Homeowners associations can be a pain in the butt—the irritating restrictions, the monotonous meetings, the monthly dues that you’re not always sure you can account for.

But an HOA can actually be helpful, at least when it comes to resale value. That’s because HOAs usually keep everyone in line, preventing your neighbors from letting weeds take over their lawn, painting their houses bright pink, or permanently parking an RV in the middle of your street—all things that could ding the value of your home.

Of course, purchasing an HOA-regulated home isn’t for everyone. But if you’re seriously concerned about the resale value of your new home, covenants and restrictions could keep you flush.


Wendy Helfenbaum contributed to this story.

The post 7 Promising Signs the Home You’re Buying Will Have Good Resale Value appeared first on Real Estate News & Insights | realtor.com®.

Buying a House? 6 Questions You’d Never Think to Ask, but Should

August 23, 2018

When buying a house is high on your priority list and you spot The One—the house that has everything you’ve ever dreamed of and more—it can be tempting to put pedal to the metal and close the deal as quickly as possible. But slow down!

No home is perfect beneath the surface, and few know this better than your real estate agent. And that means it’s time to sit down with this professional and pepper him with questions about the place you’re hoping to make your own.

And while certain questions seem rather obvious—should you offer full price, how soon can you close—there are many others you may not think to ask an agent at this pivotal juncture. But you should!

Here are six questions to ask a real estate agent to flush out what he’s truly thinking, that could help you figure out if this place is really right for you.

1. ‘Would you buy this house?’

This question may be the ultimate litmus test of whether you should purchase a home. If your agent would have reservations about buying the house for himself, that’s a waving red flag. So if you get the sense your agent isn’t as enthusiastic about the home as you are, ask why. His answer might give you pause, too.

2. ‘What is the sales history of this house, and how would it affect my offer?’

Before making an offer on a house, ask your agent for the property’s sales history, says Chris Dossman, a real estate agent with Century 21 Scheetz in Indianapolis.

Was it previously an expired listing? Was it leased? Was it ever a bank-owned property or other type of distressed home? These factors could suggest a home has been a struggle to sell—which could mean you could snap up this home at a bargain-basement price.

3. ‘What contingencies do you think are worth getting—and skipping?’

“When buyers and sellers get cold feet about the purchase or sale of a home, they sometimes think they can just back out,” says Linda Sanderfoot, a real estate agent at Coldwell Banker in Neenah, WI. But when a seller accepts a buyer’s offer, both parties sign a legal and binding contract—an official document that requires the buyer and seller to execute the transaction.

So how binding that contract is depends on the details. Some contracts have contingencies built in that enable the buyer or seller to walk away from the deal without penalty. And contingencies are often included for a home inspection and an appraisal.

But note that having too many contingencies tends to turn off sellers, so make sure to strike the right balance by asking your real estate agent for guidance. For instance, you might be OK waiving a home inspection contingency if the home is newly constructed, whereas it’s more essential with an older home that might need extensive repairs.

4. ‘Are there any upcoming condo or homeowners association assessments?’

When you purchase a condominium or a home within a homeowners association, you’ll receive the HOA’s financial documents, which outline important information such as reserve funds and CC&Rs (covenants, conditions, and restrictions).

These condo docs and disclosures can be hundreds of pages long—which could overwhelm home buyers, who could forget to check if there are any upcoming assessments. Assessments are periodic one-time payments made to the HOA above and beyond the monthly fee, usually to cover capital improvements or repairs. Since they will affect your monthly housing expenses, you’ll want to know whether they could go up anytime soon—and your agent is adept at navigating these documents to pinpoint the answer.

5. ‘What’s happening in this neighborhood, and how will that affect home prices?’

Good real estate agents hear everything about what’s happening in the communities where they do business. And although federal fair housing laws prohibit real estate agents from commenting on a neighborhood’s demographics, your agent can still give you advice on whether you’re making a solid investment based on local housing market trends and economic factors that affect home values.

So go ahead and ask: Are the neighborhood’s home prices rising or falling? Are there new amenities (e.g., parks, shopping, public transportation, Whole Foods) being built in the area?

These are all important things to consider before buying a house, and a real estate agent can help you cut through the noise and really tell you what’s up.

6. ‘Can you recommend a home inspector/handyman/real estate attorney in the area?’

Local expertise matters not only with the real estate agent you hire, but also the other professionals you could meet while negotiating this real estate deal. So if you need recommendations for a home inspector, handyman, real estate attorney, or anyone else on your home-buying journey, make sure to ask your agent for recommendations to boost the odds of smooth sailing.

The post Buying a House? 6 Questions You’d Never Think to Ask, but Should appeared first on Real Estate News & Insights | realtor.com®.