More and more home condo associations are persuading their owners to put restrictions on rentals. It usually takes a super majority of home owners to add such restrictions to bye laws but Canyon Road Towers is an example of getting it done. It took a year for concerned residents to persuade the needed votes, yet they did get it through.
There are two major reasons for restricting rentals. The first is financing, the second is care of the building.
From my mortgage background I know that various secondary market lenders aren't always all the same on rules, but a good rule of thumb is that if the building is is less than 75% owner occupied it won't qualify for conventional underwriting. In the good old days that were lax great credit scores overcame that issue. But as the mortgage crises entered the scene lenders were looking for any reason to abort condo financing and owner occupied ratio was a target.
The second reason is care of the building. It's logical, who cares most about the building, an owner or a renter? Kathleen and I saw first hand in our last building the damage and lack of care renters exhibited. We live in Canyon Road Towers and haven't seen the neglect even though there are renters here.
Canyon Road Towers has a less than 25% maximum renters. The building is within 5 of that max. Terrace Falls has a more restricted approach; 2nd home rentals are maxed out currently and if buyer is an investor they
need to live in building for a year before entering the lottery for a
rental. Primary residence units allowed to rent for a max of 4
consecutive years. Terrace Falls also has a cap on rentals.
Home owners dues, taxes, and considering the amount of rent the market justifies also detracts from the viability of condominiums as a rental.
Showing posts with label Policies Regulations & Rules. Show all posts
Showing posts with label Policies Regulations & Rules. Show all posts
Wednesday, June 11, 2014
Utah Has A Strange Policy
Actually, Utah joins six other states with this one. If you have bought or sold your home in one of the other 43 you too will seem this a strange one.
It is that Utah is a non disclosure state. In other words there is no publicly recorded record of what a property sold for. That is unless it sold through the MLS. Even then sellers can place a written request that the MLS not disclose the sales price.
How would Yoda respond to this one? "Stunning that is".
The only upside to this policy that I can see is a tax issue. If the price is not recorded how can the sale be taxed? In King County, Washington State for example, their is a 1.76% excise tax. It is collected at funding and recorded in the county records. There is no way to escape this tax as it is a law to record the sales price. Those who try to avoid it by non recording face stiff fines and penalties.
This leaves a Utah appraiser without an important tool. This makes pricing a home less of a science and more of an art. This also makes a case that the traditional agent approach of pressing the seller to reduce the price if it doesn't sell in a certain amount of time a bad approach for the seller. Traffic drives prices up, lack of traffic drives prices down. So pricing a home to the sellers advantage coupled with a unique plan for traffic becomes of paramount importance when seeking to get top dollar and in seeking to move the home quickly.
In speaking with an appraiser today I am told that banks are not accepting the paperwork from escrow as a comparable on sales closed outside of the MLS. The reason, potential fraud, as these documents are easily forged or falsified. Is this to mean that people actually do this? They do.
It is that Utah is a non disclosure state. In other words there is no publicly recorded record of what a property sold for. That is unless it sold through the MLS. Even then sellers can place a written request that the MLS not disclose the sales price.
How would Yoda respond to this one? "Stunning that is".
The only upside to this policy that I can see is a tax issue. If the price is not recorded how can the sale be taxed? In King County, Washington State for example, their is a 1.76% excise tax. It is collected at funding and recorded in the county records. There is no way to escape this tax as it is a law to record the sales price. Those who try to avoid it by non recording face stiff fines and penalties.
This leaves a Utah appraiser without an important tool. This makes pricing a home less of a science and more of an art. This also makes a case that the traditional agent approach of pressing the seller to reduce the price if it doesn't sell in a certain amount of time a bad approach for the seller. Traffic drives prices up, lack of traffic drives prices down. So pricing a home to the sellers advantage coupled with a unique plan for traffic becomes of paramount importance when seeking to get top dollar and in seeking to move the home quickly.
In speaking with an appraiser today I am told that banks are not accepting the paperwork from escrow as a comparable on sales closed outside of the MLS. The reason, potential fraud, as these documents are easily forged or falsified. Is this to mean that people actually do this? They do.
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