HOA or No?

Homeowner associations are organizations that oversee a group of homes by setting and enforcing rules as well as maintaining the grounds. They are common in planned developments. Those who purchase homes and agree to their terms and fees at the closing of the home in these communities.

Owning a home in these communities binds the owner to the association’s covenants, conditions, and restrictions (CC&Rs). The HOA also has legal powers, such as placing a lien on the home, imposing fines, or suing the homeowner for not complying with the rules. The HOA creates the CC&Rs and strictly enforces them.

When buying a home in a community with an HOA, it’s important to ask your realtor or the HOA for the CC&Rs to make sure it is up to date and is satisfactory to you as the buyer. Rules of the HOA are different and may be unique in each community so never assume from previous experience or hearsay from others in different communities with an HOA.

For the HOA to operate, there needs to be funds collected through fees paid by the homeowners. Often these fees are high, they can differ even within a development due to variations in square footage, location, and orientation. 

The Benefits of an HOA

  • Property values remain high. With an HOA, homeowners can expect the community will hold to all the standards, regulations, and processes that are put in place to manage all home exteriors and landscaping.
  • Access to amenities. Often, appealing and rewarding advantages to an HOA membership are increased amenities. Having Exclusive access to well-maintained swimming pools, walking trails, parks, playgrounds, fitness centers, golf courses, gardens, and clubhouses is well worth the cost.
  • Standards of compliance. Because of the guidelines that must be complied with, the HOA will not tolerate unruly behavior—whether it’s a rambunctious late-night party in someone’s backyard or a clear disregard for architectural rules. There’s a board set in place to mediate neighbor disputes and set forth consequences when things go wrong.
  • HOA leaders live in their communities and better understand the needs of the homeowners and residents, from the delivery of core services and amenities to decisions that affect the future of the community.

The Downside of an HOA

  • The cost. Being a part of a community with an HOA means regular monthly fees that can be expensive depending on where it is and what type of amenities are available. This bill is not tied in with a mortgage and if not paid, the HOA may place a lien on the home and possibly foreclose on it. The fee can increase over time.
  • An excess of restrictive rules and regulations. An HOA probably won’t let homeowners personalize their homes the way they have always dreamed. Owners must adhere to paint colors, the number of cars in a driveway, fencing, pets (size & breed), the length of their grass, and the composition of a garden.
  • Loss of freedom. Because homeowners are automatically required to agree to the HOA’s strict rules and regulations, there are few avenues to dispute a rule that the owner may disagree with.

The Bottom Line: An HOA has a significant impact on a community with CC&Rs. Maintaining a home can consume a lot of an owner’s time and with an HOA in place, there are plenty of benefits to reap. When it comes to selling a home an owner can feel confident as an HOA exists to maintain the community to increase property values. The rules in place are to protect the property value of the home by ensuring that your home and the homes around your property remain beautiful and desirable all year round. On the flip side, paying a monthly fee and abiding by their restrictive rules that the homeowner may not agree with might not be worth it.

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MYTH: You Don’t Need Title Insurance

MYTH: You don’t need title insurance

Everyone needs title insurance. You may think you know the entire history of the house you’re purchasing, but it’s impossible to know everything. Title insurance protects your right to the property if a previously unknown heir claims ownership of the property if it is later revealed that the “sellers” were not the rightful owners, or if liens against the property resurface. If you have an owner’s title insurance policy, you will not be responsible for paying any of the fees associated with protecting your right to the property, should these types of issues arise.

MYTH: New construction homes don’t need title insurance

Your home could be brand new, but the land on which the house is built isn’t. Chances are, the land had several previous owners before construction began. Buying property on such land opens you up to certain risks tied to ownership issues from previous owners.

Disputed wills, easements, and property liens are just a few of the issues common to land ownership. You could get caught in the mess and end up losing your resources or, worse still, your new property as well. Title insurance is crucial even for a new home and should be on your list of priorities during the closing process.

MYTH: If no one challenges ownership, then the title policy is a waste

At the closing, when you purchase a title insurance policy, the closing company does the bulk of the work behind the scenes. The title company goes through many steps to make sure that everything is in place by that time, including conducting a comprehensive title search and identifying any potential issues. The team investigates the entire history of the property to ensure that you, the buyer, will be aware of any problems that will need to be addressed before closing. By the time the closing comes around, the title company has completed a great deal of research and legwork for you.

