Advice please

Started by JohnL31 • 39 replies • 1532 views

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JohnL31 (New Hampshire)
Posts: 16

Posted:

I am thinking of buying a condo or a townhouse all cash. i went through a chapter 7 earlier this year and was discharged. my mom just passed away and left me 10 million dollars. i have spoken with multable real estate agents in the area that i want to buy in. and they all told me that i more than like would not get approved for it. i don't see why i wouldn't get approved for one and more so since it's an all cash deal and with the amount of money that i have came into and with all of the intrest that i am making off of it. i think that i am better off than most

TimB4 (Tennessee)
Posts: 21,059

Posted:

John,

Congratulations on your inheritance.
Why not purchase a single family home outside of an HOA vs. a condo?

Note: not all town homes are condos, some are fee simple purchases.

Condominiums/Coops may have right to approve the sale.
Single family or fee simple town home sales typically have no HOA involvement.

Please note that I find it odd that someone who inherited $10,000,000 would look to a forum for advice vs. an attorney or Realtor (who knows more about your situation then we would).

JohnL31 (New Hampshire)
Posts: 16

Posted:

Thank you on the congrats!!!
i will be speaking with a real estate lawyer tomorrow as i will more than likely need one!!! but i just thought that i would come on here since it's sunday and try to get some inputs on my situation...

why don't i buy into a single family home?? where i am looking is mainly all lofts still really a condo. and i do enjoy the maintance free life style over a traditional SB house. and some of the fee's cover things like master ins and water as well as heat depending on the complex..

TimB4 (Tennessee)
Posts: 21,059

Posted:

I would advise you to take a look at the condo's finances, especially the reserve study, how much is being set aside each year and the current balance. Special assessments in condos occur more frequently then within single family homes.

KerryL1 (California)
Posts: 14,550

Posted:

JohnL, did the realtors give the reason for you not being "approved"?? Just "who" or what entity would not approve you?? You are saying it would be a all-cash transaction right?

Does NH have special laws where HOA boards are encouraged to (and would want to ) read the credit history of buys in their HOA??

JohnL31 (New Hampshire)
Posts: 16

Posted:

Quote:

Posted By KerryL1 on 10/02/2016 3:47 PM
JohnL, did the realtors give the reason for you not being "approved"?? Just "who" or what entity would not approve you?? You are saying it would be a all-cash transaction right?

Does NH have special laws where HOA boards are encouraged to (and would want to ) read the credit history of buys in their HOA??

No reason given to me by the realtors did NOT give me any reason nor NOT getting approved and that came from 3 realtors. yes it will be an all cash sale no mortgage. i don't know who wouldn't approve me just because i had a few problems that got beyond me control i feel that i am better off than most people are living paychect to pay check..
i dunno if NH has any special laws that would encourage an HOA to review someones credit. and personaly i don't see why they would have to since they can put a lein on the unit and recoup the lost payments once the owner sells the unit.. i am gonna take timB's advice and get a real estate lawyer as i am sure that i will need one!!!

JohnL31 (New Hampshire)
Posts: 16

Posted:

Quote:

Posted By TimB4 on 10/02/2016 3:08 PM
I would advise you to take a look at the condo's finances, especially the reserve study, how much is being set aside each year and the current balance. Special assessments in condos occur more frequently then within single family homes.

i agree with you. though i am thinking that i might be better off in a single family home even if it's in an hoa vs a condo. not being negative but if i was to buy a condo it would be a detached one vs a bunch of units together. then you have to worry about people bringing in travlers bugs and things like that stomping and nosie among other things. and i guess the board can tell you who you can contract from to replace things like faucets and light fixtures and so on some can be pretty anal from my research!!!

KerryL1 (California)
Posts: 14,550

Posted:

Sur, go ahead--you can afford to pay a professional--and I agree either a real estate attorney or lawyer that specializes in HOA law.

I personally have never heard of HOA boards checking the credit of perspective buyers and don't know why they would! (I think FL is different). have nothing to do with perspective buyers at all, not even checking criminal records. I have a feeling that the three realtors misinformed you UNLESS there's something about NH...

