The HOA in YOUR Community?

As the real estate industry in Florida (and the country) is in the process of trying to find it’s way to their feet again, there is an issue that hinders property values in many communities. The HOA or Homeowners Associations that regulate the rules and regulations (and deed restrictions) of PUD’s (Planned Unit Developments, a.k.a.: subdivisions). These organizations are run by property owners in those communities. You know, the guys who send you all the hate mail that you have a spot on your driveway, or that your home needs to be painted, or your grass is too high and needs to be cut. In most cases, there is a Property Management firm that HOA dues are paid to. The problem with many, and in my almost 20 years experience in this business, MOST of the HOA’s is that they DO NOT operate as designed. You have people serving on those Associations who have regular jobs, usually not at the top of the food chain at their company or who have a spouse who they are afraid of at home, or they are frustrated by life. Who do they take it out on? YOU, the person they are supposed to be representing.

The delivery of the message is key. As in ANY REPUTABLE BUSINESS, the first message received by one person sets the tone for the exchange. In most cases, the HOA sends a very strong letter to the homeowner, who in most cases are not even aware there is an issue until they get the letter from the HOA. Instead of a friendly reminder, they immediately go on the “attack” and threaten litigation, liens and sometimes foreclosure! They have WAY too much power. They are unregulated, there is way too much EGO involved.

As in many communities, it’s all about who you know. I usually “farm” or market the community that I live in heavily. The members of the HOA are constantly getting my “Just Listed” and my “Just Sold” postcards. I know it must irritate many of them. But it always seems that top Realtors are targets of the HOA. The more outspoken you become of their negative tactics, the more “hate letters” you will receive.

My next door neighbor cuts his own grass and maintains his own yard. The is a M.D. so his time is limited. His yard shows it. The grass gets very high, the bugs eat sections of his yard, he never edges the common areas. He SHOULD be getting letters weekly. He does not. Has never received one as far as I know. I purchased one of the biggest eyesores in the community. I had the home professionally renovated and updated. My yard is cut by the finest landscape company in Tampa Bay (Rusty’s Lawn 813-404-1114). I try to make certain my home is better maintained than all my neighbors because of my “target” status. I still get letters more often than I can open my mailbox! It’s like an HOA member’s wife kicks his ass for not taking out the trash, he goes to the office and his boss kicks his ass for doing a poor job. He gets mad, comes home and wants to get the HOA to kick somebody’s ass in the community so they can feel better. Why else would they do the job (unpaid?). NOT because they care about the community or their neighbors, because if they did, they would use better bedside manor to deliver their message. They deliver the message with too much Mojo, Macho authority in my opinion.

The problem is, they create more problems than they solve. Potentials Buyers get wind of these cantankerous Associations and avoid these communities. They hear that a community dues check was lost, or the property owner forgot to pay that month for whatever reason. They get a foreclosure threat by the association’s attorney. Again, those attorneys’s LOVE those HOA’s because they get instructions to send the hate mail to property owners and THEY GET PAID! And guess who pays them? You guessed it, the property owners!

So who is a fault? Those HOA mamebers usually go up for re-election on a yearly basis. The problem is, the most capable, knowledgeable individuals available, don’t want the job (who wants the unpaid position). Nobody good wants the job! I for one would rather keep fielding the letters and washing the one inch speck of discoloration off my mailbox. Who gets burned the most for their immature actions? The homeowners in that community because their homes become more difficult to sell.

When I get a Buyer who calls my office and says “don’t show me any homes in subdivisions that have an HOA”, I completely understand. That needs to change. It seems like the IRS is teaching the class on bedside manor and the biggest client they have is your HOA!

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A Mortgage Rescue Plan

A great story from the AP today. Please read below. After the article, I have my comments: __________________________________

WASHINGTON (AP) — A mortgage rescue plan to save hundreds of thousands of homeowners from foreclosure drew overwhelming Senate support Monday, inching toward passage despite Republican objections. The Senate voted 76-10 to advance the bill, a broad array of housing measures including overhauls of the Federal Housing Administration, the Depression-era mortgage insurer, and government-sponsored home loan giants Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500). Its centerpiece is a new $300 billion FHA program to allow debt-ridden homeowners who are currently too financially risky to qualify for government-backed loans to refinance into safer, more affordable mortgages. The measure is on track for passage by an overwhelming margin, possibly by week’s end. It has survived several test votes in the Senate, repeatedly demonstrating that there’s enough support for it to override President Bush’s promised veto. But Sen. John Ensign, R-Nev., is blocking its progress because Democratic leaders have refused to allow a vote on attaching an $8 billion package of renewable energy tax breaks. Ensign has said he wants the tax incentives to hitch a ride on the housing measure because it has a good chance of being signed into law by Bush. “This will be the major achievement and accomplishment of this Congress when it comes to dealing with the underlying economic crisis, which is at its heart the foreclosure crisis,” said Sen. Christopher J. Dodd, D-Conn., the Banking Committee Chairman who wrote the legislation.

Bill still faces hurdles Beyond the Senate, the election-year package still faces a tricky path. The president has said he thinks a deal is possible, but the White House is balking at key portions of the bill, particularly $3.9 billion included for buying and fixing up foreclosed properties. Democrats argue the money is key to preventing neighborhood blight, but most Republicans call it a bailout for lenders who helped cause the mortgage mess. The two architects of the plan, Dodd and Rep. Barney Frank, D-Mass., the House Financial Services Committee Chairman, have been negotiating privately to iron out Democrats’ differences on the plan, but the stalling tactics in the Senate have sapped momentum for a quick agreement. 

