HOA Sales: 6 Important Tips for Buyers

by Guy Berry

When a buyer is looking at a single-family home, they usually focus on location, how it shows, property condition and price.  If a house meets these four criteria, they will make an offer. However, my experience is that when a buyer is looking for a condo or other HOA properties, they fail to understand that there is so much more to consider. Too often the buyer (and their buyer’s agent) are overwhelmed with the 300-page HOA documents. Don’t forget, these documents are a contingency of the contract. The following 6 things need to be reviewed very carefully:

 


1. Financing

The rate and type of financing available for that specific complex will be based on many things, including percentage of owner occupied, percentage of past due HOA, FHA approval, multi-story condos, litigation, and other factors. Make sure you get your buyer to a lender that understands HOA financing.

 


2. CCR’s

The important issues to investigate are the restrictions for that specific complex. The HOA might require you to park only in your garage, decide what animals you can or can’t have, the colors of your house, what you can and cannot have on your balcony, whether you are allowed to repair your car on site, cable antenna restriction, etc. This list may seem endless but even if your buyer loves the property, the restrictions might affect the buyer’s enjoyment living there.

 


3. Finances

The Buyer will be provided with a large stack of financial documents.  The first thing to focus on is how well the complex is managed. Take a look at the budget. Are they raising enough money in income to cover the HOA day to day expenses?

 


4. Reserve Study

Since the HOA will be responsible for repairing and replacing all the major components on the property (e.g.  pool, clubhouse, parking lots, lights, roofs, etc.), make sure to check if the HOA has done a recent reserve study.  Did your buyer get a copy? HOA law requires the HOA to frequently hire a 3rd party to do an onsite inventory to determine four things:

– The total life of that item (“tile roof – 40 years”)
– The remaining life of that item at time of survey (“25 years”)
– The estimated cost to replace roof (in 15 years)
– Divide that estimate replacement cost by number of years and number of units to determine how much the HOA has to collect this year from each owner for that item. This will insure they have the funds pre-collected when the roof expense comes due in 15 years.

 


5. Reserve Funds

The reserve study tells us how much the HOA should have collected in the past. HOA law states that the HOA must disclose:
– How much reserve money the reserve study should have collected to date. That would be 100% fully funded.
– How much money they have actually collected.
– The percentage between what they should have in reserve vs. what they actually have.

It is not uncommon for an HOA to be behind on collecting reserves because no one wants their dues raised.  So, should your buyer buy into a complex that is only 25% funded?  More money will be needed in the future, whether the HOA has collected enough or not.  The result may be a major dues increase or a special assessment of all homeowners.

 


6. Financial Statement Knowledge

Remember it is the seller, not the HOA, that is responsible for itemizing and delivering the correct documents to the Buyer. Is this HOA ran well?  Are they large enough to hire a property manager? (Or is the Board Treasurer, who is actually an engineer at Google, preparing these complex set of documents?) And the big question: Is your Buyer sophisticated enough to read and understand these documents? There are companies that the Buyer can hire to analyze and review these documents for them. It seems to me that when you are discussing the inspection options with your buyer, you should advise them to get qualified help in understanding what they are buying into.

 

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Consumers Focus on Reviews, Star Count When Choosing a REALTOR®

By Eric Boyenga, Boyenga Real Estate

The widespread accessibilstarsity of the Internet has brought about an era of increasing transparency in the world of real estate. With more people starting their search for a real estate agent on Google rather than asking their friend or neighbor, an agent or broker’s online reputation has become crucial.  More specifically, consumers are focusing heavily on the reviews and “star count” found on popular websites such as Zillow, Yelp, Facebook, Homelight, Trulia, Realtor.com to name a few. Because of this, many consumers often start and end their REALTOR® search online, bypassing the traditional personal recommendation. Even if a REALTOR® is referred by a friend or family member, a blemished reputation or weak online presence can cause the consumer to search elsewhere for an agent.

This new online era of agent search has made it critical to build and manage your online reputation.  Having powerful reviews as an agent or a team goes a long way in helping buyers and sellers decide who they end up choosing to represent them. But going further than that, the reviews of individual agents will reflect back on their brokerage or team as a whole and vice versa. So while agents should place a heavy focus on the client experience knowing the power of positive reviews, brokers should simultaneously be keeping a close eye on their firm’s online reputation, as well as the reputation of the agents working under them. The interesting and inevitable transition from word of mouth recommendations to online reviews has transformed consumer’s search, and understanding the industry’s transformation will help agents and brokerages succeed in the modern world of real estate.

Take Your Marketing to the Next Level by Using Video

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By Julie McCoy

In order to effectively market your business, you need to incorporate video.

Consumers are looking to get the information they need quickly and video allows them to do that. They would much rather watch a one-minute video than read, because it saves them time. Video also is more entertaining than reading.

