Charleston Real Estate BlogsRecently posted or modified blog posts by tag - HOAhttps://www.southernbellliving.com/blog/Copyright SouthernBellLiving.com2022-08-30T08:46:55-07:00tag:southernbellliving.com,2012-09-20:12304Real Estate Contingencies: 5 You Must Consider in Your Next Offer<img src="https://assets.site-static.com/userfiles/1830/image/Blog_Images/Real_Estate_Contingencies_in_Charleston_SC_5_You_Must_Consider_in_Your_Next_Offer/Key_to_Your_Charleston_Dream_Home_-_Realtors_Near_Me.jpg" width="799" height="600" alt="homeowner holding a key in front of their new Charleston home" title="Key to Your Charleston Dream Home - Realtors Near Me" />
Those new to the homebuying process, or those who haven't bought a home in a while, know just how dizzying the terminology surrounding homes, offers, and purchase contracts can be. You'll hear your real estate agent talk about many different things, and you might be surprised when the offer you submit is many pages long and not just something simple like "I'll buy this house for $200,000." Part of the reason offers are so long is that they represent a formal well-tested legal contract that gives you, the buyer, a fair shot at acquiring your dream Charleston home. Part of the legal protections the agreement provides is one or more real estate contingencies.
What are these contingencies, and which ones must you have in your next offer? Let's find out!
What Are Real Estate Contingencies?
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Real estate contingencies are conditions that must be true for the contract to be enforceable. Another way to think about these contingencies is that the offer you submit is "contingent" upon certain conditions.
Effectively, these contingencies are escape clauses that permit a seller to break the original contract without losing their earnest money deposit (which can often be many thousands of dollars). They protect the buyer from having to take possession of a home that had misrepresentations or for which the buyer could not obtain the necessary financing. It is worth noting that both buyers and sellers can have contingencies, although almost all buyer offers have them, whereas sellers seldom do. Logically, this makes sense. A seller will not want any impediments to closing the deal, while the buyer will want to back out if any aspect of it doesn't work well!
The Most Common Contingency: Home Inspection
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According to a NAR survey, 58% of buyers put a home inspection contingency into their contract, making it the most popular of the real estate contingencies.
This contingency states that the home must pass an inspection for the contract to be valid. During this inspection, a professional inspector will look at everything. They'll look at the foundation, the walls, fixtures, lighting, electrical, plumbing - indeed, if there's any defect or issue in the home - an inspector will find it.
The contingency stipulates that the home must be free of defects. Almost assuredly, the home inspector will find something wrong with the house. Even a leaky faucet, for example, would be a defect. Therefore, this contingency often gives the buyer the most latitude to walk away from a transaction.
It is also worth noting that this contingency provides negotiating power. You may get an inspection report back that reveals the roof needs replacing in the next 2-3 years. You could then ask for $10,000 of the selling price to put towards those repairs you know you will eventually need. The seller has the option to decline the proposal or accept it. If they reject it, you can still enforce the original contract and original sales price - so it never hurts to ask for at least a small credit! Your real estate agent can walk you through this process!
Another Common Contingency: Appraisal
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Arguably, the most common real estate contingency (and one that most buyers should have) is for the appraisal. In essence, this contingency says that if the home does not appraise for at least the buyer's offer amount, the buyer has the choice to walk away.
Whether you're purchasing the home all-cash or obtaining financing, you want to know that your investment is worth what you're paying for it. If you put an offer in for $500,000 and the home only appraises for $300,000, whether that offer is cash or financing, you'll want the ability to walk away without losing any earnest money!
Of course, if the home appraises for $495,000 and you put down $500,000, you'll probably still want to go through with the transaction. However, having the ability to opt out if the home doesn't appraise is a choice that nearly every buyer should have. It just wouldn't feel good significantly overpaying for a property!
The Financing Contingency is Also Necessary
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If you are looking at getting a mortgage, you must have this contingency on your offer! The financing contingency stipulates that you will make a good-faith effort to obtain financing. However, if you cannot, you can get your earnest money back and break the contract.
Now, it is worth noting that this contingency states that you will make a good-faith effort, and it makes no mention of interest rates or conditions. Therefore, buyers cannot break the contract because they only received approval for a loan at 5.9% for 30 years, but they wanted 2.5% for 15 years. This contingency effectively says that you will obtain financing at market rates if the seller accepts your offer, which may not necessarily be at your preferred rate!
To eliminate these problems, all prospective buyers should get a pre-approval letter. The pre-approval letter is valid for 90 days and will lock your interest rate and loan term. Then, you can put offers in with confidence that there won't be any major surprises when you get your mortgage.
Home Sale Contingency
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This contingency is generally best to avoid, if possible because it introduces uncertainty into the process. This clause stipulates that your purchasing of the home will only happen if your current one sells.
This scenario is quite common: a couple wants to enjoy more space and a bigger home, so they submit an offer on a Charleston property contingent upon selling their New York condo. The problem is that this is very uncertain for sellers. They don't know if the buyer will be able to get the home or not. The condo might sit on the market forever!
Usually, you're better to sell your home first and then use that money to buy your Charleston place. Or, you might have enough saved for a down payment to have two homes temporarily. Both are more certain for sellers, and you will have a higher probability of acceptance! However, if you cannot do that, you absolutely must have the home sale contingency in your offer to prevent a scenario where you cannot sell your old home but are legally on the hook to buy the new one!
For Condo Purchases: HOA Contingency
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Last but not least is the HOA contingency. If you are buying a condo, you are buying into a homeowners' association. The problem is that you don't get the chance to review all the HOA finances and CC&Rs (conditions, covenants, and restrictions) before you put in an offer. Therefore, most buyers put an HOA contingency that lets them review these documents, and if they don't like anything in there, they can back out of the deal.
