At first glance, the headline doesn’t make a lot of sense. Why would all-cash home sales increase if mortgage rates were hitting new lows for the year?
Not only that, but why would all-cash sales rise when distressed homes sales are down and institutional buying is lower?
Two separate reports came out today with the same basic message, that cash is still king despite the low rates and lack of investor activity.
The National Association of Realtors noted today that all-cash purchases increased to 33% in the first quarter of 2014, up from 31% in 2013 to 29% in 2012.
More than half of all homes purchased in Florida were paid for with cash, while roughly four out of 10 sales in Arizona, Nevada, and West Virginia were all-cash transactions.
At the same time, the distressed home sale share fell to just 15% in the first quarter, down from 17% in 2013 and 26% in 2012.
Over at RealtyTrac, all-cash sales hit a record high of 42.7% of all residential property sales in the first quarter, up from 37.8% in the fourth quarter and 19.1% from a year earlier.
That coincided with a large drop in institutional investor purchases, which fell to the lowest level since the first quarter of 2012.
Such buyers, which are defined as those who purchased at least 10 properties in a calendar year, accounted for just 5.6% of residential sales in Q1, down from 6.8% a quarter earlier and seven percent a year ago.
In large metros, all-cash sales made up more than half of all transactions in Atlanta, Detroit, Las Vegas, Miami, and New York.
The highest percentage of all-cash sales in cities with a population of at least 500,000 were all in Florida:
Additionally, 15% of all-cash purchases in the first quarter were in the foreclosure process, while 10% were bank-owned properties.
Interestingly, these numbers were released on the same day rates on the 30-year fixed-rate mortgage hit 4.21%, which is the lowest point it has been all year. And not really that far off from record lows seen in late 2012.
Why Are There So Many Cash Buyers If Rates Are Still Very Low?
For one, inventory is still tight, so paying with cash is the best way to get your offer accepted, even if you can qualify for a mortgage. Think bidding war.
But NAR also noted that mortgage lending standards remain too restrictive, though they always say that, and would say that even if you could get a mortgage with no money down with just your credit report.
They also pointed to cash sales coming from aging baby boomers, who are trading down or using retirement cash and/or years of home equity to get the job done.
Then there are foreign investors, who tend to use cash, and a recent trend of pulling money from the stock market (now near record highs) to put into real estate. Simply put, it has become an attractive investment again.
RealtyTrac attributed the trend to strict lending standards as well, coupled with low inventory, which gives cash buyers the upper hand when making an offer.
They looked at the brighter side of things, highlighting the fact that individual investors, second-home buyers, and owner-occupants have quickly filled the void left by institutional investors.
Because of that, home prices have continued to appreciate fairly rapidly, though at a slower pace than a year ago.
However, it is somewhat unfortunate that most home buyers can’t even take advantage of the low mortgage rates because they can’t get an offer accepted when competing with a cash buyer. Go figure.
Swiss bank UBS AG announced Monday it has agreed to pay $1.43 billion in penalties to settle a civil action alleging misconduct related to the underwriting, issuance and sale of residential mortgage-backed securities (RMBS) before the 2008 financial crisis.
The settlement with the U.S. Department of Justice (DOJ), which refers to a civil action filed in November 2018, does not bring the determination of liabilities, the DOJ said.
“The settlement has been fully provisioned in prior periods,” UBS said in a statement.
According to the DOJ, the United States filed a complaint alleging that UBS “defrauded investors” by making false and misleading statements to buyers of 40 RMBS issued in 2006 and 2007 relating to the characteristics of the loans.
Per the civil action, UBS knew that a significant number of the mortgages did not comply with underwriting guidelines designed to assess borrowers’ ability to repay and with consumer protection laws. In addition, UBS knew that property values associated with the loans were unsupported, the DOJ claimed.
“UBS was allegedly aware of these significant problems because it had conducted extensive due diligence on the underlying loans prior to the RMBS being issued to determine whether the loans were consistent with representations that would be made to investors. Ultimately, the 40 RMBS sustained substantial losses,” the DOJ said in a statement.
“The substantial civil penalty in this case serves as a warning to other players in the financial markets who seek to unlawfully profit through fraud that we will hold them accountable no matter how long it takes,” U.S. Attorney Breon Peace for the Eastern District of New York said in a statement.
The UBS settlement is the last case brought by the DOJ working group dedicated to investigating the banks’ conduct during the financial crisis, which resulted in $36 billion in penalties to banks, originations and rating agencies. It includes Ally Financial; Aurora Loan Services; Bank of America; Barclays; Citigroup; Credit Suisse; Deutsche Bank; General Electric; Goldman Sachs; HSBC; JPMorgan; Moody’s; Morgan Stanley; Nomura; Royal Bank of Scotland; S&P; Société Générale; and Wells Fargo.
The agreement comes as UBS is working to integrate the operations of Credit Suisse Group AG. It acquired the rival this year for $3.4 billion in stock after Credit Suisse faced a deposit run in March. A recent filing from UBS showed the Swiss bank took a hit of about $17 billion due to the takeover.