Another benefit of using video in your marketing is that you can post it on a variety of outlets, including your web site, Facebook and YouTube.

“One piece of content can be used over a broad range of channels,” said Thomas Arballo, SCCAOR’s new videographer.

As a SCCAOR member, you are entitled to a FREE 60-second professional video (a $300 value) shot in our in-house studio. Why not come in and take advantage of this great member benefit and use the video in your marketing efforts? Click here to schedule an appointment.

It’s important to work with a professional to make your videos, Arballo emphasized. “It takes all the guesswork out of it,” he said.

Hiring a professional can cost $1,000 or more per video, but it’s worth the investment, Arballo pointed out. A professional already has the video equipment, so you don’t have to go out and buy anything. Additionally, a professional has more video experience. He or she will know from which angles to get the best shots and will be able to determine the best time of day to shoot the house. A professional also will be able to do a better job editing the final product.

When you work with a professional, you have someone to bounce your ideas off of. A professional also will be able to come up with ideas you might not have ever thought of, Arballo noted.

If you’re looking for a professional, start by asking your family, friends or colleagues for referrals. Should they not know of anyone, go to local businesses and ask them who they use for marketing. Find out who their web designer is and then ask the web designer if they know of a video person, Arballo said.

Arballo noted that it’s important to trust the professional you work with.

“The best relationship I have with clients is when they fully trust me,” he said.

If you’re going to try shoot videos yourself, you need to buy your own equipment, including the camera, microphone that can mount on the camera and lights. It’s also important to figure out who your audience is and do some research, Arballo said.

Mike Bui of Equity One Real Estate has incorporated video into his marketing efforts for the past six years.

“If they are not using video, they’re missing a whole medium of being able to connect to potential clients,” he said. “Video is the No. 1 thing that people like to watch on their phone, their tablets and their computers.”

Bui noted that video has made an impact on his business particularly in the last three years. Currently, about 70 percent of Equity One’s marketing budget goes toward video while the remaining 30 percent goes toward print advertising, according to Bui.

It’s important to make sure your videos are short and sweet, straight and to the point, Bui emphasized. A video should be one minute to two-and-a half minutes long. The first 10 seconds have to be an eye-catcher. Often if a video lasts longer than a minute and a half, people will skip over it and go to another one.

Millennials like to watch videos, so using this medium is a good way to reach out to this large and growing generation, said Bui, who is a Millennial himself.

Equity One is doing more and more videos, Bui said. “We’re trying to do two videos a week now,” he said. “We’re pushing out agents to do more live stream videos, so it seems more real life. Those videos actually get watched a lot more than canned videos. People like to know that they’re watching live video.”

Don Jessup of Silicon Valley Associates began using video three years ago.

“It’s okay to make stumble once in awhile,” he said. “It makes you human, a little more real. Have fun with it. Just do it.”

Jessup incorporates video in his biweekly show, which provides company and industry news. He also does video tours of homes and uses video in emails, for example when he emails people to thank them.

Additionally, he uses video to promote events in which Silicon Valley Associates participates.

“Everyone wants to see what we did at Make-A-Wish,” he said. “You’re not just doing business, you’re doing other stuff.”

It’s important to have a call to action with your video, Jessup emphasized. “If you don’t ask, you don’t get,” he said. “In everything you do, there has to be a call to action.”

In order to be competitive, you need to use video, Jessup emphasized.

“If you are competing with the big boys, so to speak, you need to be doing it,” he said. “It makes every deal easier to close. If you’re going to be in the Top 10 percent, it’s one of the things people do.” Video provides a third-party valuation when people look for you on the web, Jessup noted. “Video is another thing when they search Don Jessup,” he said.

If you aren’t already using video to market your business, now is the time to start. Businesses are increasingly turning to video for their marketing needs and this will only continue to become more popular in the years to come. Video isn’t a trend that’s going away, it’s here to stay.

 

Boomerang Buyers Making a Comeback

By Julie McCoy

 

About 7.2 million people lost their homes due to a foreclosure or a short sale in the last recession, according to Irvine-based RealtyTrac. The good news is that this year and in the years to come, many of these people are getting back into the housing market again.

More than half a million  “boomerang buyers” re-entered the housing market last year and this year that number is expected to jump to a little more than 1 million, RealtyTrac predicts. “This is kind of a year where they really start coming out of the woodwork,” said RealtyTrac Vice President Daren Blomquist.

In the next couple of years, by 2018, the number of boomerang buyers getting back into the housing market is expected to go up to more than 1.3 million.boomerang

Using foreclosure, affordability, and demographic data,  RealtyTrac predicts nearly 3.5 million Americans will become eligible to buy a home over the next three years.