Most of the time, people exercising this option either find the HOA finances are a mess, or they find out that the HOA prohibits renting the condo out. Even if you do not plan to rent the unit out yourself, these condos are less valuable to investors. Therefore, they typically have lower sales prices and are harder to sell. If you want to move out in a few years, this might be a reason to back out!
Real Estate Contingencies Provide Protections
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Ultimately, real estate contingencies are all about protection. They let the buyer (or seller) walk away from a deal if any issues arise. If the home inspection reveals problems or the home doesn't appraise, the buyer can negotiate. Indeed, they can either get the price down or drop the purchase altogether.
At Southern Bell Living, we have extensive experience negotiating the right contingencies for all types of markets. If you want to buy a Charleston home and want the best protection for your transaction, <a href="https://www.southernbellliving.com/about/our-team/">please contact us</a>! We'd love to help you with the buying process. We will help you avoid costly issues with the right real estate contingencies!2021-12-03T06:07:00-07:002022-08-30T08:46:55-07:00Taylor Goldsberrytag:southernbellliving.com,2012-09-20:10518HOA or No HOA for Your Charleston, SC Area Home? That Is the Question<img src="https://assets.site-static.com/userfiles/1830/image/Blog_Images/HOA_or_No_HOA/Blog_2020-08-20-The-Pros-and-Cons-of-Virtual-Events.png" width="1280" height="720" alt="Street sign with pros and cons arrows" title="The pros and cons of HOAs in Charleston - Mount Pleasant Real Estate Agents" />
The heated debate of living in a neighborhood with a homeowner’s association (HOA) has been going on for decades. Since the first master-planned communities started appearing at the end of WWII, homebuyers have had to decide whether an HOA is worth it or not. As with most aspects of home buying, it's up to you! That said, one must make some important considerations before buying a property in a neighborhood with an HOA organization. Potential buyers will be provided a document of CC & Rs (covenants, conditions, and restrictions) i.e the Rule Book, which will include all the roles and responsibilities of that particular HOA. This document should be reviewed CAREFULLY and for every community, you are interested in because HOA's are like snowflakes, similar but never the same. Below we will provide you with both the benefits and the drawbacks of having an HOA
HOA Benefits
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There are several positives to owning a home in a community with an HOA. Restrictions and rules that some find limiting also limit everyone else in the neighborhood. It's entirely possible that you can’t tell the difference between one white house color and the HOA-approved color, but that same rule prevents your neighbor from putting a flaming skull in there and painting the house orange.
Community Appearance and Standards
Any and all elements of the community will be overseen by the HOA. This includes but is not limited to house colors, landscaping, tree maintenance, and various other visual components that must be approved by the HOA review board before being installed in the home. Communities will have neighborhood parks and trails which are also maintained by the HOA. Other items an HOA handles are other amenities like swimming pools, tennis courts, and workout facilities, and playgrounds.
Lower Maintenance Costs
Depending on the HOA, the lawn, landscaping, and other maintenance-related tasks are dealt with by the HOA. This generally includes services such as trash pick up, street sweeping, water, some will even offer internet and cable packages.
Association Management
HOA management level of control can vary from one association to another, but all provide some level of authority over the community. Disputes between neighbors that might otherwise land in court are often resolved by a review board with the authority to make final decisions.
Higher Home Values
In the Charleston real estate market, home values are higher in neighborhoods that have an HOA than those that do not. HOA's have policies that forbid a property or area to become neglected or unsightly. This keeps the neighborhood looking more pristine than those without and ultimately attracts homebuyers.
HOA Negatives
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Naturally, this level of oversight can also seem a bit much at times. Depending on the rules and regulations, homeowners in some neighborhoods might find their personal preferences restricted on their own property. Which can be unsettling to some.
Design Restrictions
HOA's will almost certainly have restrictions on the appearance of the exterior of the home as well as the overall lot. The goal is to create a sense of unity in the appearance of the neighborhood. This can be something as simple as the colors of the home, to something more specific like the type of lighting you use or the style of the front door.
Parking and Street Use
Most HOA’s have rules in place that dictate how parking is addressed in the community. Not only will the use of parking decals be controlled, but usually the homeowner is prohibited from leaving the garage door open or parking a car in the street. RVs and other large vehicles are also typically also not allowed.
HOA Fees
HOA fees add cost to homeownership and can range from cheap to outrageous. Depending on the amenities and services offered as well as the financial health of the HOA. As a homeowner, you will pay for the HOA through monthly fees, which generally range in the hundreds of dollars/month. Additionally, if the finances of an HOA are mismanaged, the owners can be assessed extra fees/costs to adjust or make large repairs. While members of the HOA are also owners and subject to the same costs, if they can’t make payments required, the HOA as a whole will have to pay.
Bottom Line
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Living in an HOA-managed neighborhood can make a massive difference in your enjoyment of a property - and this can be both positive and negative. As we mentioned above, before you buy a home with an HOA, it’s vital that you review the CC & Rs to confirm you are willing to adhere to the rules. We also recommend that you investigate the financial records of HOA and observe the overall impact of the HOA on the specific community.
Once you evaluate those items, then you can truly determine the value an HOA brings to you, your family, and your home. If you are not sure if a neighborhood has an HOA, <a href="https://www.southernbellliving.com/about/our-team/">reach out to one of our agents</a> and we can provide you with the detailed information needed to make an educated decision. 2021-04-16T10:17:00-07:002022-08-26T15:37:14-07:00Taylor Goldsberry