In the mortgage space, UBS has plans to wind down a business in its U.S. mortgage unit that focuses on “to-be-announced” (TBA) trading. The decision is part of UBS’s strategy to focus more on financing mortgage originators, per a Bloomberg report from May.
A beautifully appointed home that bears the signature of popular house flipper, Jeff Lewis, is officially on the market.
Lewis, whose popular BRAVO show, Flipping Out, ran for 11 seasons and was watched by millions of households around the world, has been designing, remodeling, and building homes for more than two decades.
Known for creating stylish interiors that feature a warm, neutral palette and his signature approachable style, Jeff Lewis has been running his own design firm since 2009.
One of Lewis’ most recent projects is on the market for $4,495,000, listed with Steve Marin and Or Brodsky at Compass.
“This property boasts exceptional qualities, such as its integrated, indoor-outdoor layout and effortless connectivity between rooms, ensuring a comfortable and functional flow,” says Compass listing agent Steven Marin, who is representing the home with Or Brodsky.
“The overall opulence and uniqueness of the property are enhanced by the presence of Ralph Lauren light fixtures, a Control 4 automation system, exquisite custom woodwork, and a fully personalized design—no expense was spared!”
The gorgeous, East Coast-inspired property is located in the Beverly Grove neighborhood of Los Angeles.
Taking cues from Cape Cod and the Hamptons, the home is intricately designed by Jeff Lewis Designs. The 4,000-square-foot home was originally built in 2014, with Lewis’ taking the reins to overhaul the exclusive property.
Amenities abound in this privately-gated home.
The gourmet of the family will be right at home in the kitchen fit for a king. Custom oak flooring and tile are featured, adding to the upscale feel. This luxuriously appointed kitchen boasts a Sub Zero wine fridge and Viking stovetop. A breakfast nook is located next to the kitchen, with a formal dining room nearby.
Five bedrooms and five baths are beautifully appointed and create a welcoming atmosphere for anyone who visits the Beverly Grove home. The master bedroom features double closets and dual vanities in the bathrooms.
Multiple textures abound throughout, perfectly teasing the senses with coffered ceilings, crown molding, and Ralph Lauren light fixtures.
Security and convenience are paramount, as this smart home is fully controlled by a Control 4 automation system. A sprinkler system is included, adding another level of assurance.
A backyard oasis awaits in Beverly Grove. The saltwater pool and spa are the focus, with an outdoor kitchen nearby. Perfectly manicured hedges surround the backyard, creating a sense of exclusivity and privacy.
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If you’re struggling to save up for a down payment on your first home, you could do a lot worse than move to Chicago, where it’s possible to do so within just three years, according to a new analysis from RealEstate.com.
The property listings site analyzed industry data to come up with the top ten metros where first-time buyers should find it easier to save for their first home, and also ten metros where it would probably be the most difficult.
The analysis found that in Chicago, a first-time buyer would only need around three years to save for a 20 percent down payment on a typical starter home, which is the fastest time in all 35 metros analyzed. Other metros, including Dallas, Detroit and Baltimore, take an average of just four years saving time.
Realestate.com factored into its equations the median household income for millennials (aged 24 to 36 years), then estimated how much their annual savings would be in order to determine how long it would take to save for a down payment on a starter home, or one that’s priced within the bottom third of the market.
The company says the study is relevant because almost half of all first-time buyers move outside of their current city when buying their first property.
In contrast to Chicago, the estimated time it would take to save for a down payment on a home in Portland, Oregon, is a staggering 13 years. That’s because the estimated annual savings for a millennial household in Portland are just $5,288 (compared to $10,821 in Chicago) and home values are much higher.
Those living in cities including Denver, and San Jose and Riverside in California, would also take more than ten years of saving to afford a down payment.
“Contrary to popular belief, millennials want to buy homes, but high home prices, low inventory and stagnant wage growth are some of the many factors that may be driving would-be buyers into delaying homeownership,” said Justin LaJoie, RealEstate.com General Manager. “However, in certain U.S. housing markets first-time buyers can find some relief; they just need to know where to look.”
To help first-time buyers better understand the total cost of homeownership, RealEstate.com allows home shoppers to search based on homes’ “All-In Monthly Price,” which includes estimates for costs such as mortgage, property tax and utilities, giving them a more accurate picture of the cost of homeownership.
Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected].
With rent prices at an all-time high, finding affordable housing is becoming more challenging for all renters. Right now, the average rent for a one-bedroom apartment is $1,722 and the average rent for a two-bedroom apartment is $2,047.
For low-income renters, finding a safe and affordable place to rent is even more difficult. Government programs like Section 8 are in place to help ease the financial burden of rent. But what is Section 8 exactly and how do you find apartments that accept Section 8?
We’ll walk you through the basics of Section 8 and help you understand what it is, who is eligible and how to apply for it. Here’s everything you need to know about Section 8.