“Realize you’re going to be getting a lot more interest from these folks,” Blomquist said. “Don’t discount these boomerang buyers and say, ‘I don’t want to deal with these buyers.’ This is going to be a growing part of the market for the next several years.”
The term boomerang buyers is a good name for them because they’re rebounding and coming back, just like a boomerang does when you throw it.

In some ways, boomerang buyers are similar to first-time buyers in that they don’t have a lot of money for down payment. But they also are different from first-time buyers in that they have been home owners before, Blomquist pointed out.

“They are not going into this totally blind,” he said. “They have actually learned about home ownership [unfortunately] the hard way. You’re not having to educate these folks completely on what home ownership is all about.”

Before you go too far down the path of looking for homes with boomerang buyers, make sure their history has been repaired, Blomquist advises. “That may take some time,” he said. “Coordinate with your mortgage broker to educate yourself as to what are the guidelines for FHA loans and Fannie/Freddie loans. Talk to the mortgage broker you use and get a template from them as to the time frame for boomerang buyers.”

Homeowners who hb2ap3_thumbnail_unnamed_20160715-001420_1ave gone through a foreclosure have to wait seven years to get it off their credit history and it typically takes three years (sometimes more, sometimes less) before they can get an FHA loan. Now that it’s been nine years since the recession started, many homeowners who experienced a foreclosure when it first began have passed the mandatory waiting periods. They have used the time to repair their credit and are now in a position to be able to buy again.

You as a REALTOR® need to become an advocate for boomerang buyers, Blomquist stressed. “The process of re-qualifying can be painful,” he said. “They are having to drudge up the bad stuff that happened seven years ago. That’s painful to relive that. You should be their advocate in helping them tell the story of why they were the victims, assuming they were. I think a lot of people were. You are the advocate and the buffer between them and the lender as they go through this somewhat painful process of re-qualifying,”

Don Jessup of Silicon Valley Associates worked with several boomerang buyers last year.

“I am sure we could have worked with a lot more of these people,” he said. “They have the ability to pay again. A lot of people are still trying hard to re-enter the market.”

While Jessup isn’t currently working with any boomerang buyers, he said he would be happy to start working with them again.

“I am not personally actively searching them,” he said. “It’s a good market. The problem is how do you find them. I think you could run ads saying, ‘Lost your home in 2007 or 2008? Now is the time to get back in the market.’ Offer credit seminars to people who have lost their homes.”

It’s really important to be sensitive when you’re working with boomerang buyers and to not be condescending or judgmental, Jessup emphasized. “Empathy is a good thing,” he said. “It has got to be running
through their mind, ‘What if I made a bad decision this time?'”

The reward of working with boomerang buyers is you’re helping people get their life back, Jessup noted. “There is a sense of accomplishment in getting a piece of their life back that they lost,” he explained. “It adds a sense of security in their lives when they get back to being a home owner.”

The challenge of working with boomerang buyers is that you have to be more aware of credit issues and pair them with a good lender who understands boomerang buyers and get them through the pre-approval process, Jessup explained.
Younger Baby Boomers and older Millennials are more interested in re-entering the market than older Boomers because they have more time to pay off a new home, he pointed out.

Recruiting and Retaining The Right Way

By Jim Myrick, Keller Williams

interview-1018333__180Have you ever heard the saying, “If you want to know the person’s character, look at his friends?”

The same holds true for Managing Brokers.  The agents in their office say a lot about the values and success of their business.

Are you being deliberate about who you are trying to recruit and retain? When it comes to agents,  talent attracts talent and non-talent does the same.  What also holds true is that non-talent repels talent.

Is your brokerage business set up to attract the best in the business or are you creating a group for the Island of Misfit Toys?

I think one of the big mistakes that Managing Brokers make is the same thing that many agents make. They try to be all things to all people.

What are the values and business model of your brokerage?  Don’t be afraid to put it out there and tell your story.  It will attract some and repel others and that is okay.  Who you will not hire also says a lot about your business.

Our business is becoming more and more transparent.  With the help of systems like Homesnap, everyone can see the production and type of business that your office and agents do.

After leaving management and becoming a partner in a larger office, I would get comments from associates saying, “Did you get tired of babysitting?”  I found it interesting how agents viewed their associates and themselves. Agents seeing their brokers tolerate and even cater to unprofessional and disrespectful behavior is extremely damaging.  Setting the bar and being uncompromising on it will reflect your character.

Terminating someone who violates your company values can actually be a good thing if done with class.  It shows that you have the courage to adhere to a set of principals and draws a line in the sand for you current associates.

When you put together a group of independent contractors, you can’t manage activities but you can have a common list of guiding principles.

Great sources for this are not only your competition but other successful businesses outside the real estate Industry. I call it being a “Business Scientist”.  Do the research to see what works and then implement it in your own business.