Updated: Saturday, April 4, 2020
Should You Buy a House During the Coronavirus Outbreak?
Shark Tank star and real estate icon, Barbara Corcoran, is the latest to weigh in, telling TMZ that, Nows the time to score a steal, they said. She told us buyers who are willing to pay special attention to details can find properties discounted by as much as 25. Shes seen it happen in NYC, and says that kinda deal wont be uncommon due to the harsh economic reality facing millions of Americans. She says if sellers are willing to list right now during a pandemic, its likely because theyre desperate to unload the property. That adds up to great deals...if youre able to buy now.
So, if youre looking to make a move right now, what do you need to know and what should you be looking for?
Yes, its crass to say that one persons loss is anothers gain. But the reality is that some of those whose jobs and/or finances cant withstand an economic downturn may end up losing their homes. Its not out of line to think that there is going to be a new wave of foreclosures >
Between the low mortgage rates and the potential for home prices to come back down if there is a glut of distressed properties that hit the market, there could be a good buying window for buyers.
This could also be a good time to consider real estate as an investment toolespecially in light of the recent stock market drop and those low mortgage rates.
Withnbsp;historic low rates, it is a good time to consider investing in real estate, Victoria Shtainer, a real estate agent and expert at Compass in New York, told Realtor.com. Low rates give you more buying power, and we have been negotiating amazing deals for our buyers. Given the current volatility in the stock market, investors are reassessing asset allocations in their portfolio, and considering how real estate may fit into this from an asset allocation standpoint.
Realtor.com added that buying an investment property can be a valuable asset and a good way to generate passive income, and it might also provide tax write-offs and incentives that you wouldnt get on other instruments.
For a historical perspective on real estate vs. stocks, check out this piece by Bigger Pockets, which provides a ton of data points as well as this nugget: Throughout modern history, residential real estate has actually boasted an extremely high rate of return with low risk.nbsp;
A few things to keep in mind when buying now
Given the current situation around the coronavirus quarantine, the way you buy a home will likely be different. You cant expect open houses or, in many cases, in-person home tours, right now Although, youll likely walk through a home you wish to purchase with an inspector during your escrow process.. Your escrow timeline may also be impacted.
"I recommend working with your lender early, even before the offer is accepted," Beatrice de Jong, consumer trends expert atnbsp;Opendoor, told Business Insider. The home buying process is taking longer than usual, and you could end up waiting around if you dont get a jump start.
The delay is partially due to the fact that lenders have been inundated with refinancing applications from existing homebuyers, but also because of work-from-home mandates that limit what some of the professionals involved in the process can do.nbsp;
Yes, the influx of refinancing applications has overwhelmed lenders but thats not the only reason the process is slowing down, they said. Many companies employees are now working from home, which sometimes hinders them from working as quickly.nbsp;
That can affect multiple aspects of the escrow process, like the appraisal. The appraiser physically has to go out to the house...Many of them are actually asking to have quarantine clauses built in, Andy Taylor, General Manager ofnbsp;Credit Karma Home, told Business Insider. They want to know that the home theyre going to isnt under quarantine because someone there is sick from this virus thats going around.
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Home Improvement Projects to Tackle During the Quarantine
Youre working from home, which means youre bored, and youre looking for stuff to do. If you own your home, that stuff probably means home improvement projects. Weve got tips on what to tackle during the quarantine.
Do an even deeper clean than usual
It is spring, after all. This year, in addition to annual spring cleaning list, add a few tasks that are specifically intended to kill germs and improve the air quality in your home.nbsp;
Its best to check if your cleaning materials are in the list of approved products >
Its also a good time to change your air filters and opt for a better quality than you typically get. They wont prevent coronavirus, according to experts. Your typical HEPA filter is not going to be able to remove coronavirus from the air, Dr. Erin Sor>
But, they can help keep dust and pollen away, which is important for household members who have allergies and breathing issuesif you buy the right ones.