What is Section 8?
Section 8, formally called the Section 8 Housing Choice Voucher Program, is a government-funded program run by the U.S. Department of Housing and Urban Development (HUD).
The program aims to help people find and pay for affordable and decent housing. The program gives monthly financial assistance to over 1.2 million households who are struggling to pay rent based on their annual income, which must fall below a certain threshold to qualify for Section 8.
Section 8 housing is not limited to low-income or subsidized housing areas only. Section 8 housing is single-family homes, apartments or townhomes. It’s up to the landlord or property management company to decide whether or not they accept Section 8 vouchers. Some states require landlords to accept Section 8, while other states do not. You’ll want to check with your local government to understand what rules are in place regarding Section 8.
Who is eligible for Section 8?
To qualify for Section 8, applicants must be U.S. citizens (in most cases) and fall under a certain income bracket. While that bracket varies based on the city or area you live in, it generally looks like this:
You make 30 percent of the median income in your area
You make 50 percent of the median income in your area
Typically, priority is given to renters who make less than 30 percent of the median area income as they fall within the category of extremely low income. The local public housing authority must give 75 percent of the Section 8 vouchers to those who make less than 30 percent of the area’s median income. Section 8 will take into consideration all of the gross income generated by people in the household.
Here’s a real-world example for a prospective Section 8 renter living in Los Angeles. The median income in Los Angeles is $71,358 annually. If someone makes $21,407 or less — which is 30 percent of the median L.A. income — they’d qualify for Section 8. To see what the median income in your area is, check out the Quick Facts section of the Census Bureau.
Section 8 does not cover the entire cost of the rent. It subsidizes a portion of it. Typically, Section 8 has the renter pay 30 percent of their salary towards rent and then, Section 8 vouchers cover the remaining rent due.
Section 8 is not an emergency rental assistance program, so keep that in mind if you’re applying for it. It can take weeks or even months to qualify for Section 8. There are often long wait times to receive Section 8 and, generally, only 1 in 4 people receive assistance immediately.
How to apply for Section 8
Section 8 housing can exist anywhere that landlords choose to participate. It’s not limited to certain cities or neighborhoods. Because specific geographic areas determine the eligibility factors, you’ll need to apply through the local public housing authority or PHA.
Here’s a step-by-step process on how to apply for apartments that accept Section 8.
Find your local PHA contact information
Download the PDF with each county’s contact information
Submit an application to verify your eligibility
Wait for approval
Once approved, you’ll either receive your Section 8 voucher or be placed on the waiting list
If you’re placed on a waiting list, here are some tips on how to gauge the actual wait time:
Ask your PHA for a time estimate
Ask your PHA how long the wait list is to see how many people are on it
Ask your PHA for information about the turnover rate to see how quickly the wait list moves
Understand that larger cities usually have longer wait times
Wait times vary city by city but it can take weeks or months to finally receive Section 8 assistance.
Finding apartments that accept Section 8
So, you’ve qualified for Section 8 housing and you’re off the waitlist. Now, it’s time to find an apartment that accepts Section 8 so you can start the apartment search and application process.
Usually, you’ll have 90 days to find an apartment that accepts Section 8. Once you find a place that accepts Section 8, you’ll need the PHA to inspect and approve the unit and the lease. This helps ensure you’re renting a clean, safe and livable place that meets HUD criteria.
There is not a one-size-fits-all approach to finding an apartment or landlord that accepts Section 8, but here is our advice on how to start your apartment search.
Search Rent. using the “income-restricted” filter and ask the prospective landlord if they accept Section 8 vouchers
Use the HUD interactive map to see which areas and apartment complexes accept Section 8
Conduct a basic Google search to see what comes up in your area
Work with non-profit groups that specialize in low-income housing assistance
Settling into your new apartment that accepts Section 8
Now that you’ve qualified for Section 8 and found an apartment that accepts Section 8 vouchers, you’ll want to consider a few other things to set you up for success in your place. Understand the cost of the utilities and security deposits so you can budget accordingly. Also, make sure you thoroughly understand the terms of the agreement of Section 8 — read the fine print! Once you’ve done those things, it’s time to move in and enjoy your new apartment and home.
Sage Singleton is a freelance writer with a passion for literature and words. She enjoys writing articles that will inspire, educate and influence readers. She loves that words have the power to create change and make a positive impact in the world. Some of her work has been featured on LendingTree, Venture Beat, Architectural Digest, Porch.com and Homes.com. In her free time, she loves traveling, reading and learning French.
The devastation wrought by wildfires is exacerbating a long-running housing crisis on the island of Maui, pitting locals and Native Hawaiians — many of whom rent — against billionaires and real estate developers, the Washington Post reported Monday.
The future of Lahaina, an island community that is a spiritual and cultural capital, is of concern for many locals who are uncomfortable with the encroachment of wealthy outsiders. Tamara Paltin, who represents the area on the Maui County Council, said the crisis may accelerate a process where wealthy outsiders squeeze out locals by snapping up properties.
