Dear Michael: I am buying a townhouse and I am told that it is not a P.U.D. What is a PUD and how does it affect my townhome?
Answer: A P.U.D (planned unit development) can take the form of a community of townhomes or detached homes. Membership in the HOA is mandatory. The HOA fee is often used to cover insurance and maintenance.
The difference between a PUD townhome and a condominium townhome is that in a PUD, you actually own the land your townhome sits on, and if present a small back and front yard.
In the case of a condominium townhome, all land is commonly owned and maintained by the association. Some buyers may prefer a PUD as with a PUD you can landscape the land you own, rather than having the HOA control it.
HOA fees for PUDs are usually lower than for condominiums because there is less for the HOA to maintain. Most PUD’s will not have pools, clubhouses or tennis courts (although they sometimes do).
PUD ownership is as secure as condo ownership, as long as the HOA is solvent and doing its job. To reiterate, the main difference between a PUD townhome and a condominium townhome is that in a PUD, you own some land and in a condo, the HOA does.
Dear Michael: We are in escrow on a home that did not appraise at our purchased price. We really love the home. What are our options to move forward?
Answer. The bank will not want to lend you money on a property that they cannot sell if you should default on the loan.
Appraisers are appraising properties at the most current value and execute the most extensive study in order to meet the purchase value.
If the home you are purchasing did not appraise for its value then according to your lender you are purchasing a risky investment on an overvalued home.
You have a few options which I will describe in order to find common ground with your seller in order to move forward:
1) Ask the seller to reduce the price to the appraised value. This is the most logical option; make your point stating to the seller that he/she will risk having the same appraised value with a second buyer.
2) If you have the cash to make up some of the difference, you can negotiate with your seller and could meet half way. Keep in mind that there is no sense in asking your lender to loan you more money, this money has to come from you.
3) If you really love this home and are emotionally vested and ready to pay above current market value according to the appraiser’s report, then you can make up all of the total monetary difference.
If you decide to make up this difference you are speculating which way the market is trending. Keep in mind that some appraisers under appraise for lack of knowledge of the area. Only you and your agent can determine whether or not this property is worth what you are willing to pay for it.
4) You can switch lenders and start the process all over again, but your seller has to agree as this will delay the close.
5) If no agreement can be reached the seller can decide to cancel and not to sell you his/her home.
Dear Michael: I want to purchase a house which is a short sale. All the appliances have been removed including the kitchen cabinetry. Is it true that seller has to provide a kitchen to show the house is livable in order for the buyer to secure a loan? If yes, what should I do if the seller refuses to provide a kitchen? When I made the offer, this was a short sale, but soon it will be a foreclosure auction. The bank is still considering my offer as a short sale. The owner does not care if the house is short sale or foreclosure as he just wants to be out.
Answer: This is a very tricky position for you to be in. The short sale lender does not own the home. They have no say if there is no kitchen.
They are not selling the home but rather only approving the sale at a lesser value then the loan. The short sale lender would rather approve the sale then foreclose on the home.
On the other hand your mortgage lender will not approve your loan. I understand you’re devotion to this home…problem is, no lender will loan on a home without a kitchen.
A home without a kitchen is not considered a home but more of a storage facility. This scenario leaves you with few options.
The only logical options is that the seller puts in a kitchen or that you walk away and resume your search of a less problematic property.
As previously stated in one my real estate column, short sales have no guarantees and sometime will need to be passed by the buyer. If this home is re-listed as an REO (real estate owned or foreclosure) then the selling mortgage lender will have to put in a kitchen before re-listing the house.
Problem is the process can take a very months and sometimes years.
Michael Kayem is a Realtor with Re/max /Estate Properties serving Culver City and the Westside since 2001. You can contact Michael with your questions at 310-390-3337 or email them to him at: homes@agentmichael.com
