Ask the HOA Expert

Question: The board is thinking about circulating a survey to evaluate the manager company’s effectiveness. Any suggestions?

Answer: Since the majority of owners are disconnected from the day to day HOA business and have little understanding of the manager’s scope of work, most would not have an informed basis for evaluating the manager’s effectiveness.

An input form might be more effective. List the various tasks the HOA is responsible to perform in general categories like General Maintenance, Landscaping, Pool, Janitorial, Communications, Newsletters, Rules Enforcement, Financial Reporting etc. and ask for specific recommendations for improvement. If the suggestions are directly related to things the manager should be taking care of, the board has something concrete to discuss about job performance.

Question: The Regenesis.net HOA Websites section includes "HOA Website Recommended Content & Layout". One of the criteria states "No password protection except for member information." Why would the HOA not want to password protect certain information like the Reserve Study or the financial statements?

Answer: Concealing (password protecting) information that an informed buyer needs to know is a major weakness of the HOA system. There are few business matters that an HOA should concealed from potential buyers. The budget and reserve study are definitely high on the list of things to disclose. Protecting individual owner privacy is another matter and should be respected.

Question: Can we publish the complete list of what each HOA employee makes or is this a breach of privacy?

Answer: Disclosing this kind of information could create animosity between employees or prompt interference from members who feel someone is paid too much or too little. It is something the board should keep confidential. It is appropriate, however, to disclose the total amount of wages/salaries paid in the annual budget.

Question: During a week of 100 degree weather recently, I asked permission from the board to install a window air conditioner. I was denied. I read the governing documents and rules and window A/C units are not mentioned.

My son has a rare disease and a compromised immunize system. His doctor has recommended carefully controlled temperatures (not too hot and not too cold). I can control the cold part but need A/C to control excessive heat. Shouldn’t I be able to get an exception due to health reasons? I don't want to have to pay his doctor to write a letter to the board.

Answer: The board should make a reasonable accommodation for this purpose. You should ask your doctor to provide a letter at no charge explaining the need for it so the board has the ammunition it needs to make an exception to the rule.

For more innovative homeowner association management strategies, seeRegenesis.net 

Written by Richard Thompson
September 8, 2010 Published on Realty Times

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American Savings

It's a trend that started decades ago. Even former President Jimmy Carter, in his 1979 "Malaise" speech, warned of its effects if Americans continued on their path.

He said, "In a nation that was proud of hard work, strong families, close-knit communities, and our faith in God, too many of us now tend to worship self-indulgence and consumption. Human identity is no longer defined by what one does, but by what one owns."

Yes, more than a handful of Americans are guilty of living beyond their means. The symptom of this fact was never more evident than during the recent onslaught of foreclosures during the recession.

Nowadays, the average American has 3.5 open credit cards, with an average household carrying credit card debt equaling $15,788 (Federal Reserve). And on that they pay an average of nearly 15 percent interest!

Just 20 years ago, comparative figures were practically inconsequential in comparison. The average family had just under $3,000 in credit card debt in 1990.

As a country as a whole we are inching towards the trillion dollar mark in credit card debt. Yes, trillion. The grand total as of March 2010 was $852.6 billion. Compare that to 1968 when consumer credit debt was $8 billion (in current dollars).

The current debt figures outlined above don't even begin to reflect the amount of debts we hold in non-revolving debt, such as car loans, mortgages, and student loans. It's a scary prospect for a nation that was once touted as the economic leader of the world. We are now a nation of debtors.

Is a change on the horizon for the United States? One positive that has come out of the recent recession is a slowly growing savings rate.

The New York Times reported on August 3, 2010, "A new government report released on Tuesday showed that consumers saved 6.4 percent of their after-tax income in June, and that this savings rate had shot up as high as 8.2 percent in May 2009. Before the recession, the rate had hovered at 1 to 2 percent for many years."

It may take a while to repair the damage that has been done by rampant over-spending, however. The New York Times continued that "along with high unemployment, high debt levels continue to discourage consumer spending. American households, though borrowing less, still are paying for their free-spending ways in the credit bubble of the mid-2000s. Their debt levels are far higher than they were in the 1980s and 1990s, when they had less than a dollar of debt for every dollar in disposable income."

Some economists fear that with a larger savings rate comes less consumer spending, something needed to reinvigorate an ailing economy. But in the long-run, a healthier savings rate may mean a stronger economic base for American households.

Financial experts give simple tips on how to start building your savings.

First, create a budget. Take a realistic look at your finances and develop a plan for making sure your monthly expenses do not exceed your income. This may take cutting out some extras that you have become accustomed to, but in reality can do without. If you can't afford to pay for an item without using credit, then you cannot afford it. It's as simple as that.

The same goes for buying items you don't need, instead of putting money into savings. The second simple step is to learn to identify the difference between wants and needs. You may want to have digital cable, but you could certainly survive without it. And even though you may be able to pay all of your bills without using credit, you might be living paycheck to paycheck. What can you do without?