“If all those people from outside with a lot of resources come in and rebuild Lahaina the way they want it to be, it won’t be Lahaina anymore,” Paltin told the Post. “We don’t want to make it like Anywhere Else, USA.”
Last Tuesday and Wednesday, the fires destroyed approximately 3,000 structures, with Lahaina most acutely devastated by the disaster. As of late Monday night local time, the death toll stands at 99, but officials expect the figure to rise as searches continue.
Some locals are reluctant to talk to opportunistic real estate agents offering to buy fire-affected properties, the report said. Even before the crisis, rising property prices risked displacing locals and Native Hawiaiians, with Hawaii having the highest cost of living across U.S. states. A family of four earning less than $93,000, for example, would be considered low income.
“We want to make sure that we’re able to keep Lahaina Lahaina, and Lahaina strong,” Archie Kalepa, a Native Hawaiian community leader, told the Post. “We don’t want it to be Lahaina was.”
The Federal Emergency Management Agency (FEMA) has activated its disaster relief housing programs, which include providing funds for displaced residents to temporarily stay in hotels. A local real estate agent organization is also seeking out vacant vacation homes to lodge survivors.
FEMA Administrator Deanne Criswell, pledged to be “very creative” in the way the agency will exert its authority, acknowledging that disaster relief approaches on the U.S. mainland may not work in Hawaii. Bringing tiny homes or other transitional housing units to the island are on the table, but such relief isn’t likely to resolve longstanding housing problems.
As mega-fires continue to threaten communities amid climate change, the gap between rich and poor is expected to get wider, the report said. Native Hawaiian families whose houses were passed down through generations could experience significant financial strain: Many of these properties don’t have mortgages and thus aren’t required to have insurance.
The community is pulling together to combat changes that may affect their future on the island.
“When it’s time, we will all rebuild one day at a time,” said Doreen Buenconsejo, a Maui local whose parents lost their home, to the Post. “I know our community is so strong that we will pull together and help each other to clean up our lands.”
Fires are becoming increasingly frequent and destructive across the nation, particularly along the West Coast. Your homeowners insurance usually includes fire insurance, safeguarding against all accidental blazes. However, the specifics of your coverage can vary depending on where you live, especially if you own a home in wildfire territory.
So what is fire insurance, what does it cover, and how is it changing? Whether you live in a city with high-fire risk like Brentwood, CA, or in low-risk Duluth, MN, this Redfin article has everything you need to know.
What is fire insurance?
Fire insurance is a specific type of insurance coverage that compensates homeowners for accidental damage caused to their property by fire. It’s often included as part of a standard homeowners insurance policy, but depending on where you live and the specifics of your policy, the coverage can vary.
Does homeowners insurance cover fires?
Yes, homeowners insurance usually covers all fires, including wildfires. In fact, fire coverage is one of the foundational elements of most standard homeowners insurance policies. Here’s a breakdown of what’s generally covered in the event of a fire:
Dwelling coverage: This covers the structure of your home, including walls, roofs, and built-in appliances. If a fire damages or destroys any part of the physical structure of your home, this portion of your policy would help pay for repairs or rebuilding.
Personal property coverage: This covers your belongings inside the home, such as furniture, clothing, electronics, and other personal items. If these are damaged or destroyed by fire, your policy would help compensate you for their value, either at actual cash value (which accounts for depreciation) or replacement cost (which doesn’t factor in depreciation), depending on your policy.
Detached structures: If you have other structures on your property, like a garage, shed, or fence, these are typically covered under a standard homeowners policy if they’re damaged or destroyed by fire.
Loss of use or additional living expenses: If a fire makes your home uninhabitable, this portion of your policy can help cover the costs of living elsewhere temporarily, such as hotel bills, meals, and other associated expenses.
Liability protection: If someone is injured on your property as a result of the fire, or if you accidentally cause a fire that damages a neighbor’s property, this part of your policy may cover legal or medical expenses.
What doesn’t fire insurance cover?
While fire insurance is designed to provide broad coverage for damages resulting from fires, there are certain exclusions and scenarios that might not be covered by a standard policy. Here are some common limitations:
Intentional fires (arson): If the fire is determined to have been set intentionally by the homeowner or with their knowledge, the insurance will not cover the damages.
Vacancy: If a property has been vacant for a specified period (typically more than 30 days), damages from a fire might not be covered. Insurance companies see vacant properties as higher risks for vandalism, theft, and neglect.
War and nuclear hazard: Damages resulting from war, including undeclared war, civil war, insurrection, rebellion, or revolution, are typically excluded. Similarly, fires resulting from nuclear reactions or radiation are not covered.
Other perils: If a fire results from an earthquake, landslide, power outage, neglect, faulty design or materials, or ordinance of law, insurance may not cover your property.
How is fire insurance changing?