JohnL31 (New Hampshire)
Posts: 16

Posted:

i think i would be best off hiring a real estate attorney i don't want to depend on a real estate agent as they tend not to disclose everything as well!!! i have never heard of an HOA checking anyone's credit and i don't see why they would since they can put a lien on the property making sure that they get paid when i sell it as if they had my SSN then i could just go poof and good luck at trying to find someone there. i heard of a few HOA'S doing criminal background checks maybe like 3 that's it. i would suspect they would atleast run a background check as i would not want a pedophile or a serial killer living next door to me!!! and i can't even imagine what kind of lawsuits that could open up if it did happen..

that's why i am going to get in touch with a lawyer to see if there is something about NH that a real estate agent is not telling me since they just want to make the sale and i can't blame them for that but i atleast want honesty and to be informed. i read alot of bad things about FL it really makes me wonder

JohnL31 (New Hampshire)
Posts: 16

Posted:

though i am sure that i will have to prove that the funds are available with a bank statement and prove to them that i can pay the monthly fee. wich is not a problem

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Buying a house for straight cash isn't necessarily a good idea. There are issues with that. Especially if your buying into an HOA.

The issue your having for not being approved is that bank's don't approve sales without certain credit requirements. Yes, you can pay cash for the whole thing all day long. However, if you have really bad credit or none at all, your going to face a really hard time. All cash sales does not eliminate nor improves your credit score. The amount of cash you have doesn't equal good credit... Just ask MC Hammer...

A HOA situation adds an additional concern and issues. Just because you own your house outright does NOT make you NOT on the hook for HOA fees/dues. You have to pay those no matter what. If you don't? That all cash house you just bought goes away... You are subject to liens and foreclosures for a paid for house.

My suspicions strongly indicate you have some really bad credit issues. Your best option? Believe it or not is to put about 20% and above money down on a home. Open up a loan. Maybe 15 year it instead of 30. You want to have a mortgage. It will build your credit up and provide you with some good tax breaks. Which your going to need after that inheritance money is taxed.

Remember you still need to keep the house insured and pay the taxes if you paid cash. Insurance is also a serious factor. Your past insurance claims and/or credit comes into play how much your premiums are for. It would not be a smart idea to NOT have insurance an any home you purchase.

You may want to get a buyer's agent realtor. Any realtor can act as buyer's agent. They just split the profit (usual 6% of the sale) with the seller's realtor. However, they can act as both in some cases. This may be helpful for you when dealing with Realtors and purchasing a home.

Just don't assume paying straight cash for a house is a good credit building decision if that is your goal. It is not. Until you can secure an actual loan, a paid for house still does nothing for your overall credit.

Former HOA President

JohnL31 (New Hampshire)
Posts: 16

Posted:

While i do agree with you that there are issues when paying cash for a house and even more so buying into an HOA. I know that all cash sales don't improve my credit score nor does the amount of cash that i have give me a good credit score also. lenders like to see timely payments. and i am knowing that just because i own my home outright does not let me off the hook for the HOA fee's they have there bills to pay to and i know that the fee's have to be paid no matter what even if i am on my death bed. yea i had credit problems it's called our wonderful economy tanking. though i have just started to rebuild my credit wich is a positive... i agree that i have to keep the house insured and all of the bills paid including taxes if you don't pay your taxes then they put a lien on your home and if you don't pay your water or power bill then they cut you off and they charge you a reconnect fee. i never did assume that paying strait cash for a home was a good credit decision but it's one less headache!! and my inheritance is a life insurance policy wich from my understanding is NOT taxed i will have to look into that to

the more and more i think about it i think that i am better off taking tim's advice and buying outside of an HOA

KerryL1 (California)
Posts: 14,550

Posted:

In the expensive urban zip code where I live, 90% of the homes are condos, and 40% of the transactions are all cash. I have a feeling that most of these buyers have a pretty good idea about what they're doing.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

It may be better to look at foreclosures or short sales. Most of the time cash sales are less of an issue if it is a foreclosed property. Those houses listed generally are harder to buy because money is still owed. So if your handy or get lucky, I would buy foreclosed. However, still need to verify it is not in a HOA. The records are at the courthouse in records department.

