Las Vegas Short Sales Tip:
Pay your Association dues. Over the years of doing Las Vegas short sales I’ve seen more then a deal or two killed because Homeowner Association Dues were not paid and late fees, collection fees, interest charges, lien fees, paperwork fee, recording fee, postage and mailing fees were tacked on to the bill turning something that was reasonable to pay into something completely ridiculous.
Worst case scenario I was personally involved in was when one of my real estate investors was attempting to purchase a distressed short sale. We made it through to an acceptable price that the bank would agree to and then found out about the $13,000+ in past HOA dues and collection fees. The seller certainly could not afford to pay it, the bank did not want to pay it and my real estate buyer certainly was not going to pay for it. Result? The Home ended up going through foreclosure to the Trustee’s sale and becoming another blighted home in the community with dead landscaping and trash piled up on the front door. Hardly in the best interest of the community it was located in.
So… I have to kind of laugh when I see an article in the Las Vegas Sun where the collection agencies for the HOA’s call Las Vegas Real Estate Investors Greedy for not wanting to pay these fees.
HOA Collectors want to End Cap on Delinquent Fees and Foreclosures – 12/03/2010 – Buck Wargo
Investors argue state law limits the collections to nine months and the added fees are hurting their ability to invest and improve properties. Collection companies accuse investors of being greedy and only wanting to enhance their profits.
“I don’t think the general public understands that if you live in a homeowners association and follow the rules, you should be concerned about this,” Stone said. “It will hurt you if investors have their way.”
Ok… let’s think this through a little bit. The previous owner of the property was not paying their HOA dues. The house sells to a new owner who can afford the upkeep on the home and they get to pay all of the past dues AND all of the collection fees that were tacked on?
In my case scenario previously mentioned above our estimate of past HOA dues that were not paid was around $4,000. I have no idea the exact details / fines associated with that particular property because I was not representing the seller in that attempted transaction. My real estate investor that I was representing would have been fine with paying another $4,000 in past HOA dues to obtain the property …. however…. $13,000+?
Not a chance…
Example of Collection Fees Tacked On
Below are excerpts of a letter sent to a homeowner that I was representing in a Las Vegas short sale. The seller had lost their job and was in such dire straights he could not even afford to keep his utilities on and had to move in with his parents.
Amount due at the time of the letter including Late Fees = $1,113.00.
A futher breakdown of the fees from the same letter:
Some simple math here:
$1,113.00 minus $665.00 in late fees, collection fees and interest = $448.00 in past HOA dues.
$665.00 divided by $1,113.00 = 60% of the bill in fees that HAD to be paid by somebody to transfer ownership to the buyers to make the short sale happen and keep the home from going to foreclosure. Obviously… we all should know by now that a Las Vegas Home that goes through the foreclosure process and the time it takes before a new owner can move in is not in the Best Interest of the Community.
In an e-mail that the seller sent to the Homeowners Association explaining the situation and how he did not know the collection fees were going to get racked up, that the home was in escrow and a new buyer would be taking over, here is the response he received:
Once assessments are 60 days past due and over $200 in arrears, we send those files to collections. We do not waive fees from the collection agency as the rest of the community then is paying for someone else’s delinquency. Nor do we ever waive assessments due as they also become a burden spread on the backs of the rest of the community.
As far as notices, they go out regularly. If you did not change your address with the management company in writing after you moved, there was no way for them to know where to send notices. You had a coupon book and could have kept paying your assessments as we don’t regularly bill.
I’m sorry there is nothing which I can do or offer up as help as we cannot put the burden of all the collection fees which homeowners accumulate on the rest of the community. Perhaps ya’ll could split them or the real estate agent would be willing to help.
–End of Message
This is just one example of several on the mentality when it comes to distressed Las Vegas homeowners wishing to move on and avoiding foreclosure. I only post this example because the homeowner that this was done to Requested that I post it and to share the added stress he had to go through instead of “putting the burden of all the collection fees on the rest of the community”. (Over 500 Homeowners in this particular community.)
Luckily, this ended up with a happy ending since I was able to convince the bank to pay the fees so title could be transferred to the happy new owners.
In absolutely ZERO way am I suggesting that past HOA dues are not paid back to the association and homeowners of the community with a transfer of ownership from a distressed Las Vegas Homeowner and I don’t know any Las Vegas real estate investors that do not feel the same way.
The past HOA dues owed are not just going to be wiped away and disappear with the rest of the homeowners in the community being stuck paying them and that’s not even the issue.
In my $13,000 plus example from my investor situation above, he was planning on spending over $40,000 in rehabbing the property which included new exterior paint and new landscaping for the front yard. It certainly would have been a huge improvement to that street in that particular community.
I think it’s pretty safe to say that the improvements that were planned for the property if the short sale would have gone through would have been much better “in the interest of the community” then paying all of the collection fees.
Instead… the property sat blighted for another 7 months before being sold to a new homeowner.
Regardless… until a common sense solution is created, do whatever it takes to pay those HOA dues to avoid making a bad situation even worse.
And please do not think that gouging Las Vegas Real Estate investors looking to purchase and improve homes in the community is the solution.
If you want to see pictures of Las Vegas homes that were broken in to, vandalized and practically destroyed after being foreclosed on, well… I’ve got those to.
And I can tell you, it certainly does not add value that is in the best interest of all the homeowners in the community when the property eventually sells for far less then market value.
Paul Francis, CRS
Prudential Americana Group – REALTORS
Las Vegas Short Sales
702.592.3058
According to Moody’s. To me… this is no surprise and I’ll go over why with some simple calculations using some home values. Keep in mind the massive increase in inventory in the form of new homes built during the real estate boom that people don’t factor in or conveniently forget. In other words, there really is no shortage of homes available that would suggest appreciation rates rising faster than normal.
However… understanding the foreclosure process will certainly help out in getting rid of the fear/stigma associated with a foreclosure. Homeowners often seem to be under the impression that the big bad lender is going to send people over to kick down the door and throw you and all of your belongings out on the street. They get a notice and they think they have to move out right away.