With the increasing frequency and intensity of wildfires, especially in places like California, insurers are reevaluating their risk models. Recently, State Farm stopped offering homeowners insurance entirely in California in early 2023. This has led to much higher premiums from other companies in some areas and even refusal to insure homes in particularly high-risk zones. These changes follow the most destructive wildfire seasons in the state’s history, with 11 of the state’s 20 largest wildfires occurring in the past five years.
This follows a trend in other states across the country ravaged by climate change-induced disasters. For example, in parts of Kentucky ravaged by flooding in 2022, flood insurance rates are set to quadruple. Similarly, insurance companies in Florida and Georgia are raising rates due to more frequent hurricane damage.
Insurance markets are regulated by local and federal governments, and many states and counties are struggling to keep their residents insured. In areas frequently hit by wildfires, state governments are stepping in to ensure homeowners can access affordable fire insurance. This might include offering subsidies, such as through high-risk pools.
What can you do?
If your home is at risk of wildfires, there are actions you can take to lower your insurance rates and help keep your coverage. Installing fire protection devices, like smoke detectors, fire alarms, sprinkler systems, and smart home security systems can all help lower your premiums.
It’s also essential to understand the specifics of your coverage. The more transparent and comprehensive your policy is, the better off you are in the case of a disaster.
Final thoughts
Fire insurance is a vital safety net for homeowners, ensuring that they can rebuild and recover after a devastating fire. As the world changes, so too does the landscape of fire insurance. Homeowners should regularly review their policies, stay informed about changes in the industry, and consider the evolving risks and benefits associated with their property.
If you own rental properties, you have come to learn that time is one of your most precious assets. We all have a lot on our plates, but especially those in property management who oversee multiple properties. Daily tasks can quickly become overwhelming, taking you away from larger business priorities.
As a real estate investor myself, I have experienced this first-hand. My biggest limitation is the time that I have available, so I have found that getting every reasonable task off my plate is one of the most important things to do in order to succeed. Once you are behind on your tasks, all you can think about is how you’re going to catch up, so automating those tasks or finding other ways to outsource them, is the first step toward real expansion and growth.
As most property managers and real estate investors know, the work never ends, so getting through it in the most efficient way possible is critical for success. If you aren’t ahead of the game, you can get buried to the point that you are actually hurting yourself, and your business.
To alleviate the pressure, I recommend automating as many aspects of your business as possible. It can save you time and money, and put you on the road to achieving your long-term goals. Here are some surefire ways to successfully automate your real estate property management business.
Embrace Digital Marketing
Traditional marketing methods to find tenants have gone the way of the wooly mammoth; if you aren’t embracing digital marketing, you’re leaving time and money on the table. Social media, email marketing, and online listings can all effectively reach potential tenants. There are a huge number of quality listing services out there, such as Zillow, Rent.com and many others. Listing your property on these sites can definitely garner some attention, but painstakingly copying and pasting the listing site-by-site is not a good use of time. Find a software that will syndicate the listing for you, sending it out instantly to all the top sites from one central location.
Leverage ChatGPT
Speaking of listings, consider utilizing ChatGPT. It can streamline a number of tasks that typically eat up time in your day. For example, you can use it to write property descriptions, newsletter content, tenant emails, blog posts and more, which gives you more time to focus on strategic initiatives. Open AI, the company behind GPT and ChatGPT, has solutions for you to integrate AI Technology directly into your software, which is what we did at Rentec Direct. Our AI Listing Generator allows clients to generate an enticing property description in a matter of seconds, which typically takes between 10 to 30 minutes.
Offer Virtual Tours
Your AI-created listing generated interest among prospective tenants, now consider how to save time in terms of property showings. Virtual tours are the answer. They have become a valuable tool for property managers. Eliminating the need to be on site to show a vacant property will save you loads of time and give the potential renters all the time they need to peruse the space for as long as they want. Make sure to add as many frequently asked questions to your virtual tour to eliminate the need for a lengthy follow-up meeting.
Invest in Property Management Software
Investing in property management software is one of the best decisions you can make for your business. The right software can help automate many tasks, such as rent collection, maintenance requests, and lease renewals. You can even automate the marketing of vacant properties and syndicate across multiple rental sites with one simple click. A property management software platform can be your ticket back to a healthy work-life balance and take more time-consuming daily tasks off your plate.
Offer Online Rent Payments
Using a check to pay rent – or anything else for that matter – is antiquated. It’s a massive waste of time, and with the expectations and busyness of today’s modern world, it just doesn’t make sense. No one wants to go through the steps of writing, mailing and sending a check through the mail, especially when there are ways to quickly and securely pay online.
Implementing online rent payment can save you and your tenants time and headaches. Not only does it make the rent collection process more efficient, but it also eliminates the need for manual record-keeping. If you are considering implementing a software platform to help automate your business, find one that has online rent payment functionality built-in. Data shows that renters are more likely to pay on time when the rent is automatically withdrawn through an online payment system too. It’s a win-win for everyone.