I would not buy into a HOA if I could pay cash. Unless it is investment purposes only for rental. Otherwise your dues are not tax deductible nor repairs. It is too risky if something happens where I can not pay dues later. Plus its still payments basically.

I am not saying not to buy into a condo or loft situation. They can benefit what your looking for. I hate mowing and certain responsibilities a HOA or condo offers. It just how much you are willing to pay for these services at the group rate. My HOA the dues were $50 a month for pool, mowing, clubhouse access, and garbage pickup. My non HOA home it is $40 every 2 weeks just for lawncare. I have no pool. So yes moving into a loft with a gym, pool, no lawn, and other benefits may be worth the reduced money you pay for these same items because it is as a group discount basically.

Former HOA President

PitA
Posts: 1,416

Posted:

The state motto of New Hampshire:

Live free, or die.

? HOA ?

? What would Einstein have said ?

(his personal definition of insanity)

JohnL31 (New Hampshire)
Posts: 16

Posted:

portsmouths getting more and more HOA'S all of the newer built homes are in one

KellyM3 (North Carolina)
Posts: 2,239

Posted:

John,

An all-cash purchase is the best scenario for a real estate transaction as it's clean. Your credit score is irrelevant on a cash purchase because you don't need a loan.

Go for it if you like the community. The HOA won't get between you and a seller, I can't imagine. If you go into debt for the property taxes or the HOA dues, you'll get foreclosed as both are debts incur liens. In your financial position, that should never be a problem for you.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Kelly buying a house for cash doesn't work that way at all times. You can't just walk up and pay cash for a home. This is what the OP is finding out. The issue isn't that they can't pay for the home. It's the fact that most likely the homeowner who is SELLING the home still has a mortgage on that home. That is why the bank is still technically the owner. The bank is the one who is most likely saying "No good credit we aren't selling. Cash or no cash".

Banks are just like anyone else. Your going to want to see the money before you sign that line. You also want to know the person who is saying "Hey I am good for the money" is actually "good for the money". The banks don't ask you to pull your wallet out or pull your pockets out. They go by your credit history. If they see one has a good credit and financial history, then yes they may then extend to sell.

Credit does play a role in a purchase. Now if the owner is free and clear then home sell may happen. There is no bank involved. The person can sell the home themselves for cash as long as their is no lien or mortgage. Which could be why one sees and hears about people buying houses for cash. It's because that situation is met where a cash sale can happen. However, it does NOT happen with every and any home sale.

Former HOA President

KerryL1 (California)
Posts: 14,550

Posted:

Really, Melissa? The bank or mortgage company that's going to be completely paid off by the prospective buyer can approve the buyer??? I've never seen this in the many transactions I've been involved in. I agree entirely with Kelly.

MichelleK5 (New York)
Posts: 161

Posted:

The only time I have ever heard of an all cash sale not going through is when there's a board involved that has the right to deny a sale.

Melissa, I believe you're wrong regarding a bank denying an all cash sale due to the buyer having bad credit. Even closings on all cash sales take a few weeks as opposed to the months when you finance. The bank simply doesn't require the same documentation. And there is never, ever a good reason to finance a home if you can pay all cash unless you think the markets gonna tank again, and your property value is going to plummet. But no one buys a home with that in mind.

I've known plenty of people with crappy credit that have the cash to purchase, and I've never heard of them not qualifying due to their credit report. Unless, unless there's a coop board involved, then the amount of money you have doesn't make one bit of a difference. At least not here in NY.

