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Subject: Selling a home at below fair market value (without using a realtor): bad for neighbors?
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PaulJ6
(New York)

Posts:102


07/07/2019 6:00 PM  
I own a condo that I am looking to sell to the tenant who lives there. Since it would be a direct sale, without using a realtor for either of us, the purchase price would be discounted by 6%. Plus it needs some work, resulting in a further reduction. The total price will be about $30k (about 8%) less than the asking price for the condo next door, which is for sale (and has been renovated).

Selling at a price that low could, of course, create comparable sales figures in the building that won't look good.

Would the HOA board want to do what it can to avoid that outcome? Or is there a way to show these issues (no realtor, and a need for repairs) in real estate records so that other buyers and sellers disregard this sales price? I'm not looking to harm my neighbors, but I would like to have some leverage with the board.

Thanks.
PatJ1
(North Carolina)

Posts:75


07/07/2019 6:06 PM  
Why do you think the Board can do anything? Is it a co-op?

Board members are volunteers. Many have no idea what they're doing. Educate them. Don't beat them up.
PaulJ6
(New York)

Posts:102


07/07/2019 6:08 PM  
It's a condo, but the board has messed with a few neighbors who sold condos in the building recently by requiring payments of fees for the closing that seem to be arbitrarily imposed to extract cash out of people. I don't want to have to deal with that.
MarkW18
(Florida)

Posts:45


07/07/2019 6:14 PM  
Last I checked, extortion was illegal. If the unit is sold at below market value it will even out down the road. If it needs work, lowering the price makes perfect sense.
SheliaH
(Indiana)

Posts:2565


07/07/2019 6:20 PM  
It's great that you care about the property values of your neighbors, but that isn't one thing that will or won't hurt them, so I would do what makes sense to my pocketbook and not worry about stuff you really can't control. You aren't using a realtor, but it wouldn't hurt to check how home sales are going in your area - perhaps a look at a real estate site like Zillow can give you some ideas.

You didn't say if your condo is a townhouse or in a highrise (I live in a townhouse), but if I were buying one today, I'd take a very close look at the community's finances, such as whether there's been a recent reserve study, how closely is the board following its recommendations, delinquency rate and success rate in reducing it, are any special assessments on the horizon, etc. This is just as important as the maintenance - are there any that have been postponed over and over again, and if so why? Do you have relatively decent neighbors with a low number of rented homes? What's the crime rate in the community and surrounding areas.

The HOA board can only control the budget and how well it enforces the rules - it cannot dictate your asking price or who you sell your home to. Besides, you can ask 20 people their opinion of your homeowner association and get 20 different answers, and some may be of more interest to buyer A than buyer B. Don't lose your mind over this.

Instead, make sure your assessments are up to date and you don't have any issues with CCR violations before the house changes hands - THAT's probably the best thing you can do for the soon to be new owners and the neighbors that remain.
PatJ1
(North Carolina)

Posts:75


07/07/2019 6:27 PM  
Posted By PaulJ6 on 07/07/2019 6:08 PM
It's a condo, but the board has messed with a few neighbors who sold condos in the building recently by requiring payments of fees for the closing that seem to be arbitrarily imposed to extract cash out of people. I don't want to have to deal with that.




Often the MC charges a fee to fill out questionnaires required by the bank to obtain a mortgage. Our MC keeps all these fees. Is that what could be happening?

Board members are volunteers. Many have no idea what they're doing. Educate them. Don't beat them up.
PaulJ6
(New York)

Posts:102


07/07/2019 6:33 PM  
Posted By PatJ1 on 07/07/2019 6:27 PM
Posted By PaulJ6 on 07/07/2019 6:08 PM
It's a condo, but the board has messed with a few neighbors who sold condos in the building recently by requiring payments of fees for the closing that seem to be arbitrarily imposed to extract cash out of people. I don't want to have to deal with that.




Often the MC charges a fee to fill out questionnaires required by the bank to obtain a mortgage. Our MC keeps all these fees. Is that what could be happening?




Unfortunately not; the board has been doing “inspections” and imposing fines and repair costs for damage that owners have been disputing. These “inspections” and fines and costs seem to keep happening right before sellers are ready to close
NpS
(Pennsylvania)

Posts:3464


07/07/2019 6:35 PM  
1. I can't believe that NY doesn't have strict laws on what can be charged by the Condo assn.

