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The annual homeowner association meeting convenes. The president announces that the floor is open for nominations. A fellow homeowner say to you, "You know, you would make a good board member." Before you have a chance to reply, some body movement indicates that you are willing, ready and able to serve. "The nominations are closed," a vote is taken, and suddenly YOU ARE ON THE BOARD OF DIRECTORS. You ask yourself, "What does being on the board mean, who is going to teach me and how much do I get paid?" Here are some basic guidelines on how to become a successful board member and enjoy it at the same time...a lesson in HOA responsibilities and practices. What does it mean to be on the board? You have made a commitment that you will serve the HOA's interests to the best of your ability, be fair on matters that come before the board, will do your best to preserve and enhance the values of the common areas and that you will spend money in a prudent manner. Being a director also means that you have fiduciary duties which require making reasonable investigation into matters dealt with and acting in a businesslike, prudent manner when making decisions. Who is going to teach you? Hopefully, you have several veterans on the board who will help you. Ideally, you will have the property manager who works closely with the board and is willing to offer guidance. Continuity is one of a board's greatest challenges. Ask questions. How have issues been handled in the past? Current boards should carefully consider plans laid by previous boards and not change them impulsively. Take time to become familiar with your association grounds and facilities. Review the HOA's governing documents, the rules and regulations, and any other board policies to develop a familiarity with them. Keep a set handy for when specific questions arise. Make a commitment to attend all board meetings and prepare in advance by studying the agenda and related material. There generally aren't (or shouldn't be) many meetings but each deals with critical issues. Give them your full attention. Budget time offers an opportunity to help build a sound financial future for the community. The two basic parts of the budget are Operating (deals with routine maintenance and day to day expenses) and Reserves (long range, major repairs and replacements). As a member of the board, you will be asked to predict future financial needs by using both past budget history and new information accumulated for future repairs. How much does the job pay? While no money is paid, there are many personal rewards to be had for a job well done. Dealing with people requires patience and flexibility. Remember that while disagreement is not always avoidable, you were elected to make decisions. Consider carefully those decisions put before you and do your best. If you serve as a committed member, it will be one of the more rewarding experiences that you will have. by Richard Thompson For More information on HOA's visit http://www.robertjrussell.com
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The declining home values that are plaguing homeowners are just one of the factors creating an opportunity for prospective home buyers.
Standard & Poor's latest Case-Shiller index, which tracks home prices across 20 major U.S. cities, reported that values dropped 19% in January from a year earlier.
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Those depressed values, combined with near-record-low mortgage rates and government incentives (an $8,000 first-time home buyers' tax credit included in the stimulus bill), are luring more first-time home buyers into the market. Indeed, a recent Century 21 Real Estate survey found that more than three-quarters (78%) of potential first-time home buyers say now is a good time to buy.
If you agree, be aware that buying a home comes with plenty of potential missteps. Here are 10 all-too-common mistakes first-timers make.
1. Not knowing how much house you can afford.
Many novice home buyers spend a lot of time researching homes - comparing kitchen layouts and backyard square footage - but very little time researching their financing options. One of the first things buyers should do is talk to a qualified lender and get preapproved for a mortgage, says Claire Clark, senior vice president of business development at Prudential California Realty. Without first figuring out how much house you can afford, you risk falling in love with one you can't.
2. Assuming foreclosures are great deals.
Just because the previous owner owed $450,000 on a house before the bank took it over doesn't mean it's worth that much now. Values have slipped significantly, says Jay Michael, partner at Estate Property Group, a Chicago real estate brokerage, so you may not be getting the bargain you think with a foreclosure. Also, most homes owned by lenders or banks have been sitting vacant for months and may have been vandalized. That could require extensive renovation or repair. Weigh the costs of fixing up the property against the savings you'll likely reap by buying a lower-priced foreclosed home.
3. Letting your true feelings show.
No matter how much you've fallen in love with a house, don't let the seller's agent in on it. Otherwise, they will gain the upper hand in negotiations.
4. Failing to find a good buyer's agent.
Landing a mortgage is tough these days. So buyers should rely heavily on knowledgeable agents to help them get their finances in order, says Michael. After all, buyer's agents have a fiduciary responsibility to the buyer exclusively -- and should be looking out for their best interests. Start your search at the National Association of Exclusive Buyer Agents, a nonprofit representing buyers. Or consider using an agent recommended by a relative or friend. Interview each candidate about their experience, if they've worked with first-time buyers before and what kind of service you'll get from them.
5. Underestimating the costs of owning a home.
Whether it's a rusty pipe or a leaky roof, things go wrong and need to be fixed. Many home buyers don't anticipate the additional costs for repair and maintenance, or for an increase in utility costs, says Erin Baehr, CFP and president of Baehr Family Financial. Consider the age of your new home and how well it's been treated by the previous owners in your budget. Be prepared to set aside a small percentage (1% at most) of the home's purchase price annually for repairs and upkeep.
6. Failing to budget for property taxes.
Property taxes - and the likelihood that they'll climb over the course of your time in the house - should be factored into any home-buying budget, says Baehr. To get an idea of how much you'll be paying, call the local assessor's office or talk to people in the neighborhood.
7. Assuming your first offer will get accepted.
As home prices get even more affordable, competition is bound to heat up. "You can't assume you'll walk in there, make the offer and get it," says Clark. Try not to get discouraged if you lose out on the first - or second - house you make an offer on.
8. Skipping the inspection.
Before signing anything, hire a professional inspector, says Justin Lopatin, a mortgage planner with American Street Mortgage Company. The seller isn't likely to tell you there's mold in the basement or the walls are poorly insulated. Lopatin advises buyers to find and hire their own inspector - independently of the realtor - to ensure there's no conflict of interest. (You can find inspection companies in the phone book, or by doing a simple web search with your zip code.)
9. Doing too much too fast.
Some buyers want to make the house their own right away, says Baehr. They overextend themselves on credit to do so, and assume the improvement will pay for itself by increasing the home's value. But that's not always the case - especially in today's market. Instead, buyers need to exhibit patience and make changes over time.
10. Failing to include a contingency clause in the contract.
A mortgage financing contingency clause protects you if, say, you lose your job and the loan falls through or the appraisal price comes in under the purchase price. Should one of these events occur, the buyer gets back the money he used to secure the property. Without the clause, he can lose that money and still be obligated to buy the house, says Lopatin.
Apr 10th, 2009