Regular HVAC filters are intended to protect the equipment, not your lungs and sinuses, said Airista. While ordinary furnace and ac filters do help to remove some dust from the air when changed regularly, they do little to trap the microscopic particles that cause the sneezing and wheezing of allergy season. Thats why you need special air filters for allergies that are designed to stop those tiny particles. They are called high energy particulate air filters or more commonly, HEPA filters. Because HEPA filters are made from densely packed layers of glass fibers instead of paper, the best ones are able to trap more than 99 percent of pollen, dust and smoke particles and keep them out of the air you breathe every day.
After youve identified that your filter is HEPA, look for the MERV rating. HVAC HEPA air filters for allergies are rated on how well they block particles of different sizes. The rating system is called the minimum efficiency reporting system, or MERV. The ratings range from MERV 1 to MERV 12, with the higher number indicating filters that are capable of removing the smallest particles, including many species of pollen.
Have some leftover paint around the house? Touch up those walls and baseboards. If not, home improvement stores are still open if youre able to get out and, if you do, be sure to abide by the appropriate social distancing rules and take proper safety precautions. Walmart also has paint, so you can pick up a couple of cans when youre getting groceries or other necessities.nbsp;
A fresh coat of paint will refresh your space and also make it feel newwhich you probably need right about now.
Clean out your closets
Face it: Even the most organized among us can have a messy closet, and now is the time to make it right, said Curbed. Start by taking everything out of the closet, purging whats no longer used, and cleaning the interior. If its a clothes closet, sort your clothes by category and be sure to hang delicate items and stack thicker things like denim. Put your most-used items at the front, while seasonal or ra>
Build a garden
Not only will it give you something to do, but also something to eatwhich can come in handy if the quarantine period goes on for an extended period of time. Fast-growing vegetables likes arugula,nbsp;lettuce,nbsp;radishes,nbsp;spinach, andnbsp;turnips can go from seed or seedling to harvest size innbsp;40 days or less, said The Creative Vegetable Gardener.
Stick to projects that are not super labor intensive or that will take a long time
Getting projects taken care of in this interesting time is about making smart choices. Someone in the family could get sick, or you could be called back to work sooner than expected. You probably dont want an unfinished project when its time to get back to regular life.nbsp;
Limit the products you need
You could run into supply chain issues, backorders, or delivery issues with your renovation, which could delay or derail your project.nbsp;
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Ask the HOA Expert: What's The Difference Between The CC&Rs And The Rules And Regulations?
Answer: CCamp;Rs stands for "Covenants, Conditions amp; Restrictions". CCamp;Rs include the Declaration, Bylaws, Rules, Regulations, Policies and Resolutions.
As far as standing up in court, no one can predict the outcome of a judge or jury decision. But the board has a responsibility to make sure all rules, regulations and policies are in writing, distributed to all owners and residents and easily accessible when needed website recommended for 24/7 access. If the HOAs rules are fair and uniformly enforced, most judges will rule for with the board.
Question: I am an HOA treasurer and have been attempting to implement spending controls. We have two board members who regularly purchase items for the HOA and want to be reimbursed. My concern is that expenditures are unpredictable and hard to track. Ive proposed that all expenditures by these individuals must be for budget approved line items. This was rejected by the board as being too restrictive. What do you think is a reasonable policy?
Answer: It sounds like your HOA has a long history of directors spending money as they saw fit. Your well intentioned controls were predictably not well received by the Old Guard. The first question that comes to mind is: Has the old routine caused budget overruns? If yes, you have a sound basis for your controls. If no, you may be making much ado about nothing.
That said, it is not common for random directors to routinely spend the HOAs money. In self managed HOAs, the president and treasurer generally handle payments, occasionally reimbursing a director for an HOA expense that cant wait for the normal payment process. Ideally, if you have a hired manager, all expenditures should be routed through the manager. It is much easier to hold an employee or contract manager accountable than a fellow director.
Your biggest obstacle doesnt seem to be opposition to good financial management practices, but perception that such is not needed. Getting a barge to change course takes time. Continue to press for change. The board has a fiduciary duty to run HOA business in a business-like way.