Use Maintenance Request Software
Handling maintenance requests can be one of the most time-consuming aspects of property management. If it’s not a broken sink, it’s an issue with the air conditioning. These can pile up and easily be forgotten, leading to annoyed tenants and adding to your stress.
Maintenance request software can automate this process, allowing tenants to submit requests online and track their progress. When all requests come to one place, knocking them out promptly is much easier. Plus, the right system will keep records for you – something that’s important come tax time.
Automate Lease Renewals
Managing lease renewals can be a pain, but automating this process can save you time and ensure you don’t miss any critical deadlines. Property management software can automate the lease renewal process, automatically sending out reminders to tenants and generating new lease agreements. The minutiae of the business no longer need to be your primary concern when you understand how to use all of the technology at your disposal.
Not taking advantage of all the ways to automate your business is only making things more complex and putting maximum strain on you. There are many ways to streamline your daily workflow, but in my own experience, automating with the right systems and technology has delivered the largest return-on-investment for me. Your business is unique, so dig deep and find the pain points you can eliminate through thoughtful automation. Nothing can replace the peace of mind that comes with having more time for yourself and your loved ones.
The chasm runs the full length of the condominium complex, from the shuttered tennis court to the shuttered pool. Measuring more than 500 feet long and 20 feet wide, the gash divides the complex in two, its weed-choked perimeter cordoned off with chain-link fencing. A grimy trickle of water oozes along the chasm’s concrete floor a dozen feet below, like some ugly open wound that just won’t heal.
Welcome to Coyote Village, a 70-unit condo complex in suburban La Habra whose residents have been living out a homeowner’s nightmare. Over the last four years, portions of the tree-lined greenbelt that once shaded the complex have violently collapsed into a concrete maw below. That’s because, unbeknownst to most residents, the greenbelt wasn’t built on solid earth. Running beneath it is a cavernous flood channel that decades ago was sealed with a concrete lid then topped with mounds of soil and landscaped with pine trees.
The first collapse of the concealed lid came in January 2019, when a section of the greenbelt near the tennis court caved in, exposing the flood channel below. The second implosion came in March, when heavy winter rains saturated the greenbelt and the concrete lid couldn’t handle the weight of the soggy soil and towering pines. This time, the collapse took out a huge swath of the greenbelt near the community pool.
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Most residents were shocked to learn that their complex was built on top of a private canal that plugs into Orange County’s larger Imperial Channel, which routes storm water out of La Habra, Brea and Fullerton. It stood as the only covered private channel in the county’s 380-mile public storm drain system.
And that “private” designation is where the residents’ encountered another chasm, in the form of a years-long legal battle.
After the 2019 collapse, the county did some cleanup work at the site and provided security fencing around the exposed portion of the channel. Following the March 15 collapse, La Habra brought in construction crews to excavate the channel, which at that point was clogged with dirt, tree limbs and concrete that the city worried would create a damming effect in the broader drainage system during future storms.
But the city’s work stopped there.
La Habra officials have argued since the first collapse that the channel belongs to the complex. And worse, that the channel’s concrete lid had been improperly covered with a breadth of landscaping that violated what had been approved in the city permitting process. According to the city, the homeowners association that represents Coyote Village is responsible for repairing and rebuilding the channel.
The Coyote Village Homeowners Assn. has challenged that stance in a running legal battle, started in 2020, contending the channel is integral to a larger public system and was damaged by public use without just compensation. It has sued the city, the county and the county flood control district, among others, for relief.
“While the conduit runs through the HOA property, the water is public,” said John Peterson, an attorney representing the homeowners group. “The public needs to share in the responsibilities.”
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State Sen. Josh Newman, a Democrat whose district encompasses La Habra, tried to broker a solution last summer and was able to secure $8.5 million in state funding to repair the flood channel. “The residents were wholly unprepared and financially unequipped to deal with this,” Newman said. “I was happy to secure those funds.”
But a year later, that money remains unspent.
La Habra initially questioned the propriety of expenditure, asking the state Atty. General’s Office if the allocation could be considered an improper gift of public funds. The state’s Legislative Counsel determined it was not. In the months since, the city and homeowners association have haggled over who would run the major construction project, with the HOA concerned it does not have the expertise and city officials reluctant to take charge of repairs on a canal they consider private property.
Residents have watched in a mix of frustration and resignation as the saga has unfolded.
Jan Duncan, an HOA board member, said she put her Coyote Village loft on the market in June and received six offers the first week. Then came questions about the flood channel and why it hasn’t been fixed in four years. In short order, every offer was rescinded.
“I cannot give buyers anything in writing to guarantee that this is going to be resolved,” she said. “Without that, they’re uncomfortable. I can’t blame them.”
Justin Marinello is among the parents in the complex who worry about the safety risk the exposed channel poses for children. His condo looks out on the gritty channel and his 4-year-old son had a front-row view of the city’s excavation work after the March collapse.
