Real Estate Weekly: December 2, 2022

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Real Estate Stat -5.9%

Existing-home sales fell 5.9% in October from the previous month.

Source: National Association of REALTORS®, 2022.

Existing-Home Sales Fell for the Ninth Straight Mont h a nd Decline 5.9 % i n O cto ber 2022

The national median existing home price for all housing types reached $379,100 in October, up 6.6% from a year ago. Home prices have continued to climb, marking the 128th consecutive month of year over year gains.

Regionally, in October, the country showed steady price growth from a year ago. The Northeast and the South shared the largest gain of 8.0%, followed by the Midwest, with an increase of 5.9% The West had the smallest price gain of 5.3% from October 2021.

Demand remains strong as home buyers are snatching listings quickly off the MLS, and it takes approximately 21 days for a home to go from listing to a contract in the current housing market. A year ago, it took 18 days.

Source: www.nar.realtor

Now could be the time to sell a new home and earn a slice of the real estate pie.

Record-low interest rates is renewing interest in the housing market for many people.

“When sellers are interviewing real estate agents to market their homes, their primary focus is usually on the advertising that the agent will offer them,” says Jessica Goodbody of Weichert Realtors.

Let us help you meet your marketing goals by advertising your listings in Real Estate Weekly.

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Understanding homeowners associations (HOAs) before buying into one

By Erik J. Martin CTW Features

Purchasing a home with in a condo, townhome, or other managed housing community has its perks and pitfalls. One benefit is that you usually don’t have to worry about mainte nance chores like raking leaves, shoveling snow, and replacing the roof. That’s because these and other responsibilities often fall to an organization entrusted with managing and upkeep of common areas and amenities within the building, community, or subdivision. And therein lies the rub. Because the organiza

tion tasked with these to-dos is better known as a homeowners association (HOA) or condo association, which must charge fees to each homeowner and lay down the laws when it comes to anything occurring on the property outside your front door (and sometimes including your front door).

HOAs often get a bad rap in the news and on social media because, well, people bristle at being told what to do nowadays, and the costs they charge are getting more expen sive. Nevertheless, these associations are crucial for the proper functioning, appearance, and mainte-

nance of the community and to ensure that property values continue to climb.

“A homeowners asso ciation is an organization that creates and enforces rules for a neighborhood, subdivision, or condo building. HOAs are typi cally governed by a Board of Directors elected by the members, and they are responsible for maintain ing common areas, enforc ing rules, and managing finances,” explains Boyd Rudy, associate broker with Plymouth, Michiganheadquartered Dwellings Michigan.

HOAs vary in scope and size, but most maintain

regulations that must be followed by all homeowners who are required to live within the HOA community.

“Most HOAs restrict things you can do outside of your home, such as the colors and architecture of homes. The idea is to keep the community look ing uniform,” says Marc Schneider, an attorney with Schneider Buchel LLP in New York City. “Also, many HOAs are responsible for the roof and façade/siding of the buildings as well as the driveways and landscap ing. There are typically rules governing the use of roads as well as the ameni-

ties. For example, there are usually rules about speed limits or the hours of the community swimming pool and who can use it during certain times.”

Jennifer Spinelli, found er/CEO of Niche Home Buyer in Albuquerque, says HOAs boards are commonly comprised of community residents.

“They may hire pro fessional management companies to handle dayto-day operations. Home owners who live in HOA communities are typically required to pay monthly or annual dues, which are used to cover the costs of maintaining the common areas and amenities,” she notes.

Drilling down closer into the rules and regulations, these are better known as covenants, conditions, and restrictions (CC&Rs), which are put in place to ensure that the community retains its value and aesthetic appeal.

“The CC&Rs are legal agreements that home owners agree to abide by when they purchase a property within an HOA community,” Spinelli explains. “Bylaws, on the other hand, are the rules and regulations that dic tate how an HOA oper ates, typically put in place by the Board of Directors, which must be followed by all homeowners within the community.”

Break the rules, and the HOA may impose costly fines or penalties that could lead to your expul

sion, forcing you to sell your home. That’s why it’s crucial to fully under stand the fine print before purchasing a property in an HOA community.

“Be sure to obtain a copy of the HOA’s bylaws and CC&Rs and review them carefully. This document will outline what you will be expected to follow as a member of the commu nity. It’s also a good idea to attend a meeting of the HOA board to get a sense of the community’s dynamics and see how well the board is managed,” Rudy advises. “Be sure to ask questions about the HOA’s budget, reserve fund, and planned capital improvements.”

Also, inquire about any special assessments that may be charged in the future.

“Learn about any special restrictions so that you can determine if you are com fortable following them. Some HOAs have very strict rules about things like noise levels, pet own ership, and even what type of furniture can be placed on a porch or balcony,” cautions Spinelli.

