Why is the Contingency Period Important?
Views of the master planned community of Calavera Hills in east Carlsbad
As a buyer of a condo or a detached home in California, the standard contract provides for a CONTINGENCY PERIOD during which you have the opportunity to perform your due diligence. The reason this is important is that you want to make sure you learn as much as you can about the property you are buying so you can make an informed decision.
The default time period is 17 days (starting the day after contract acceptance) but this can be negotiated up or down. Since buyers normally make their offers contingent on a number of things (e.g., inspection, bank appraisal, obtaining a loan commitment) the contingency period allows you to investigate the property and all available reports, and provides you with ample time to satisfy all the terms and conditions of your contingencies.
At the end of the contigency period you are required to either remove the contingencies and move ahead with the deal or withdraw. In this market some buyers wish to leave the loan contingecy in place until it is actually funded given the problems we have seen with some banks failing to fund at the last minute, this should be part of your negotiations up front. Failure to follow the terms and conditions of the written contract can put your deposit in jeopardy.
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If I can provide more information about Carlsbad and surrounding areas, or the housing market in general, or otherwise assist you in your home search, please contact me by phone or text at (760) 840-1360 or email me at JDowler@remax.net.
All content copyright © 2009 Jeff Dowler
New Website to Understand the NEW Housing Tax Credit
Everyone is aware of the new stimulus bill that has been passed, although many find it confusing. In particular the issues associated with the new housing tax credit of $8000 for first time home buyers.
A new site was created to provide information about this credit – how it works, who it applies to, and more.
Check out the Federal Housing Tax Credit site to see if YOU can benefit.
New Fee Coming for Condo Purchase Loans
Fannie Mae is implementing a new fee for folks who are buying condos.
The reason is that condos have been the riskiest buys in recent years with all the speculation, investors, and now the issues associated with short sales, foreclosures and REOs, the majority of which are condos. Condos statistically are a greater default risk, and so Fannie Mae is adding a new fee effective April 2, 2009.
Buyers will continue to have the option to use FHA loans (provided that the condo complex is FHA approved – many are not) if they qualify. Be aware that the interest rates may be different and FHA requires a 3.5% downpayment.
The fee announced by Fannie Mae will be 3/4 of a point (as a % of the loan amount) which can be fairly substantial. Something to keep in mind if you are considering a condo purchase.
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If I can provide more information about Carlsbad and surrounding areas, or the housing market in general, or otherwise assist you in your home search, please contact me by phone or text at (760) 840-1360 or email me at JDowler@remax.net.
All content copyright © 2009 Jeff Dowler
More Thoughts on HOA Fees
Ya gotta love ‘em if you are buying a condo, since you don’t have a choice.
AND they can sometimes be pretty hefty – so watch the MLS listings (or ask your Buyer Agent) so you are not too surprised. In our area here in Southern California HOA fees in condo associations typically range from perhaps the mid $100s to over $300 per month (and well in the $500s for higher-end complexes). These are not tax deductible so you need to factor these costs into your budget (and the bank doing your pre-approval and your loan will as well).
HOA fees can cover all sorts of things, although buyers often feel they are not getting a lot for the fees they are paying. And in some complexes that does appear to be the case. Usually exterior building maintenance is included, as is grounds maintenance. Perhaps also water and sewer, and the association will have a master insurance plan to cover the building exteriors and common areas. If the HOA is professionally managed the fees for those services are also part of the HOA fees you pay. If there is a pool, a garage, elevators, tennis courts, an electronic gate, and other amenties then you are paying for these as well.
Keep in mind these are not negotiable since they are set by the HOA not the seller. Also know that they will go up over time, and in some cases a special assessment may be needed for repairs if there is not enough money in the budget.
When doing your due diligence as the buyer once an offer is accepted, make sure you examine all the HOA documents including the meeting minutes, the budget and accounting, the rules and regulations, and the by-laws. And be sure to ask any questions so you are satisfied.
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If I can provide more information about Carlsbad and surrounding areas, or the housing market in general, or otherwise assist you in your home search, please contact me by phone or text at (760) 840-1360 or email me at JDowler@remax.net.
All content copyright © 2009 Jeff Dowler