JohnL31 (New Hampshire)
Posts: 16

Posted:

what's the difference between a condo and a co op. i do know that in a co op that they decide on who they want in there thing

MarkM31 (Washington)
Posts: 351

Posted:

Quote:

Posted By MelissaP1 on 10/03/2016 9:51 AM
Kelly buying a house for cash doesn't work that way at all times. You can't just walk up and pay cash for a home. This is what the OP is finding out. The issue isn't that they can't pay for the home. It's the fact that most likely the homeowner who is SELLING the home still has a mortgage on that home. That is why the bank is still technically the owner. The bank is the one who is most likely saying "No good credit we aren't selling. Cash or no cash".

Banks are just like anyone else. Your going to want to see the money before you sign that line. You also want to know the person who is saying "Hey I am good for the money" is actually "good for the money". The banks don't ask you to pull your wallet out or pull your pockets out. They go by your credit history. If they see one has a good credit and financial history, then yes they may then extend to sell.

Credit does play a role in a purchase. Now if the owner is free and clear then home sell may happen. There is no bank involved. The person can sell the home themselves for cash as long as their is no lien or mortgage. Which could be why one sees and hears about people buying houses for cash. It's because that situation is met where a cash sale can happen. However, it does NOT happen with every and any home sale.

That's some crazy stuff right there. If it's a cash deal, regardless of the credit standing of the buyer, you go to an escrow company and the money transfers to the mortgage company. Credit has part part in this transaction. The bank is paid off and the deal proceeds.

Why would you think credit plays any part in cash out?

JohnL31 (New Hampshire)
Posts: 16

Posted:

Got an e-mail from my lawyer this morning and it's good news!!!

Thank you for speaking with me this afternoon about your potential condominium purchase in Portsmouth, NH. As I mentioned over the phone, it is unlikely that a condominium association or homeowner’s association would require a background check or credit check run on prospective purchasers. Checks of that sort are the norm for co-operatives, but not for regular condominiums.

that's good news as i did go ahead and make an offer on a unit hopefully the seller accepts it!!! i do agree with what melisa is saying. but she did point out a couple of things that i have been thinking about that a condo offers that you i am not gonna like shoveling the snow when it's 40 below out after living on the west coast for 16 years

. that and she also mentioned the thing about group discount when paying for the condo fee for things like the pool rec room and lawn mowing ect ect. it's cheaper to pay a condo fee than it is to contract someone out yourself

the agent did ask me if the estate was settled and i had the cash in my bank acct and i told her yes and showed her a bank statement

AugustinD
Posts: 5,144

Posted:

Thank you for the update, JohnL31. I had gotten all foggy on the issue of whether a condominium board could approve or disapprove a purchase. I see I was conflating condominium boards with cooperative boards. Your attorney's message cleared this up.

My remaining question is why these real estate agents with whom you talked cast doubt on your chances of being able to buy a condominium.

Else: Unhappy as I am with boards that show little competence, like MelissaP1 I think often of how the "group purchases," so to speak, that condominium members make tend to be at a per capita discount compared to purchasing individually. This 'group discount' may tend to make up for wastage on other matters.

Good luck on the negotiating.

SheliaH (Indiana)
Posts: 6,964

Posted:

I can't tell from this if you're a first time homeowner or not, but it certainly appears you're new to HOA and condo living, so whatever you do, educate yourself on the differences so you can make an informed decision. With $10 million, I suspect someone will sell you a house regardless of the bankruptcy, but you also need to be concerned about the community and lifestyle. You may find you really are better off owning a home in a non-HOA community.

Look all over this site and you'll see that HOA living isn't for everyone. Sure, it's great that someone else takes care of the lawn care, snow removal and what not, but there are also rules regarding pets, parking, what type of exterior changes you can make, not to mention neighbors who behave as if rules apply to everyone else but them. That sort of thinking can cause a lot of headaches in a condo or townhouse community because you share common walls (some people didn't learn how to play well with others when there were in kindergarten!)

You need to consider if you can live within the rules of the condo or HOA - be sure you get a copy of those and read them before you buy. In addition to looking at the reserves as Tim suggested, I'd also get the current budget, along with monthly income/expense reports, as well as the last 12 months or so of condo or HOA board meeting minutes to see what the issues are. If there aren't any, find out why - if no one knows or wants to tell you, be very concerned.