One key divide is over limits on the mortgages FHA can insure and Fannie Mae and Freddie Mac can buy, which the Senate measure sets at $625,000. The House-passed bill set the caps at $725,000, which is preferable to lawmakers from the highest-cost housing markets, including Speaker Nancy Pelosi, D-Calif. 

Also at issue is whether the new regulator and tightened rules for Fannie Mae and Freddie Mac should take effect immediately, as dictated by the Senate bill. The House-passed legislation delays them for six months, leaving it up to a new president to implement the changes. And the two sides are at odds over which tax breaks to include and whether to pair them with offsetting tax increases to prevent a rise in the deficit – something that conservative “Blue Dog” Democrats insist on. The Senate’s $14.5 billion package falls $2.4 billion short of being paid for, while the House’s $11 billion is fully covered. 

There is broad agreement on using the FHA to help struggling homeowners refinance into mortgages they can afford. The Bush administration has twice broadened the agency’s authority to do so under a program it calls FHASecure. Top housing officials were planning to discuss the expansion – as well as the fate of the housing legislation – on Tuesday.

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 As a real estate agent, I love the idea that Uncle Sam is getting involved. As an American, I not certain they should! About a year ago, we (Real Estate) were all alone in this mess! In 2008, Gas Prices have joined the loop (just filled up my Expedition at a cost of $98.00), skyrocketing property taxes got noticed and our great Governor, Charlie Crist has kicked the insurance industry right in the “mommy / daddy button” and it seems like the world is going to fall apart! NOT SO! Everything is not what is seems!

At our office, we have this big “Sale Pending” board that shows what deals are currently pending escrow. We use color to describe the deal. Bank foreclosures are green, short sales are blue and regular, arms length deals are black. since mid 2007, that board is 95% green and blue! However, in the past week, black has made a glorious return! The past 3 weeks we have been partying like its 1999 (or 2005) as MANY regular deals are starting to close. A CLEAR SIGN that the worst is behind us! If the government wants to get involved (article above) to speed the process, I say “run Uncle Sam, RUN!.”  We have hit bottom and we are turning the corner!  2009, here we come!

As a final note: As the NFL training camp is about to open for all 32 teams, I want to wish my client, Michael Pittman the best of luck playing for the Denver Bronco’s. As a Buccaneer, her was not appreciated enough and like Chris Simms (not in Tampa when the season starts), Michael will shine in Denver. It would be great to see him play in the Superbowl here in Tampa this February!

Be Prepared To Take The Risk

The millionaires are being made again. As the Florida real estate market decline stops to a grinding halt faster than the Tampa Bay Rays losing ways, those day traders of the dom com boom and those pre-construction “flippers” have given way to the real investors. Those who are buying now in a frenzy will be the true kings of real estate investing in the next few years!

Back in 2005, it seemed like anyone could make a quick buck in the fast appreciating real estate market! Who thought it would end? Although my clients made millions during the boom, I certainly had my share of short term losses with some of my clients. I gave some advise to valued clients to buy while markets were booming. Most of my investment clients were wanting to put minimum monies down ($5,000 was common), buy pre-construction, wait the 10-12 months for construction completion, and then sell at $80,000 to $100,000 profits per home without having to make many, if any payments on those SUB-PRIME LOANS! The good times rolled! It really was “easy money” if you got in at the right time. Words like “can’t miss” and “sure thing” flowed from the mouths of Realtors and lenders alike. I almost purchased three homes for my children because I was fearful they would never be able to afford to purchase a home of their own when the grew up! Visions of New York flashed through my head! Like some of my investors, the Arcuri family took their lumps when the bubble popped! But my confidence in a rebound remains very, very high!

POP the market went first quarter of 2006! Soon it will be the first quarter of 2009!

Those who liquidated and took the loss shortly after the bubble broke were the ones who took the minimal loss. Those who held on too long, have to wait awhile to bounce back. And bounce back we will. Despite the bitter taste, educated investors continue to invest. Those who don’t have the stones for real estate need to stick with their “real” jobs of wrestling or playing ball or working for “the man”. The ones who don’t want to be taking chairs to the head and flying around the world like a gypsy when they are in their 40’s will give real estate another look. True investors know that you win most of the time in real estate, but once in a while you lose! Over the life of your portfolio, you WIN BIG IN REAL ESTATE!

To those “bad deals” that the investor has not sold, the unintended landlord that is making up the shortage in the payment from the tenant, I say hold on! History has told us that TIME will turn a lame real estate investment into a goldmine. TIME. Since Tampa Bay was saturated with investors and much of the sales activity in 2004, 2005 and 2006 was investors speculating on fast returns, Tampa is poised for a quicker than normal bounce back as opposed to other areas of the country and even the state. Once that over-supply of homes equals out to the demand, Tampa will again lead the state back! Only Lakeland in my opinion will have a faster bounce than Tampa.

The good times will be back soon! Where will you be? You can look back in 5 years and say “Damn, I should have invested in 2008 when the market bottomed out” or you can say “I’m so thankful I purchased in that down market. My wife is so happy with her new Bentley”……… it’s your call. I can only lead the horses to the watering hole, you have to drink the Cool-Aid!