2. An option for keeping sales prices up. Sell the house at market price. Seller gets the discounted amount and is out of the picture. The difference between the market price and the discounted amount goes into escrow. After the sale, the escrow monies are used to make improvements to the property that bring it up to standards.

Je publie un degagement de toutes responsabilite. Read all posts at your own risk.
PatJ1
(North Carolina)

Posts:75


07/07/2019 6:43 PM  
Posted By PatJ1 on 07/07/2019 6:27 PM
Posted By PaulJ6 on 07/07/2019 6:08 PM
It's a condo, but the board has messed with a few neighbors who sold condos in the building recently by requiring payments of fees for the closing that seem to be arbitrarily imposed to extract cash out of people. I don't want to have to deal with that.




Often the MC charges a fee to fill out questionnaires required by the bank to obtain a mortgage. Our MC keeps all these fees. Is that what could be happening?




Haven't heard of this before. Why would you have to let them in? Is it in the governing documents?

Try posting your question here.

https://www.expertlaw.com/forums/forum.php

I'm curious if this is legal.

Board members are volunteers. Many have no idea what they're doing. Educate them. Don't beat them up.
MelissaP1
(Alabama)

Posts:8300


07/07/2019 7:00 PM  
The sale value does effect other homes that are selling in your area to some effect. HOA has nothing to do with it. Home value is assessed by what homes sell for in a set area that is similar square footage/bed/bath options. It also factors in foreclosures or short sales. I would consider your sale more in the "short sale" department. A short sale is typically a house being sold to avoid foreclosure. It's usually needing repairs and owner wants to get rid of the burden ASAP.

How much a short sale effects the general home value of other people selling depends on many factors. You get what you pay for essentially. Your tenant is paying for a home that needs extensive work. Your neighbors house has already been renovated and so buyer will be paying for those. Yours is just factoring in their repairs. It will up it's value again once that is complete.

My neighborhood we have a mixture of renovated houses and those needing renovated. They are older homes built in the 60's to 70's. A few homes just went up for sale that were basically stuck in the 70's. They sold for lower prices. However, other homes have been fully renovated and in very good condition. Those have sold at the expected home sales prices in our city. Which then will up the sales prices again in a few months.

Former HOA President
AugustinD


Posts:1791


07/07/2019 7:05 PM  
Posted By PaulJ6 on 07/07/2019 6:00 PM
Selling at a price that low could, of course, create comparable sales figures in the building that won't look good.


If it's a private sale that does not use MLS, then my understanding is that, in the future, it is unlikely to be counted among the "comparable sales" (a.k.a. "comps") used by realtors and appraisers. On the rare occasions when an appraiser wants to draw on non-MLS sales, the appraiser is supposed to go to some trouble to confirm the private transaction sales price. From what I have seen recently, condo appraisers rarely go to much trouble when appraising a condo. They do a cursory check of the condition of the condo, then go straight to comps from the MLS.
GenoS
(Florida)

Posts:3050


07/07/2019 7:24 PM  
Posted By PaulJ6 on 07/07/2019 6:08 PM
It's a condo, but the board has messed with a few neighbors who sold condos in the building recently by requiring payments of fees for the closing that seem to be arbitrarily imposed to extract cash out of people. I don't want to have to deal with that.

That sounds illegal as hell. Arbitrary, capricious, and done with malice.
KerryL1
(California)

Posts:6421


07/07/2019 8:02 PM  
"Arbitrarily," Paul? Really? Nothing in your HOA's docs to justify these "fees"?
PaulJ6
(New York)

Posts:102


07/08/2019 5:01 AM  
Posted By KerryL1 on 07/07/2019 8:02 PM
"Arbitrarily," Paul? Really? Nothing in your HOA's docs to justify these "fees"?




The governing documents allow for fees to be imposed for various violations. It just seems odd that this all happens right before a sale.
MelissaP1
(Alabama)

Posts:8300


07/08/2019 5:37 AM  
Actually that doesn't sound too "odd". If they are violations. The HOA can't pass them onto the new owner necessarily. So they have to pass them onto the current owner who has the violation. Who is to say these violations don't exist. Just turning a blind eye until closing day comes.

Former HOA President
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Forums > Homeowner Association > HOA Discussions > Selling a home at below fair market value (without using a realtor): bad for neighbors?



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