MYTHTitle insurance offers only minimal protection

When you purchase a home, you receive the “title” to the property. This title is your legal right to own it. Early in the home-buying process, a title search is conducted to review the history of the property and uncover any issues that could limit your right to ownership. Even after the most meticulous search of public records, there can be hidden title defects, such as tax liens, forged signatures, claims by ex-spouses, and recording errors. These title defects can remain undiscovered for months or even years after you purchase the home.

MYTH: Title insurance is the same thing as homeowner’s insurance

Homeowners insurance protects you so you have the resources to pay for any damage that might occur to your property. Title insurance protects you from anyone else claiming your home is theirs or for some prior owner’s back taxes or encumbrances or any other real property dispute

Title First Agency: Dedicated to innovation and passionate about service, Title First Agency is your comprehensive, nationwide resource for title and real estate settlement services. Headquartered in Columbus, Ohio, Title First has branch offices throughout the Midwest and a robust virtual partner network throughout the country. Title First got its start in 1956 as an affiliate of a local law firm and has since emerged as one of the largest independent title agencies in the nation. Proudly servicing Realtorslendersbuildersdevelopers, law firms, buyers, and sellers, Title First is equipped to serve your residential and commercial title and settlement needs.

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Seller Concessions

Seller concessions are an agreement within a real estate contract whereby the home seller agrees to pay for some or all of a home buyer’s closing costs.

Concessions can be offered by the seller as an incentive to encourage buyers to purchase their home. Closing cost fees can add up quickly and the expense of this, on top of adown payment could be a big reason preventing someone from buying a home. Offered concessions may be more appealing than a lower price as some of the financial strain can be offset because the seller agrees to financially contribute to the closing costs.

If the home has been on the market for an extended time, or it is a buyer’s market, a seller might be motivated to offer concessions. To officially ask for seller concessions, your real estate agent will write out an offer to the seller, indicating a specific amount you hope for them to pay.

Seller concessions are a useful tool in real estate. Used correctly by the seller, it increases the marketability of their home. Buyers often can’t afford to put more money down than they have allotted which turns them away from considering a home. With a concession from the seller in the form of either paying the buyer’s closing costs or paying points to get an FHA or VA loan, (for example) a deal could be done.

Always work with an experienced realtor who will be able to give you all the information about the market, local sales, and the regional housing market. The realtor will be the one doing the negotiating and depending on the condition of the market they will guide you in the right direction.

The Bottom Line: When asking for concessions, the buyer should use the best realtor to help negotiate with the seller. Since they might not be willing to offer everything asked for there will need to be a compromise and a solution that works for both the buyer and the seller. In the end, this can save a lot of money as well as making the entire process of buying a home more affordable and attainable.

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Appraising a Home

An appraisal on a property intends to determine the fair market value. It’s one of the final steps in the home-buying process that happens once the seller has accepted your offer and you have started the work with a lender. A financial institution will not lend money without an appraisal. The appraisal value of a home can make or break a sale, leaving this part of the real estate process a critical step.

The home appraisal is different from the home inspection even though both an appraiser and an inspector will walk inside, outside, and around the property to check everything with a fine toothcomb. The appraiser is finding the value of the home and the inspector is looking for problems or defects with it.

During an appraisal of a home, the appraiser will look at the state of repair, the features, the square footage, as well as the number of bedrooms and bathrooms. Give a list of repairs and improvements made such as a new roof, water heater, air conditioning, etc. The owner of the home should bring forward anything and everything that will help the appraiser decide the general market value.

The appraiser will research all the comparables (“comps”) in the area with features similar to the home. Also provided should be whether the values of homes are on the rise, decreasing, or stable. If there are any concerns that he feels will harm the property’s value, it will be noted. Additionally, he will flag any bigger problems he may see in the foundation, the roof, or any noticeable water leaks in ceilings or floors.

Again, an appraisal can make or break a sale of the home so it’s a stressful time. If the appraisal comes back higher or lower than the sale price, there will need to be more negotiating. If the seller isn’t happy with the outcome, a good realtor will discuss with the appraiser why certain decisions were made. With the help of a realtor, the seller can put together a valid argument as to why the appraisal is not correct.

Appraisals are valid for six months unless the home is in certain markets where homes are selling fast and prices continually change. At this point, lenders usually like an appraisal every three months. The real estate market changes from year to year and even month to month.

The Bottom Line: The process of home appraisal and final valuation might seem beyond your control. But, you can take charge by making some improvements to your home to up the appraisal outcome. Ask your realtor to help you understand what the appraiser will look for so that you can update and make sure your home is ready for show!

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