BUYING A CONDO?

You've found your dream condo, and you're ready to relax under the city lights of Atlanta and kiss your commute goodbye. Hold everything. To keep from getting stuck with a lemon, you've got to do some homework. Here are the seven most important questions you need to ask before buying a condo.

1. "What's the Beef?"
Take a look at the minutes of the condo association board meetings to see what the owners have been griping about. If everyone was complaining about the faulty plumbing or the gardener's absence, you know that the complex is having management difficulties. Even if there aren't any complaints, reading the minutes will reveal the sorts of projects that are under way at the complex -- projects the seller may have neglected to mention.

2. "Who's Been Naughty and Who's Been Nice?"
Find out the delinquency rates of present owners. If people aren't paying their association dues on time, that is either a sign of discontent or an indication that the association might be underfunded.

3. "How Much Is In the Repair Fund?"
Ask if the community has done a reserve-fund review in the past five years. Lester Giese, the author of The 99 Best Residential & Recreational Communities in America, recommends the following formula: If the complex is one to 10 years old, the reserve fund should have 10% of the cost of replaceable items (roofs, roads, tennis courts, etc.). Between 10 and 20 years old, the repair fund should be at 25% to 30%. At 20 years, that amount should be 50% or above. Residents who brag that they don't pay much in maintenance may be in a complex that either is not being kept up well or is living beyond its means.

4. "Can You Cover Me?"
If you look at nothing else, get a copy of the certificate of insurance, which is a summary of the association's policy. First see if the replacement costs covered by the policy are an accurate estimate of the cost of rebuilding. Then make sure that the policy has a building-ordinance clause, which means that the insurance will cover the cost of bringing the building up to code if there is any rebuilding to be done. On older buildings, there may have been many code upgrades since the time of construction. Finally, make sure that you understand exactly what the association policy covers and what you are responsible for. The smart condo owner will insure his or her personal belongings, along with any other items within the unit that are not covered by the association's policy. If you have trouble understanding the insurance lingo, take the insurance certificate to an agent whom you trust and who understands the state laws.

5. "Does the Association Present Any Legal Problems?"
Buying a single-family home without a lawyer is no big deal for many people. But with a condo, there's so much more involved. Contact a local real estate lawyer and have him or her go over the bylaws of the association. Do they make sense? Are they consistent with the state laws? Giese, the author, once found that the association bylaws of a large garden-style condo complex had been lifted from the books of a high-rise condo, leaving confused tenants with rules about shared hallway space and the correct use of garbage chutes. Benny Kass, a Washington real estate attorney, recommends that you also have your lawyer screen the association at the local courthouse, to see if any owners have filed suit against it.

6. "Is the Complex Renter-Friendly?"
If the renter population is over 10%, there should be clear rental policies, either listed in the bylaws or tacked on as an amendment. Does the management company find renters for you? If so, do they get enough good renters? Ask other tenants about their experience. In addition, ask to see the association's rental lease, and have a real estate lawyer look it over. Keep one thing in mind, though: An association can change its bylaws to prohibit or restrict renting at any time. The more owners who rent, the less chance that will happen.

7. "Am I My Community's Keeper?"
Watch out for a condo whose owners manage the place themselves. Although many are operated efficiently, self-management can lead to more hassles for owners -- especially those who live thousands of miles away. If the complex is professionally managed, check out the management company as thoroughly as you check out the association. Ask other owners. Ask people in nearby buildings. And be sure to interview the day-to-day manager directly. If you hook up with a bad manager, you can be sure of this: Your dream condo will keep you up at night under those city lights!

• RISMEDIA, May 21, 2010

When a lowball offer TOO low???

Often times in frantic real estate markets where there are more properties for sale than buyers (a.k.a a buyer's market) buyers will automatically get very aggressive on initial offers and even go as far as submitting offers on multiple properties at a time! A practice usually common among investors, is now common among all types of home buyers. The reasoning may be anticipating a desperate seller, testing the waters, or no knowledge (or clue) of the fair market value of a home. But to understand or find logic in the low ball offer you have to look at it from both sides.

On the buying side, before even presenting an offer you and your real estate agent (you thought I'd tell you to go it alone? Ha!) need to determine fair market value of the home in it's current condition. Next you need to determine the bottom line you think a seller will take for a property by taking into account numerous things (payoff, commissions, seller's anticipated profit, taxes, etc.) and then see if the number you are thinking of makes sense. One thing I've learned over the past year is not to let the seller's payoff deter you because some sellers actually have the ability to satisfy second mortgages or shortages on the primary loan in order to close WITHOUT doing a short sale. The most important thing about a 'low ball' offer is that it has to make sense and be well put together. A realtor or the seller will not take an offer seriously if they don't see the basis of your offer; especially if its incomplete, missing docs, contains misspellings, etc.

On the selling side, you should anticipate low ball offers and not be offended when you receive one. The proper response is to either reject the offer or my favorite is countering the offer at full price. Many buyers will submit low ball offers because 'they just had to try', but are still serious about purchasing. Cash buyers are usually always aggressive, but analyzing your bottom line against the offer and factoring in carrying costs, some all cash offers are not bad at all! Always be open-minded and look for ways to structure the deal to make it work. When selling a home, leave the emotions on the table and let the buyers deal with that! On the selling side it's about making the numbers work!!!

The Federal Tax Credit Deadline Has Passed--------NOW WHAT???

Now that April 30th is here and gone it alleviates any questions (so far) if the tax credit will be extended. I personally think that it will be re-introduced after the housing numbers are out detailing the inevitable increase in homebuying and hopefully a slight stabilization if not slight increase in home sales. While April 30th was the deadline to be under contract, June 30th is the deadline to close to be eligible. I hope that an amendment to the program is added to include ANYONE who closed before June 30th.

To agents and to actively seeking homebuyer's credit, it was NOT the ideal market to make a deadline in. From the high number of buyers using FHA and the low number of FHA eligible homes it cause bidding wars that I haven't seen since 2006. Also with the high number of foreclosure and short sale properties, forcing a bank to understand the need to expedite the negotiation process in order to get binding contracts in time was almost futile in every way. I started April with 10 buyers 8 of which were eligible for the tax credit. Seven went under contract in time (two were ON the 30th!) After gaining more buyers, through referrals, I now start May with 10 buyers again with 4 who were unable to secure a property in time.

The market I anticipate this month is going to be more of the same. I think less than 5% of buyers who were actively looking will stop looking because of the expiration of the tax credit. Once people are emotionally invested, money becomes less of a motivator. I think that sellers will take note and still remain motivated to sell. Banks may begin to see the importance of sprucing up these foreclosures a bit to expedite the sale. I also think a positive result of the bidding wars will be better comps (comparable properties used in appraisals) to help increase property values. Which EVERYONE will be happy about.