“My son enjoyed watching the construction because he likes giant Tonka toys playing with dirt,” Marinello said. “But it would be nice to be able to open the door up and just have some grass for him to run on.”
On the other side of the chasm, Lizeth Ruiz knew about the exposed channel when she moved to her condo in 2019 but figured it would be quickly repaired. Instead, she finds herself fending off mosquitoes that breed in the canal’s dingy water. “Now, I keep everything closed and have to be more mindful about wearing pants instead of shorts,” Ruiz said, holding her newborn baby tight.
As the summer heat soars, the concrete channel is lined with dry weeds that rise taller than the 6-foot safety fencing. The channel itself is defaced with graffiti. Residents continue to pay $390 in monthly homeowners fees even though the channel’s collapse has sidelined amenities like the tennis court and pool.
It marks a wrenching chapter in the life of a property with an eccentric history.
In mid-century La Habra, a ranch owner flooded a portion of the area to create a lake and islet, deemed “Monkey Island,” where he let feral monkeys roam free. He also eyed the land for a track that would host ostrich races. At the time, ostrich farms were a popular tourist attraction in Orange County.
Later, the lake was drained and La Habra city leaders opted to go a development direction they considered more forward-thinking, erecting a shopping plaza and post office on the site.
In 1978, developer Loren Hendrix proposed an adjacent 70-unit condominium complex, when such communities were still novel in Orange County as an affordable alternative to single-family homes. Without yards to maintain, he envisioned residents being able to stroll along a landscaped creek — a dressed-up version of the flood control channel that crossed the property — as a key selling point.
But Hendrix faced stiff questions from city staff about how he planned to protect children from hazards posed by the channel-turned-creek. Archival records show the county flood control district rejected Hendrix’s creek design. The district recommended design changes Hendrix considered too costly. Instead, the complex would host an enclosed flood channel masked with landscaping.
La Habra City Council members approved the development in April 1979 on the condition that Hendrix’s design be approved by the city’s chief building inspector and the county flood control district. A year later, the building inspector wrote that the complex was “substantially in compliance” with applicable codes. It’s not clear in county records whether the flood control district ever approved the design.
In any case, the condo development and greenbelt were built. And for 40 years, storm runoff flowed through the underground channel unbeknownst to most residents until the 2019 collapse.
La Habra city officials say the cave-ins are more about what was built on top of the channel than what lies below.
Deputy City Atty. Gary Kranker contends that at the time of the 2019 collapse the soil piled above the channel ran 9 feet deep — 6 feet more than the greenbelt design approved by the city — and that the pine trees that by then stood 80 feet tall contributed to the channel lid’s failure.
“It’s the obligation of the individual constructing the channel, or in this case, the channel roof, to make sure it was done properly,” he said. “Based upon the calculations that we have, it would have been done properly had it only had 3 feet of soil.”
And he faults the homeowners association for failing to take aggressive action to alleviate the risks between the first cave-in and the implosion in March. “To be quite candid, [they] did not do anything to try and alleviate this condition,” he said. “They could have hired someone to remove the soil, one wheelbarrow at a time.”
Last year, the homeowners association sued Hendrix, the complex developer, for fraud. The complaint alleged that he concealed the channel and any maintenance responsibilities from the association so he could sell condos “more quickly and at higher prices.” Peterson, the association’s attorney, said a settlement agreement compels Hendrix to find the insurance policies that covered the development and assign the rights over to the association.
Hendrix did not respond to requests for comment through his attorney.
Last week, representatives for the city and homeowners association said they were closing in on an agreement for moving forward with repairs that would free up the $8.5 million in state funding. Once a resolution is reached, the canal’s reconstruction is expected to take at least a year.
Roma Damo, who has lived at Coyote Village for 35 years, doesn’t see much light at the end of the tunnel — or flood channel, in her case.
“I’m seriously thinking about renting this condo out and getting myself an apartment,” said Damo, 88, eyeing the degraded channel outside her condo windows. “I don’t want to spend the rest of my life here looking at this.”
A home for sale by owner opens the door for you to buy the property without a middleman—though you may choose to use your own real estate agent to facilitate the transaction.
Here’s a look at how the homebuying process with a for-sale-by-owner deal can differ from a typical real estate transaction.
For Sale by Owner: Good for Buyers?
When homeowners choose the FSBO (“fizz-bo”) route, they take on all of the responsibilities real estate agents would typically shoulder, from listing the house and showing it to negotiating and closing the deal.
The main motivation for doing so is often cash. Sellers who go it alone can save money on the commission that real estate agents would normally earn. If neither side uses an agent, the deal sidesteps the typical 5% to 6% for agent commissions.
On the buyer’s side there can be a number of benefits of buying a house for sale by owner. First of all, the lack of a listing agent means you have more direct contact with the seller, which might give you more negotiating power.
The seller will also likely have detailed knowledge of the house and neighborhood, which can be a bonus as you decide whether or not you want the property.
