Monthly Assessments

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Make the most of your home investment Ask Our Broker

The right color in the home can produce a variety of subtle effects

If we hold our own open house and find a seller, how do we compensate our listing agent?

BY KIT DAVEY

Q: We recently listed our house with a real estate firm and had our first open house. We now intend to hold open houses on our own in an attempt to increase our selling chances. What would happen if we found a buyer during an open house held by us? Is it appropriate to ask our listing agent to reduce their commission? A: The reason to hire a real estate broker is because you believe he or she can generate the highest price and the best terms your property can yield in the current market. If you could do just as well, you would act as a self-seller. Holding an open house is a form of negotiation. It allows buyers to look at the property and if a seller is there, so much the better. Buyers can ask questions and get answers that may differ substantially from what a broker might say. For instance, imagine that the property is priced at $500,000.A buyer comes in and says they really like the property and asks if would you take $475,000. If you say yes, you have just lowered your price by $25,000 – and since you do not have a written offer, an actual bid from a buyer could be less. Moreover, you could get a bid that has you making a huge seller contribution – paying all the transfer taxes, making repairs. etc. Alternatively, if you say no, you may be rejecting a buyer with a real interest in the property. A broker, on the other hand, can offer an answer unavailable to owners:“The property is listed for $500,000. If you wish to make a written offer at another price I will certainly show it to the owners for their review and consideration.” Here, there’s no commitment to accept a discount and perhaps unattractive terms, but the opportunity to make a bid is kept open. If you have an open listing or an exclusive-agency listing you have the right to sell the property directly and not pay a fee to the broker. However, the most common form of listing is an exclusive-right-to-sell arrangement – a listing agreement under which the broker is paid regardless of who sells the property during the listing term. Should the broker hold additional open houses? Did the broker promise to do so? If yes, you may have a scheduling conflict to work out. Before going further, please see what form of listing you have. Do not hold an open house until you have discussed See ASK OUR BROKER, Page 2

Just a Hint of Something

High rise, high cost: Luxe condos and townhomes may come with higher monthly assessments, but the increased funds means the association may be all the more better to handle repairs and maintenance.

Assessing Your Assessments Beds and baths are important, but when buying a condo or townhouse, so is the monthly maintenance. How much do you need, and how much is too much? BY CHARLES SCUTT CTW Features

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mart home shoppers take a fine-tooth comb to the fine print and scrutinize the sale terms before signing on the dotted line of a home purchase contract, as well they should. But not enough home seekers may be taking the necessary time to carefully inspect exactly what they’ll be paying for in monthly assessments, say the experts. Whether you’re planning to purchase a condo, townhouse, duplex or some other form of multifamily property, you can expect to fork over an assessment fee every month – an amount predetermined by the community’s homeowner’s association – that covers the costs of current and future maintenance of, insurance for and amenities included with the community. In an attached-home community,“you do not own the land outside the walls of your home – it is shared by all members of the community, and all

contribute financially to its upkeep,” says Dale Rainey, a Fresno, Calif.-based broker.“So the costs of maintaining the facilities are spread among all the homeowners.” “Just as you have maintenance expenses when you own a freestanding home, such as having the roof repaired or the yard mowed, you have maintenance expenses in a townhome or condo community,” said Emily Cressey, an analyst with Grassland Investments, Seattle, and a board member of a townhome community in which she resides.“The monthly assessment is the HOA’s way of forcing homeowners to save up and pay for ongoing expenses and infrequent repairs. Savings over the long term is much easier than being charged a big one-time assessment when a large expense comes up unexpectedly.” The HOA, in fact, is the body responsible for determining by vote how much to charge for monthly assessments, she says. It creates a budget

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CTW Features WANT TO CREATE A RESTFUL mood in your bedroom? Would you like your kids to concentrate more while doing their homework? Want to feel energized during your morning shower? Believe it or not, you can influence your behavior and emotions through the color of paint you use in your house. The proper paint selection may not only enhance your décor but also positively affect your mood and energy level. “When you’re ready to repaint a room in your home, ask yourself a few questions before you start looking at paint samples,” recommends Carol Lorraine an image consultant and style designer with Self Images in San Mateo, Calif. She suggests responding to the following questions to help narrow your color choices: • How do you want to feel in the room? Relaxed? Alert? Cheerful? Romantic? • What activities take place in the room? • Will you spend long or short periods of time in the room? • What size is the room? Do you want it to feel spacious or cozy? Ryan Buhk, a sales rep for Kelly Moore Paints in San Carlos, Calif., also suggests asking, if you entertain frequently, what kind of effect do you want to create in the space? But what about matching carpeting, drapes and furniture? “Matching your paint to your décor should come after deciding on the mood you want to create,” suggests Lorraine.

WHAT DO COLORS COMMUNICATE? Leslie Harrington’s “Color – A Stroke of Genius,” a special publication for Benjamin Moore paint, describes common behavioral responses to color. Keep these effects in

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Ask Our Broker ASSESSMENTS CONTINUED FROM PAGE 1 for property maintenance and maintains a savings account with reserves to pay for unexpected costs or less common big-ticket bills. Typically, monthly assessment fees cover the costs of items like utilities for community facilities, exterior maintenance of roofs, siding, fences and parking lots, lawn care and landscaping, snow and ice removal, swimming pool upkeep, athletic facilities and the administrative costs of running the HOA.The tab also should include some level of insurance for the public areas and exteriors of the buildings. Rainey says that HOA fees can vary from as little as $100 per month to more than $500 monthly, depending on the features the community offers. According to Richard Swerdlow, COO of the Swerdlow Group, a Miami, Fla.-based real