Question: I recently took over professional management of an HOA which has over 70,000 of unpaid water bills. The water department has threatened to shut off service within 48 hours. The board directed me to impose a special assessment of 1000 per unit without a meeting or member vote. Can an emergency special assessment be imposed without member approval?
Answer: You need to read the governing documents to see what authority the board has to raise special assessments. Even if the board has authority to do so, proper and reasonable notice must be given to the members and time to raise the cash.
If a special assessment requires approval of the members, a member meeting needs to be called with advanced written notice. The meeting must have a legal quorum and a legal majority vote as defined by the governing documents. You may be able to pull this off by mail in ballot if your governing documents allow it. But none of this could possibly take place within 48 hours.
The board needs to make immediate and adequate payment arrangements for the water bill, perhaps by getting a short term loan from the bank. Or, you might be able to get the water department to leave the water on if money is on the way special assessment or loan. But they will, no doubt, want to see the written evidence letter from bank, copy of special assessment notice, etc..
The bigger question is, if this HOA has allowed things to get so bad that basic utilities cant get paid, what other fires are you going to find that they want you to put out? This crisis didnt happen overnight and the board likely has others waiting in the wings. Unless you are getting paid extra to deal with these special circumstances, you need to seriously evaluate whether this is an account worth your time.
Question: Our professional manager is pandering to certain board members and ignoring policies passed by the board majority. How do you keep a manager from getting involved with Board politics?
Answer: The board president has primary authority over the manager and should speak to the manager directly and plainly about this problem. Most managers are only trying to please or do their job. It may be a simple misunderstanding. If, however, there is conscious subterfuge and unwillingness to change, the matter should be addressed directly with the management company owner. If change isnt forthcoming, the president should recommend to the Board that there be a change in management company.
On the other hand, if the manager is kowtowing politically to board president who is abusing her authority, the remaining directors need to have a heart to heart with the president. All officers serve at the pleasure of the board. If one is exceeding authority, the board can remove and replace that person with another director who wont.
Question: Our bylaws indicate that expenses are shared equally. We have one and two bedroom units that vary significantly in size. Dividing expenses equally seems unfair. Can we simply vote to change it? If so, how many need to vote in favor of it?
Answer: Occasionally, developers propose an expense allocation like the one you describe. Its easier to calculate but clearly overlooks disparity in size and value. When there is substantial difference in square footage, the norm is to allocate expenses according to a units square footage as a percentage of the total units square footage. In that case, the expense share may range, for example, from 2 to 5 depending on unit size.
When developers ignore the unit size issue, the inequity usually becomes apparent after turnover. Then, those that feel they are carrying a bigger share than they should lobby to "fix it". The problem is that fixing it requires 100 consent from those that will pay more and those that will pay less. In this regard, individual owners have the protection against a majority foisting its financial will on the minority whenever it sees fit. Its different when it comes to a rule that applies to everyone, like No Pets. A majority could vote to eliminate pets but the same rule would apply to everyone.
If a majority of the owners were allowed to change the expense allocation formula without this 100 requirement, theoretically 51 of the owners could pass an amendment that would force 49 of the owners pay 100 of the expenses. So expense allocation is one area that absolutely requires 100 consent of those affected. While its theoretically possible to achieve if 100 are willing, people are people and there is usually someone that refuses to budge.
Bottom line listen up developers, the expense allocation formula needs to be fair from the get-go. After turnover, its too late to change.
Question: One of our homeowners wants to start an HOA newsletter. A few board members object to starting a newsletter because people dont read the minutes as it is, the board would need to review it and finding someone to do it consistently may be difficult. What say you?
Answer: Having a regular newsletter is not just a good idea, its a basic good management practice. To encourage readership, the newsletter should be worth reading and provide information that all members need to know. If certain members dont choose to read it, thats up to them. The HOA should not withhold information because of it.
The board secretary generally previews the newsletter for content and accuracy. This doesnt take much time for a two to four page newsletter more than ample for most HOAs.
Newsletters do not need to be long and involved, just timely and >
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