Don't forget to walk around and talk to some of the neighbors about the HOA or condo board and see if they like how things are being run. You may find some are totally clueless and that's also a big problem. I was a first time homeowner and one of the biggest problems I've found with HOA living (I'm in a townhouse community) is that many owners treat condos and HOAs like souped up apartments - all they have to do is pay their assessments and go on about their business. Doesnt' work that way - homeowners make up the board, elected by other homeowners and if you don't pay attention to who's making the decisions or why things are or aren't being done, there could be some serious underlying problems the homeowners either aren't aware of or want to ignore as long as possible (hoping the caca will hit the fan after they've sold their homes and moved out).

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

KerryL1 (California)
Posts: 14,550

Posted:

MY question, like Augustin's, which I asked waaaay above also is: what reasons did those "three agents" give for you supposedly not being able to buy in an HOA, JohnL?

JohnL31 (New Hampshire)
Posts: 16

Posted:

Quote:

To be honest no they could not give me any reason why i wouldn't be approved to buy a condo.. i'm glad that i called a lawyer and got the answer from there mouth and i am also glad that i found an agent that knows her stuff to. yes i said it's an all cash transaction. now i am crying all the way to the bank LOL

. i think a lien is better than giving out your SSN since a lien just doesn't go away like someone can just disapear and screw em over then they would be stuck trying to find the person.. .the special assesment fee was only 500 bucks not bad the same as the monthly fee wich includes master insurance garbage water rec room pool as well as a new roof and lawn care and snow plowing

JohnC46 (South Carolina)
Posts: 14,265

Posted:

JohnL

Many early condo docs were written to eliminate people. Some directly said no blacks may buy. This of course being illegal.

Later, many docs said the association had the right of refusal meaning the association could buy the unit prior to it being sold to "another" person. This was also used to eliminate various people. This wording still exists in many old association docs.

JohnL31 (New Hampshire)
Posts: 16

Posted:

i backed out of the deal. the first deal breaker was i could not get a hold of any one from the board via phone and or e-mails.. the second deal breaker was i had my agent ask someone from the board if satellite tv was allowed and the person from the board told her that it was but where they wanted the dish placed i could not get no signal very shady to me...

TimB4 (Tennessee)
Posts: 21,059

Posted:

John,

In a condominium, the Association controls the buildings. Hence, they can specify where a satellite dish is allowed to be installed.

In a single family home (or a single family home that the HOA provides grounds-keeping services of the individual proeprty), the Association may not prevent you from installing a satellite dish.

With 10 mil, I'd be buying my own property and building my home. Then hire others to perform the maintenance, etc.

JohnL31 (New Hampshire)
Posts: 16

Posted:

yes they can tell you where to put the dish and so on. i am buying a single family home without an HOA involved and i am gonna contract out for maintance and plowing services and lawn ect ect ect.. the one main thing that i wasn't thinking was the special assement fee's and how often those can pop up.. i also think that it might be easier to budget not being in an HOA because of things like that as well..

MichelleK5 (New York)
Posts: 161

Posted:

With 10 mill, first thing you should is get a financial adviser/planner that specializes in handling high net worth individuals.
You want that money to grow.
No offense, but don't be that guy hits it big, just to go broke due to bad or impulsive decisions. Not saying you are, but with 10 mil, you really shouldn't be on-line
getting advice from strangers about HOA properties.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By MichelleK5 on 10/08/2016 5:04 PM
With 10 mill, first thing you should is get a financial adviser/planner that specializes in handling high net worth individuals.
You want that money to grow.
No offense, but don't be that guy hits it big, just to go broke due to bad or impulsive decisions. Not saying you are, but with 10 mil, you really shouldn't be on-line
getting advice from strangers about HOA properties.

I agree.

KerryL1 (California)
Posts: 14,550

Posted:

I also think this thread has strayed faaaaar away from HOA topics.

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