Take time to meet with some of the current resi dents of the HOA to get their thoughts and opin ions about living there, as well.

Additionally, “it’s wise to hire an attorney who is familiar with community associations before purchasing a home there,” adds Schneider.

Negotiating better deals with sellers in the current market space

Question:

Real estate sales in our area have slowed and we’ve seen a number of price cuts. What can we do to negoti ate a better deal with sellers, now that buyers finally have some leverage?

Answer:

What has plainly been a seller’s market for the past few years has shifted in many areas. With higher mortgage rates, steeper prices, and less affordability, purchas ers may be able to bargain more than in the recent past. Pricing. Price is the most obvious area for battle. Buyers can always offer less than sellers are asking, but some context is in order: While asking prices may be slipping, home values have generally been rising. In Au gust, for example, existing home sales fell 19.9% from a year ago, but home values during the same period actually increased 7.7%, according to the National As sociation of Realtors.

Buyers can always offer less than a seller is asking. But, for bargaining purposes, you might take a different approach. Give sellers their price, but ask for a “seller contribution” at closing equal to a percent of the sale

price.

The size of the seller concession will depend on the type of financing used to purchase the property. For in stance, as much as a 4% credit is allowed under the VA program, while FHA and USDA borrowers can get as much as 6%. Residential borrowers using conventional financing can get credits for as much as 3% to 9%, depending on the amount down.

Seller concessions are a negotiable item, so how much you actually get depends on your leverage with the seller.

With a seller credit, the owner gets bragging rights for a full-price offer, while buyers obtain a concession that can be used to pay closing costs or reduce mortgage needs. However, a seller credit cannot be used to reduce the down payment, that cash must come from the buyer or an approved source, such as a gift from friends and family.

Financing. At the height of the pandemic, sellers were getting multiple offers, including bids that lacked a financing contingency, not a good idea. With the market widely slowing and bidding wars less common, it’s time to bring back financial contingencies. In basic

Q&A Q&A

ASK OUR BROKER

By Peter G. Miller

terms, such clauses say buyers will purchase a property only if they can get specific financing, say at least a given loan amount with an interest rate not to exceed a particular level. If such financing is unavailable, a clause can say the deal is off and the buyer’s deposit is returned.

Condition. Home inspection clauses are another provision often given up during the buying frenzy of the past few years. A home inspection clause allows purchasers to have a professional inspector examine the property, determine if there are significant defects, and provide an idea of the possible costs for repairs.

The tricky part is what happens next. Does the inspection just provide information, or can it set off a required response from the seller? Is the seller required to make repairs or make repairs up to a certain dollar value? Can buyers end the deal and get back deposits if the seller refuses to make repairs or the repairs exceed a certain amount? Etc.

For details regarding clauses, speak with real estate brokers or local real estate attorneys.

Email your real estate questions to Mr. Miller at pe ter@ctwfeatures.com.

Don’t count on it: square footage is approximate

By Marilyn Kennedy Melia CTW Features

Space, whether more or less, is a major factor motivating a move.

A young family cramped in an 1100 square foot condo wants more bedrooms; a single professional needs a larger kitch en; a downsizing couple wants to trade half their space to be mortgage-free.

But home shoppers clicking through listings shouldn’t take what would seem to be an objective measure of space –the stated square footage – to be an exact count.

Many homeowners “have no idea what their square footage is,” notes Deb To maro, owner of a Carmel, IN real estate brokerage.

If sellers don’t have a reasonable esti mate but kept papers from their purchase,

they can find it on the appraisal report, she adds.

The square footage on Zillow and related sites also aren’t usually correct. They’re drawn from public records which often “convey outdated information,” like not counting an addition,” says San Francisco appraiser Scott Yeargin. Public records may use measurement techniques for taxation or other purposes, different from appraisal standards.

Those standards count the footage of finished rooms that are not below ground. “An unfinished area like a garage or storage is generally not considered to be livable space,” Yeargin explains.

A finished basement would not be included in the count but is reported separately and contribute to the appraised value.

Appraisals are key to home sale transac

tions because mortgage lenders don’t want the appraised value to fall short of what the buyer is paying.

In this sellers’ market, could erroneous square footage in the listing lead to an appraisal value that’s not supportive of the price?

Probably not, says Yeargin. “Generally speaking, owners are within range of the market when they list their home for sale, regardless of what they say or think their square footage is”.

But there can be exceptions. Tomaro re lates one instance of a bi-level home with a lower-level living area that was partially below ground, causing a below-market valuation. Luckily, “we were able to appeal the appraisal and get it adjusted,” concludes Tomaro.

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