When buying a home or buying a condominium that has a Homeowners Association, it is very important to read all of the documents provided to you.  While this may appear to be a daunting task because the HOA documents can run to hundreds of pages, these documents govern - and sometimes limit - your use of your home as well as your expenses as a homeowner within that Association.

The Covenants, Conditions and Restrictions (CCRs) and By-Laws,  are the governing documents of the Homeowners Association (HOA).  These documents outline how the HOA is run and the basic rights, duties and obligations of the home owners within the HOA.  They also specify any limitations to your use of your home. For instance, they may limit the number and size of pets, your ability to rent the home in the future, whether you can operate a home based business, the procedures you must follow if you wish to upgrade or remodel your home and where you can park your car.

The Rules and Regulations typically cover the day-to-day matters such as the use and expense of the common areas (open space, pools, clubhouse, etc.).

The Minutes of the Board of Directors meetings will contain the details on current and future repairs, improvements, expenses, lawsuits and any increases in monthly assessments.  You should receive copies of the minutes for the most recent 12 months.

You should pay particular attention to the Financial Documents from the HOA, specifically the rate of delinquency, adequacy of the financial reserves, operating losses and any current or planned asessments.  The financial information can be contained in numerous documents including the Reserve Funding Disclosure, Financial Statement Review, Pro Forma Operating Budget, Assessment Enforcement Policy and Special or Emergency Assessments, if applicable.

It is enormously important that you fully understand the financial condition of the Homeowners Association.  Have the reserves been adequately funded?  Are there many delinquent dues and assessment payments?  If there is an assessment on the home you are purchasing, does your purchase contract specify whether the assessment will be paid by the seller or will you be responsible for payments after the close of escrow?

HOA Documents Checklist:

1. CCRs with current Amendments
2. Articles of Incorporation or Association
3. By-Laws
4. Current Rules and Regulations
5. Copy of Minutes for the last 12 months
6. Year-to-date Budget
7. Financial Statments
8. Insurance Summary
9. Association Collection Policies and Practices

You are the most important source of information to create an effective marketing campaign that will help get home buyers excited about buying your home. 

Between 87% and 94% of home buyers start their home search on the internet and proceed to view the homes that meet their needs and capture their interest. 

You want buyers to pick your home above all others so your visual tour should include photos of your home and yard as well as the neighborhood and community in which it is located.   The perfect time to start writing notes is while you are preparing your home for sale.

Print this page and use it as an outline for your notes but don’t limit yourself to these questions and topics.

Why did you decide to buy this home yourself? 
(Schools? Location? Views? Privacy?)

What would you tell a buyer to make them want your home more than any other?

What features of your home might a buyer overlook (or not appreciate) if they viewed them quickly? 
(Custom French doors? 3/4 inch hardwood floors? A hidden storage alcove?)

What things about the neighborhood and community have you enjoyed the most? 

(Parks and recreation? Neighborhood off-leash dog park? Location to shopping and restaurants? Access to public transportation?)

What upgrades and improvements have you completed since you purchased the home?  Are they under warranty?
(New roof?  New heat or air-conditioning?)

Smart Selling is a series of articles to help you get educated and prepared to sell your home fast for the highest possible price.  Other topics include:

Understanding Fair Market Value and List Price

Should You Update Your Home to Sell?

Alain Pinel Realtors introduces the first Open House Guide for all San Francisco, Bay Area Open Homes.

Do you want a single website to find the Open Homes in the northern California cities of Alamo, Blackhawk, Clayton, Concord, Danville, Diablo, Lafayette, Martinez, Moraga, Orinda, Pleasant Hill or Walnut Creek?  Look no further!  Alain Pinel Realtors introduces open.apr.com, the first Open House Guide for all San Francisco, Bay Area Open Houses - even those listed by other companies.

This site includes all of the scheduled Open Houses that are posted on the Multiple Listing Service as well as Alain Pinel Realtors' exclusive listings and offers the added advantage of community information and maps. If you want to buy a home in Contra Costa County, California, introduces this is "one-stop-shopping" to plan your Open House visits!

Are you buying a home in Contra Costa County, California?  Read this important information regarding Contra Costa Water's Drought Management Plan.

Although we have recently been inundated with rain, the reservoirs in Contra Costa are still at 75% of normal. As a result the Drought Management Plan is still in effect.

The general overview of the plan is this:  Water usage for each household has been averaged over the years 2005, 2006 and 2007 for each billing cycle.  Each household is required to reduce their water usage by 15%.  If you exceed 85% of the historical water usage, the charge for the excess water usage is four times the standard charge.  For more details, read the Drought Management Plan brochure.

My savvy home buyer asked an important question, "Do the water usage patterns transfer to the new owners of the house?" I called the Contra Costa Drought Management Hotline.  The answer is "Yes".  Within two weeks of opening your CC Water account, you will receive notification of the existing household average on which your water charges will be based.  This could represent a problem if your family size is larger than the current occupants of the home.  In that situation, it is likely that your water usage will be higher than the current household average and you will be charged the excess water usage "penalty" charge unless you fill out the online Exceptions Request Form.

