We found the condo we want BUT there is a $10,000 assessment!!!

           After searching for a condo for months, you finally find the place that is exactly what you are looking for only to find out there is a $10,000 special assessment to be paid over the next two years…now what?  First of all, you may consider looking for another condo and even if you have this one under contract, you can likely get out of the contract without being in default.

            For the sake of argument, let’s assume that you have to have THIS condo and don’t want to search for another one.  Your first and easiest option is going to be to make a fair offer on the property but, state that the seller will be responsible for paying the special assessment at closing.  In a buyer’s market this tactic may work especially if the seller has some equity in the home and is not taking a loss.  Your next option would be to determine how much you are willing to pay for the condo and subtract the $10,000 dollars from that number.

            Now assuming you are getting a loan on the property, it is advantageous to have the seller pay the special assessment even if it means a higher purchase price.  If you were to buy the condo for $400,000 and pay the assessment yourself, (assuming 20% down at 5% per year) you would have a monthly principal and interest payment of $1717.83 plus $5,000 a year in assessments for the next two years.  On the other hand, if you paid $410,000 and had the seller pay the assessment your monthly principal and interest payment would go up to $1,760.77 ($42.97 more per month).  When you consider the extra $42.97 a month, it will take 232 months (also known as a little over 19 years) before you have actually paid the $10,000 dollars.  Accordingly, if you don’t plan to own the property for at least 19 years this will be the cheapest solution for you.

            If you would like more advice on how to save money on your next real estate purchase or have questions about this information, please contact me anytime at the information below.

All the best,

Tyler MacGuire  e-PRO®, SFR

Broker Associate

Omni Real Estate Company

Office: 970-468-2740

Mobile: 970-409-7779    

Web: www.tylermacguire.com

       

“Your Guide to Summit County Real Estate”

First Right of Refusal: What is it and What You Need to Know.

A First Right of Refusal is a HOA regulation that allows members of the association to assume a Purchase Contract from a third party buyer without their or the Seller's consent.  More simply put, if you make an offer on a condo with a First Right of Refusal a letter will go out to all owners in the HOA stating the terms and conditions in the contract.  The owners in the HOA will then have a set period of time (usually 10-20 days) to decide if they want to purchase the condo instead of you.  For an individual to exercise their First Right of Refusal, they will have to be willing to assume the current purchase offer including all of the terms and conditions set forth in the contract.

Essentially, the purpose of a First Right of Refusal is to offer some level of protection to owners in an HOA in the event that someone decides to sell below market value.  For example, let’s assume you and your neighbor own similar condos that are worth $200,000.  If your neighbor falls on hard times and needs to sell their condo fast, they may list it for sale under market value and accept a purchase offer for $170,000.  If this happens it will adversely affect your property value so, you may want to exercise your First Right of Refusal and purchase the under valued unit yourself.  By purchasing the neighboring unit, you become the beneficiary of the under priced sale despite the adverse affect on the value of your condo.

It is very important when purchasing a property in a HOA to know if there is a First Right of Refusal and when it expires.  As a buyer, you don’t want to be spending money on inspections and appraisals just to have someone else exercise a First Right of Refusal and buy the property out from under you.  As always, if you have questions about this or anything else pertaining to Summit County Real Estate, please feel free to contact me anytime at the information below.

All the best,

Tyler MacGuire  e-PRO®, SFR

Broker Associate

Omni Real Estate Company

Office: 970-468-2740

Mobile: 970-409-7779    

Web: www.tylermacguire.com

         

“Your Guide to Summit County Real Estate”

A Strong Start to 2012

It has been a great start to 2012 for the Summit County Real Estate market!  This is demonstrated by an increase in both the number of transactions and average sales price in January 2012 compared to January 2011.

In January 2011, 57 properties sold with prices ranging from $79,900 to $1,699,000 and an average price of $471,390.  In January 2012 the number of transactions increased by 14% to 65 and the average price increased almost 5% to $494,739.

Looking forward, there are currently 134 properties under contract.  If only half of these transactions close in February, that will be another 67 transactions in February 2012 compared to 64 in February 2011.  It will be interesting to see how these numbers play out over the first quarter of 2012 but for now, both prices and number of transactions appear to be increasing compared to last year.

As always, please feel free to contact me anytime at the information below with questions or for more information about Summit County Real Estate.

All the best, 

Tyler MacGuire  e-PRO®, SFR

Broker Associate

Omni Real Estate Company

Office: 970-468-2740

Mobile: 970-409-7779    

Web: www.tylermacguire.com

      

"Your Guide to Summit County Real Estate"