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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.

 

2016-nar-global-goldThe National Association of REALTORS® (NAR) awarded the GOLD Global Achievement Program Award to the Global Investment Council of the Santa Clara County Association of REALTORS® (SCCAOR) at its national meetings in Orlando, Florida. The award, which was won by SCCAOR’s Global Investment Council during its first year of existence, is designed to recognize and reward the most active associations in global business.

Brad Gill, the committee chair of the Council, said that it was a great privilege to serve as chair for the global investment council during its inaugural year.

“To receive such recognition from NAR this early for our council reassures me that we have created something great for our general membership,” said Gill.  “All the member volunteers on our committee as well as our staff liaisons have worked diligently this year to ensure that we will have a strong global presence here at SCCAOR now and well into the future.”

The Global Investment Council at SCCAOR coordinates with other internal committees and external organizations to make sure that its association is the recognized local resource for global real estate and multicultural clients.

NAR presents the GOLD Award to Councils that demonstrate “exceptional commitment to building members’ awareness of the global and multicultural business opportunities in their local markets.” Councils were evaluated in five focus areas: Business Plan, Marketing/Communication, Events/Education, Outreach and Benchmarking.

“SCCAOR is pleased to bring its members the resources, connections and training they need to be successful in the Global Real Estate Market,” said Hilda Ramirez, Director of PR, Education, and Events at SCCAOR. “The evolution of the internet has made investing in global real estate one of the fastest growing sectors in the profession.  It is an honor to be recognized as a NAR Gold Global Council in our first year of operation.”

 

For more information, visit www.sccaor.com/international

chiliA new King of Cuisine was crowned last night at the 2016 Santa Clara County REALTORS® Foundation Chili Cook Off. Congratulations to Pete Smith of Intero Real Estate Services on his winning recipe, Pete’s Fire Breathing Dragon Chili. It was delicious; ingredients included 17 pounds of beef sirloin and a few jalapenos for extra kick. For the first time in the history of the event, the same entry received top honors from both the “Celebrity Judges and the People’s Choice Award”. Pete’s name will be proudly added to the perpetual trophy. Proceeds from the event support the grants awarded by the charitable arm of the Santa Clara County Association of REALTORS, the SCCR Foundation.

By Nick Pham, Broker/Owner of PN Real Estate and Planning Commissioner for the City of San Jose

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You can become more knowledgeable as a REALTOR® by tapping into the City of San Jose’s web site. The site provides a lot of great information about the housing market, development projects and even permit projects.

When you are aware of the city’s future development plans, you become more of an area expert.You can better help your clients with their buying, selling and investment decisions.

Every city planning department has a “General Plan” that outlines the future of the city. San Jose’s General Plan Envision San Jose 2040 outlines all the major community strategies, growth areas and land use policies for the entire city for the next 24 years.

The city’s web site also provides land zoning information as well as building permit information. You can simply enter a property address and find out what zone it is in and potentially how the neighboring zoning may affect your client’s decision.

San Jose has seen major development growth since the stock market crash of 2010.   There are many projects, both residential and commercial, sprouting in every neighborhood.

I have learned that by being a resource of information, my clients often reach out to me about their real estate and non-real estate-related questions. This continues to put me in front of them.

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.