Thirdly, be thankful. Gratitude is a wonderful start in adjusting your spending habits. Most Americans are blessed with a lifestyle and affluence that the majority of the world's population would envy. If your savings rate is anemic, then consider re-evaluating what you really need. Be thankful for the things that you have already in your life. And remember that possessions don't define you, and never will. 


Written by Carla Hill
August 31, 2010 Published on Realty Times

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Rural Housing Incentives

The landscape of American has changed over the years. As population levels grew, so changed rural and urban demographics. Cities have stretched their boundaries to include former farmlands, absorbing formerly rural populations. And young rural dwellers have made the leap to city life, as small American farms and a largely agrarian society has been replaced by industrialized farming and a service-focused job market.

According to the Census Bureau, a gradual shift has been taking place over the last 100 years.

• 1900: 39% urban dwellers

• 1920: 51% urban dwellers

• 1960: 63% urban dwellers

• 1980: 73% urban dwellers

• 2000: 79% urban dwellers

This rapid growth has changed the dynamics of our country. It has put further pressure on our environment and increased strains on local governments to provide education, health care, sanitation, security, and transportation.

The University of Michigan reports that "because governments have less revenue to spend on the basic upkeep of cities and the provision of services, cities have become areas of massive sprawl, serious environmental problems, and widespread poverty."

For those, however, who choose to live rural lives, numerous programs and incentives are in place that can make the process easier.

For example, if you are looking to connect to rural water sources, and you live in certain regions of Arizona, California, New Mexico, and Texas, you may be eligible for a grant that will pay for connecting service lines to a residence. It can also be used to pay utility hook-up fees, install plumbing and related fixtures, i.e. a bathroom sink, bathtub or shower, commode, kitchen sink, water heater, outside spigot, or bathroom, if lacking.

Looking to go green with a small business? The Rural Energy For America Program Grants/Renewable Energy Systems/Energy Efficiency Improvement Program provides grants for energy audits and renewable energy development assistance. It also provides funds to agricultural producers and rural small businesses to purchase and install renewable energy systems and make energy efficiency improvements.

Worried about qualifying for a home loan? The government has programs for that as well, whether you are an individual or builder. Considered "Guaranteed Housing," you can find such help as zero downpayment requirements and no maximum purchase price limit.

For more information on what grants, loans, and programs could be of help to you, contact your local rural housing office. 


Written by Carla Hill
September 1, 2010 Published on Realty Times

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Real Estate Outlook: Mixed Figures

With sharp drops in sales of existing and new homes plastered over the front pages and leading the nightly newscasts, it's no wonder the real estate doomsayers on Wall Street have been working overtime.

And there's no minimizing the bad numbers we've been seeing: A surprising 27 percent decline in resales from June to July, and a 12 percent drop in sales of newly-built houses during the same period.

Yes, most economists predicted that the months following the tax credits' expiration would be negative, so we were forewarned.

But let's not get caught in a Chicken Little economic trap here. Hidden among the recent negative numbers have been some positives that aren't getting much attention.

Start with home values. If families are going to buy houses, they've got to have confidence that the property will at least maintain market value and ideally gain a little over time.

Well, every major index put out recently by government agencies and private researchers has found home prices stable or appreciating in most areas of the country.

The Federal Housing Finance Agency's index, released last week, found home values up by about one percent during the second quarter of this year over the first quarter.

The National Association of Realtors' sales report for July found median prices up by seven tenths of one percent on average from the prior month - not a big deal for sure, but on the plus side, not negative.

Affordability is another key area where things have been slowly improving with little attention. The Wells Fargo-National Association of Home Builders "housing opportunity index" -- which looks at home prices, mortgage rates and what median-income families can afford to buy -- is at a near record high point.

Thanks to 30-year mortgage rates in the mid-four percent range, 72 .3 percent of median-income American families can now afford to buy the median-priced house. Historically that number has stayed in the low 60 percent range, and sometimes slipped below 50 percent.

That's great, you might say, but those families have not been buying lately even though they can afford to. Why?

Every consumer poll has the same conclusion: People are worried about unemployment -- potentially their own.

But now there might just be some modest good news just around the corner on jobs. Last week's new filings for unemployment benefits dropped by 6 percent - far beyond what most economists predicted and the first decline in weeks.

Bottom line: Don't be rattled by the rough patch of bad housing news we've been seeing. The fundamentals are in place for improvement once the economy begins generating new jobs again. 


Written by Kenneth R. Harney
August 30, 2010 

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Pre-Qualifying for a Mortgage

One of the first steps to take as a potential home buyer is to get pre-qualified for a loan. This step helps both you and your lender learn just how much home you can afford. And you should begin this process before you even start looking for a home.

According to the Federal Housing Administration (FHA), their pre-qualification essentials include:

• Having a steady employment history, at least two years with the same employer.

• Consistent or increasing income over the past two years.

• Credit report should be in good standing with less than two thirty day late payments in the past two years.

• Any bankruptcy on record must be at least two years old with good credit for the two consecutive years.

• Any foreclosure must be at least three years old with good credit for the past three years.