Everyone who has written an offer on a foreclosure property knows that when the offer is accepted, it isn't accepted using the California Residential Purchase Agreement but is accepted using the bank's contract.  Why does that matter?  The bank's contract is written by the bank's attorneys for the bank's best interests.  Many rights afforded buyers on the California Residential Purchase Agreement are specifically excluded.

The new California law "Buyer's Choice Act", which went into effect on October 11, 2009, returns one right to buyers.  The Buyer's Choice Act prohibits foreclosure sellers from requiring, either directly or indirectly, that the buyer purchase title insurance or escrow services from a particular title insurer or escrow agent as a condition of selling the property.

The law does not stop a buyer from agreeing to accept a title insurer or escrow agent recommended by the seller -- if written notice of the buyer's right to make an independent selection is first provided by the seller to the buyer.

A "seller" subject to this law can be a financial institution or and individual lender who foreclosed and acquired title to residential 1 - 4 unit property at the foreclosure sale.  This law applies only to such sellers and their agents.

This law will remain in effect until January 1, 2015.

NACA Save The Dream is hosting a Note Modification event in the Craneway Pavillion, Richmond from October 16 - 20.

This event is structured to try and assist homeowner's attain a Note Modification.  It starts with an orientation for 500 homeowners at a time.  The homeowners bring their financial and hardship documentation, meet with individual NACA counselors who determine the payment the homeowner can afford, scan the documentation and submit it to the mortgage servicer.  The homeowner then goes to meet with their servicer who is right next to the counseling area.  In some cases, the homeowners receive their note modification on the same day. Read the entire article.

The documentation typically required to consider a Note Modification is:

- Copies of all paystubs for the most recent two (2) months

- Copies of the last two (2) months statements - all pages - for checking, savings, investment and retirement accounts, as applicable

- Copies of your Federal Tax Returns for the last two (2) years, including W-2's.  If you are self-employed, copies of your business tax returns will also be required plus a year-to-date Profit & Loss statement

- Completed Financial Statement reflecting all income, assets and liabilities

- A Hardship letter

Placing your house for sale and having it fail to sell may leave you feeling discouraged or frustrated.  If you are committed to moving on with your life, your first experience may be nothing more than a speed bump.

Free Report:  When Good Homes Fail to Sell

This 19 page report covers:
- 5 Basic Reasons Homes Fail to Sell
- Understanding Fair Market Value and List Price
- External Influences on Fair Market Value
- Conditioned to Sell
- Market Price is a Buyer Magnet
- Buyer Viewings in Relation to Price
- Real Estate Marketing
- What Went Wrong? Look for Clues

You have the opportunity to change the game plan, break the status quo and start out with a clean slate.  Download my free report When Good Homes Fail to Sell.

I recently received a phone call from a frustrated mortgage lender.  She has a significant backlog of pre-approved FHA first-time buyers that can't find homes that will accept FHA financing - and the deadline for the First Time Home Buyer Tax Credit is looming.  She asked, "What's going on?"

In order to answer her question, I pulled the Active single family home listings in the $275k - $350k price range ("starter" homes in our Northern California market area) in the three cities with the most homes in this price range.  The results shocked me. 

Of the 43 active listings:

NO FHA

• 11 are short-sales, of which only 6 will accept FHA financing.  Given the 3-4 month average timeframe for a short-sale decision, an offer written on these homes will not be approved and closed by the Tax Credit deadline.
• 3 are cash-only REOs.  The properties won't qualify for any financing.
• 15 are REOs that will not accept FHA financing.
• 12 are "normal" sales that will not accept FHA financing
  

FHA OK

• 2 are "normal" sales that will accept FHA financing - a miserable 7% of the possible listings (excluding short-sales and cash-only REOs).

Is it possible that the 27 "no FHA" homes have such significant pest, health and safety issues that FHA financing would kill the deal?  No.  Does Conventional 10% down financing overlook all pest, health and safety issues? No.

Does the FHA financing exclusion serve the sellers?  No.

Less than 5% of first-time buyers have the funds necessary for a 10% down payment ($27,500 - $35,000) plus loan costs.  Limiting the financing to Conventional decreases the potential pool of buyers to 5% of the first-time buyers and bargain-hunting investors.

Let me play devil's advocate for a moment.  Let's assume that an FHA Offer will cost the seller $5,000 in pest, health and safety repairs, but in exchange for that cost the pool of potential buyers will increase by 95%.  This isn't a marginal increase in potential buyers, this is a huge increase!  The potential cost will be offset by a higher net sales price.

I recognize that REO's are sold as-is.  That being said, am I the only person who knows about the FHA 203(k) Rehabilitation loan that doesn't require any repairs prior to closing?


FHA Fix and Flip 90 Day Rule

Many of the homes in the best condition are investor fix and flips.  Unfortunately, FHA will not provide financing on these properties until they have been owned by the investor for 90 days.  These investors are extremely savvy.  They purchase structurally sound homes that are a cosmetic mess.  They fix holes in the walls, paint, put in new flooring, update the kitchens, add granite counters and new appliances.  They are, for the most part, beautiful and turn-key ready for the market in 30 - 45 days.  They are sold and closed by the time an FHA buyer is allowed to write an offer.

The 90 Day rule serves who?  Protects who?

Are you facing the same issues in your markets?