I think every agent should be asking their clients this question.  Most have no idea what living in a condo complex means, especially the downsides.  I can tell you in my practice as an expert witness in real estate litigation cases,  that these issues come up in trials all the time.

We all know the upside.  There is no yard and most owners,  drive home,  push the garage door button, drive in and they are home.  In the morning,  they reverse the process.  And,  they tend to be newer,  larger and less commute compare to houses.  But what about the downsides?

The first one is financial.  With most HOA fees hovering around $350-400 per month,  this is deducted from your buyer’s ability to qualify.  $400 per month,  will service about $50K in mortgage payments.  Meaning that if you buyer is looking at $350K condos,  you can show your buyer $400K homes.  So,  is a condo right for your buyer?

The biggest disadvantages the restrictions.  Yes,  they are well meaning and designed to keep the prices up in the neighborhood but you need to warn your buyer about these limitations on their quality of life.  Here’s a few:

• They may want a canopy to cover their patio but the HOA says no
• They may be a guy who like to fix his own car,  but the HOA restricts this
• The HOA may not allow homeowners parking in the Guest parking but the buyer’s teenager also has a car
• The top condo might be disallowed from having hardwood floors
• If your client is a free soul,  they might be bothered by the fact that the HOA decides what color the outside of the house or front door can be painted
• They will decide how loud your stereo can be
• They will decide what time you can use the pool
• They will decide what pets you may have and even if allowed,  what size
• They might restrict political signs
• The list goes on and on

This is why it is so critical for your buyer to read the HOA docs so that they aren’t shocked once they move in.  And, when they do,  it is very easy to blame the agent.  So,  have this very serious discussion with your buyer “before” they go into contract,  not after closing.

Thanks to my friend and real estate attorney,  Mark Strombotne,  who has prepared a list of new California laws that affect real estate for 2012.   Here are a couple that are most interesting with a link to his website to cover them all and a more detailed description of the law:

• Water Conserving Plumbing:  The TDS will be modified to include a question as to whether the property has water conserving fixtures (shower head, toilet, etc).  In addition the law includes a couple of other issues that you should understand.  After Jan. 2014,  if a house is remodeled ,  a homeowner must upgrade to water conserving fixtures to get a final permit.  And,  by 2017,  ALL houses will be required to to have these fixtures in their home.

• Owner’s right to rent Condos or tow homes:  A homeowner association can only restrict renting one of these units if the restriction existed when they purchased the unit.   And,  HOA docs are supposed to clearly describe any restriction that exist.
• Recycling:  An owner of an apartment house of more than 5 units must arrange to provide recycling services for the building.  Also, a landlord can require their tenants to separate their recycle their waste.

• Domestic Violence:  A tenant who is a victim of domestic violence may terminate their tenancy  if done within 180 days of the incident.

• Tenant Smoking Ban:  A residential landlord can prohibit smoking inside or outside the building if it is included in the rental or lease agreement.

• Real Estate Office Managers: A broker can legally appoint someone else to supervise and manage the office.  Under the new law (B&P Code 10164),  the office manager is subject to disciplinary action by the DRE for failing to properly supervise the day to day operations of their agents.

• DRE fines: The DRE can issues fines up to $2500 if they believe the Licensed person violated DRE rules or if an unlicensed person engaged in licensed activities.

• Tax Delinquency:  If a person fails to pay their taxes to the state of California,  DRE may suspend or refuse to renew an agents real estate license.

For more laws and a better description of these i have mentioned.  click here to go to Mark’s newsletter.  You also may want to signup for his monthly newsletter.  It is always informative.

More next time.

Guy Berry,  the industry’s risk manager.

Http://www.guyberry.com

I took a break from my real estate and real estate expert witness work to attend the Keller Williams national convention, called Family Reunion.  I and 9000 of my best friends were in Orlando, Florida from Sunday until Wednesday.  Many of the leadership stayed over till Friday.  To say it was amazing would be an understatement.  They offered more than 300 classes,  all taught by agents who actual do whatever they were teaching.  But, was most amazing was their volume and their age.  I attended one class where the lowest volume on the panel was 75 closings,  while most had 200 or more.

The big change is teams and using social media to drive leads to the agents.  Keller Williams in the book,  Millionaire real estate agent,  shows an agent how to grow their business by hiring the right team members,  starting with an executive assistant ….not a $10 per hour gofer to run copies.  In fact,  KW offers a 2 day and 4 day class on Recruiting,  hiring and motivating your team.  Since KW agents work at a 100% commission plan after X dollars,  what other company would help you build a team?

Another announcement was that KW paid $30 Million or so in profit share back to their agents in 2011 and have paid over $350 million since the program began.  Our leader,  Gary Keller,  ask the question.  What if they had taken the $350 million and used it to BUY companies like the currently largest company has.  INTERESTING QUESTION.

The other announcement was that Keller Williams is on track to become the largest company in North America in 2012.  This combined with statistics showing that KW actually grew in unit sale,  dollar volume,  sales per agent and several other categories,  while other company (and the entire housing market) was down substantially.  Interestingly,  well respected REAL TRENDS reported that Realogy,  owner of Coldwell Banker,  ERA,  Century 21 and Better Homes and Gardens decided to wait to release their 2011 numbers until after the Keller Williams Family Reunion events.   Hummmm.  Bad news to report?

I am madly in love with Keller Williams for the way their treat their agents,  their integrity and their motto …”GOD, FAMILY, BUSINESS,  in that order”

Contact Guy Berry 408-690-2998 for further information.