However, you may run into some pitfalls with FSBO properties. A seller may love her home and overprice it, potentially complicating matters when you get an appraisal.
Recommended: How to Buy a House Without a Realtor
Using a Buyer’s Agent
Just because a home’s seller doesn’t want to use a listing agent doesn’t mean you can’t engage the services of a buyer’s agent.
You may already be working with an agent who can contact a FSBO seller for you. Or you may need to look for an agent who is willing to take on the job.
In some cases, buyer’s agents may be hesitant to work on a FSBO property. They may be wary of taking on extra liability, or extra work for which they will not necessarily be compensated.
That said, a buyer’s agent can negotiate the sale on your behalf and walk you through the complicated paperwork. If the seller is putting the contract together, your agent can also check the work to make sure you don’t run into any problems.
Sellers typically pay the agent commission. Just be sure the seller agrees to pay the buyer’s agent commission in the purchase agreement.
Here’s what to expect in the buying process when using a buyer’s agent.
Shopping for a Mortgage
Before making an offer on a home, it’s a good idea to shop for a mortgage to get an idea of the terms different lenders offer and how much you are likely to pay each month.
A mortgage calculator can help you understand how down payments of various sizes will affect the numbers. And you may consider getting preapproved for a mortgage to see exactly how much you can afford to spend.
In an FSBO situation, homeowners may have no experience with the home financing process, and getting prequalified or preapproved for a home loan may remove some roadblocks on your path to making a purchase.
Viewing the Home
Your agent can contact the seller and set up an appointment to view the home.
Be on the lookout for sagging floors or cracks in walls that might indicate structural issues. Test windows. Look for water damage on ceilings or walls that may indicate a leaky roof.
Since the seller will most likely be showing the house, take this opportunity to get as much detail about the home’s history as possible. What repairs have been made recently, and which ones haven’t been made in a while? It’s smart to ask about any warranties, and to be sure they will remain after a sale.
Recommended: What to Look for When Buying a House
Getting an Inspection
When buying a home for sale by owner, it’s not in your best interests to skip an inspection. Home inspectors go over the house with a fine-toothed comb, looking at structure, plumbing, electricity, and appliances to see whether they need repair now or in the near future.
If the inspector finds any problems, you can ask the seller to fix them, credit you the cost of repairs, or reduce the sales price. If you’ve already signed a purchase agreement, severe problems found during an inspection can be a reason to pull out of the contract.
Recommended: The Ultimate Home Inspection Checklist
Negotiating a Sale Yourself
If you decide not to use a buyer’s agent, you and the seller will have to negotiate the sale and write up the purchase contract yourself.
You may also choose to hire a transactional agent or attorney who can help you write the contract and ensure it is done legally and in a way that protects your rights.
If you do decide to go it alone, there are a few things to keep in mind.
Recommended: Guide to Buying, Selling, and Updating Your Home
Making an Offer
Before making an offer on a house, check comparable properties in the neighborhood and see if the listing price is reasonable. Doing so can help you pin down what a reasonable offer is.
Consider offering less than the listing price. The seller may ask you to come up in price, but if you start too high, it’s difficult to negotiate down again. You can use the neighborhood comps you’ve researched as a negotiating tool.
Including Contingencies
Contingencies are certain conditions that must be met in order to close the deal. Some common contingencies are a satisfactory home inspection and appraisal.
If a home is appraised at less than the agreed-upon price, a lender may be unwilling to loan the buyer the money. In that case, the appraisal contingency can be an opportunity to negotiate the sales price.
A clear title is another common contingency. The title is a document that shows who has owned and now owns the home. The title company will make sure there are no liens or disputes associated with the property. If there are unresolvable issues, the clear-title contingency gives the buyer a way out of the contract.
Negotiating Fees
It can’t hurt to ask for seller concessions, closing costs that the seller agrees to pay. A seller may agree to help pay for property taxes, attorney fees, appraisal inspections, and the like.
Even in a seller’s market, if the property has been sitting, possibly because the price was too high, a seller may offer a financial incentive to move the home.
Putting Earnest Money in Escrow
Your earnest money deposit is the money you submit with your offer to demonstrate your serious intent to buy.
The listing agent would usually put this money into escrow. But if you’re going it alone, it’s a good idea to engage a title company or escrow company to hold the money for you until the sale goes through.
If you give the money directly to the seller, they may refuse to give it back to you if a contingency causes the deal to fall through, which could mean suing to retrieve your cash.
Determining When You’ll Get Possession
It’s a good idea to be sure your purchase agreement specifies when you will take possession of the new house and receive the keys. Possession may take place immediately after closing, or the contract may give the seller time to move.
The Takeaway
Buying a house for sale by owner can come with challenges and opportunities. It may make sense to engage a professional to help you negotiate, safeguard your interests, and deal with the documents.
If you’re in the market for a mortgage, check out SoFi’s line of fixed-rate mortgage loans that may allow you to put less than 10% down.
SoFi also offers investment property loans.
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.