HINT CONTINUED FROM PAGE 1 mind when making your selection: • Red increases appetite and energy levels, raises blood pressure and makes a person feel warm. • Pink is associated with innocence and sweetness, and is favored for packaging candy or for little girls’ rooms. Pink has short-term calming effects and is sometimes used to color walls in prison holding cells. • Orange adds energy, extroversion and vigor, and can encourage thirst. (Sounds like a great color for a sports bar.) • Yellow stimulates memory and encourages concentration -a wise choice for a study, office or library.

estate company, HOA dues usually are paid directly to the homeowner’s association every month via personal check or bank transfer. Properties with deferred maintenance, extensive grounds (lots of public areas including tennis courts, swimming pools, etc.), and those that did not collect enough money in the past to cover large upcoming expenses may have especially high assessments, warns Cressey. What can you do about it? Beyond being an educated consumer, not much, says Rainey. “Depending on how the association is set up, individual homeowners have very little if any influence on increases in their monthly dues and how money is spent for maintenance,” he says. Additionally, keep in mind that monthly fees can significantly change when control of a new community is transferred from the developer to the HOA if the association feels that the devel-

oper did not adequately account for operational costs, says Swerdlow.“However, monthly assessments usually rise with the cost of inflation as the cost for labor, electricity and taxes increase.” “While it may seem counterintuitive to look for homes with a high HOA fee, it can actually be good to find a home where the charges are higher than average,” says Cressey.“If the fees are kept too low, the association will not have funds on hand to properly handle needed repairs and ongoing maintenance.” Rainey says to make sure that the HOA fee includes insurance covering replacement of any common facilities, as well as adequate resources to maintain the grounds of the complex. “Before you buy, request a copy of the development’s association bylaws, annual budgets and meeting minutes to get a handle on how spending decisions are made and whether any big assessments have been col-

lected in the recent past,” Cressey says.“Evaluate the size of the savings reserves the association has accumulated and compare them to the condition of the property. If you can see that major repairs are going to be needed in the near future, determine whether the HOA has the funds on hand to cover those repairs.” Also, try to attend your quarterly or annual HOA meetings and ask questions of the board of directors, says Cressey.“And if you want to be more involved in the decision-making process at your community, join the HOA.” Above all, when purchasing in a multifamily community, be sure the property fits your lifestyle, Swerdlow says.“Find a building that has amenities and grounds that you will use and enjoy, and avoid paying for luxuries that you won’t use.”

• Green evokes feelings of relaxation, quietness and comfort. It is associated with new growth and new beginnings. Because it is such a calming color,“green rooms” are provided for TV talk show guests and for actors in theaters and television studios.A green bedroom would encourage rest. • Blue can lower blood pressure and body temperature. It’s ability to cool down is so powerful that it is used in burn victim wards, according to Lorraine. People who enjoy solitude may enjoy its coolness. • Purple also can help to lower blood pressure, as well as suppress the appetite and quiet the mind. But as purple is mixture of cool blue and warm red, it may be a difficult color to live with for long stretches. The effects of these colors are altered by adding white or black

to them.“Light or pastel colors are generally more casual and darker colors more formal,” says Lorraine. Lorraine also encourages people to surround themselves with color that is harmonious with their body’s coloring:“If you’ve ever had your colors done, you can use the hues which match your skin, eye or hair color to create a nurturing, balanced environment.”

the color swatches up to the walls, the furnishings, woodwork, etc. Check in different areas of the room, at different times of the day, and with the lights on and off. Narrow your choices to three. Return to the paint store and purchase a quart of each of your top three choices. Buhk suggests painting a 2-by-3-foot area onto the walls, or onto a piece of plywood that you can carry around the room. “You’ll know you’ve made the right selection when you look at the color and it feels right inside,” says Carol.

MAKING THE FINAL CHOICE After establishing the emotional effect you’d like to create, assess the colors already present in the room’s upholstered pieces, carpeting and woods.Visit your local paint store and grab 10 to 30 sample cards in the your “mood” colors, body colors and possible matches to the room’s décor. Return to your home and hold

© CTW Features

© CTW Features Kit Davey, an interior designer based in Redwood City, Calif., helps redecorate homes through the creative use of their existing furnishings. Send your questions to [email protected].

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the pros and cons with your broker.

Q: I want to purchase a house, and my broker has suggested the use of a lender and title company with the same name as the real estate firm. What gives?

A: Real estate brokers and homebuilders often have affiliated mortgage, insurance and title businesses.While the Real Estate Settlement and Procedures Act generally prohibits real estate brokers from receiving fees related to real estate settlement services, there’s an exception for affiliated business arrangements. The question with an affiliated business is always the same: How do they stack up against the competition in terms of price, product and service? If an affiliated business can save money or provide another advantage, that’s fine. If not, go elsewhere. In the case of homebuilders, there’s often a situation where a buyer is told that if they use an affiliated business they will be entitled to various discounts. In such circumstances, buyers are well-served measuring the value of discounts versus the cost of affiliated services. Under RESPA, a broker must fully disclose affiliated relationships and a buyer or borrower cannot be forced to use a given mortgage, insurance or title provider. If you feel you have been required to use a given service provider contact your nearest HUD office for additional information.

Q: I just passed the real estate exam and now must choose a broker. How does one go about doing that? What are some questions I should ask? A: As a newly minted real estate licensee, your first job is to find a supervising broker who can provide additional training and experience.You might want to work as a paid assistant to an established broker for a while to learn more and get some money, or you may want to work with a firm that has a mentoring or educational program, or both. Look for brokers who are active in your area, market extensively, have a good Web presence and are highly regarded.Then meet with brokers or office managers to find out more about each firm. © CTW Features Need real estate advice? Peter G. Miller, author of “The Common-Sense Mortgage,” would love to hear from you. Send your questions to [email protected]. Due to the volume received, not all letters may be answered.