• Mortgage payment qualified for must be approximately 30 percent of your total monthly gross income.

Other lenders' ideas regarding pre-qualification are all similar to those outlined above. A mortgage lender will look at your credit report, earnings, debts, and savings in order to see how much home you really can afford.

Why is this important? In recent years there has been a “mortgage crisis,” where the industry was rampant with fraud and with loans that put homeowners into situations they could not afford. As payments rose, homeowners found themselves unable to meet their monthly obligations. According to Realtytrac.com and their U.S. Foreclosure Market Report, in January 2010, one in every 409 households in the country had received a foreclosure filing.

Since pre-qualification for a home loan typically costs you nothing, but gives you both a goal of what homes are in your affordability range, as well as how much money you should look to have saved for a downpayment, you can hardly wait to take this step.

What if the home you want is out of your reach? Experts recommend reducing your debt and saving up a larger amount for your down payment. Let's say your dream home is $225,000, but you only qualify for a $180,000 loan. If you have a downpayment of $45,000, then you are ready to make a move!

During the pre-qualification process, you will be expected to provide the following information:

• your gross monthly income

• your total monthly payments (car payments, credit cards minimums, child support payments, student loan payments, any other monthly debts)

The lender will be looking to see that your debt to income is below about 40 percent, and the lower the better. So, if you are looking to buy in the near future, be sure to talk to your lender soon! 

Written by Carla Hill
March 8, 2010 Published on Realty Times

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How Mortgage Rates Compare

You've heard it all across the media. Interest rates are at historic lows. If you are new to the mortgage process, these figures and statements give you little frame of reference.

Let's take a moment to look at where interest rates have been over the last few decades, and what today's rates really mean for homebuyers.

Interest rates are affected by a gamut of factors.

According to the Federal Reserve Bank of New York, "Lower interest rates make it easier for people to borrow in order to buy cars and homes. Purchases of homes, in turn, increase the demand for other items, such as furniture and appliances, thus providing an additional boost to the economy. Lower interest rates mean that consumers spend less on interest costs, leaving them with more of their income to spend on goods and services."

And this is, after all, what you want people to do in a down economy. You want them to reinvigorate the economy with spending.

The Fed continues, "If the rates that consumers and businesses have to pay to borrow rise too rapidly, however, spending may decline, leading to an economic slowdown."

So, it is a intricate dance the powers that be must perform in order to steer the economy the best they can. They, namely the Federal Reserve and Banks, are seeking stable prices, high employment rates, and sustainable growth in the economy.

30 years ago, in 1980, when many first-time home buyers parents were making home purchases, Freddie Mac reports that the 30-year fixed rate mortgage hit a staggering 16.32 percent.

Let's compare that in relation to today's interest rate, averaging around 4.5 percent.

• In the most basic terms, a 30-year fixed-rate mortgage for $100,000 at 16.32 percent, will cost you around $1,450 a month.

• For the same mortgage at a 4.5 percent rate, you'll be paying $580 a month.

The difference is astounding, and this is the main reason the media is shouting news about interest rates. If you are in the position to buy, now could very well be the time. 


Written by Carla Hill
August 26, 2010 

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Social Benefits of Housing

Recent research from the National Association of Realtors (NAR) outlines the importance of homeownership's relationship with the economy, but of the social benefits it provides.

NAR reports, "The economic benefits of the housing market and homeownership are immense and well documented. The housing sector directly accounted for approximately 14 percent of total economic activity in 2009."

What sorts of social benefits are provided through homeownership?

According to the study entitled, "Effects of Homeownership on Children: The Role of Neighborhood Characteristics and Family Income", teens from households of homeownership have a higher rate of staying in school than teens from rental households. In addition, daughters of homeowners also experience a lower rate of teen pregnancy.

In terms of education, in the study, “Measuring the Benefits of Homeowning: Effects on Children,” there have been significant findings that homeownership has a strong positive effect on educational achievement.

The NAR report goes even further to show that "the average child of homeowners is significantly more likely to achieve a higher level of education and, thereby, a higher level of earnings."

Homeowners deal daily with issues pertaining to home maintenance and financial responsibility, something NAR research shows teaches children "life management skills."

Studies have also found that homeownership increases the amount of civic participation in a community. This is due in part to homeowners feeling that they have a higher, more permanent stake in their community and its issues.

For example, a study by Glaeser and DiPasquale found that 77 percent of homeowners said they had at some point voted in local elections, compared with 52 percent of renters.

In addition to these great social benefits, higher levels of homeownership have shown to reduce crime rates in communities. "Homeowners have a lot more to lose financially than do renters. Property crimes directly result in financial losses to the victim. Furthermore, violent non-property crimes can impact the property values of the whole neighborhood. Therefore, homeowners have more incentive to deter crime by forming and implementing voluntary crime prevention programs." (NAR)

For more information about these studies, please visit Realtor.org. 


Written by Carla Hill
August 19, 2010 

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Call Alvin's Team Today! 877-651-7810 
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