Despite the recent changes in the financial landscape such as rising interest rates, plummeting stock prices and skyrocketing gas prices, people are still buying and selling houses.
This might mean adjusting prices to fit the projected payments. It might also mean more scrutiny of the monthly and annual costs associated with owning the house in question.
For buyers, this means asking tons of questions about everything from utilities to HOA dues, homeowners’ insurance and Mello-Roos or other additional tax assessments.
In the residential real estate realm, this is typically referred to as PITIA, principal, interest, taxes, insurance and homeowner’s association. With so much pressure on our pocketbooks today, this calculation becomes crucial.
For example, some newer houses come with a “lifestyle enhancement,” or a transaction fee based on the purchase price and typically paid by the buyer at the close of escrow. This will increase the amount of cash the buyer needs to come up with to close the deal.
Most counties in California have property tax information available to anyone online. Look at the list of additional assessments in addition to the base tax to calculate the total tax. While some fees typically stay the same, the base tax and other assessments will be adjusted based on the home’s purchase price. And there is usually a phone number to call to inquire as to the remainder of the term on Mello-Roos, water district bond and/or school district bond.
When it comes to homeowner’s insurance, get quotes from your current carrier, as well as the seller’s carrier. Ask the sellers what they currently pay and consider asking for a copy of their policy.
If the house is in a remote area, backs up to a national forest, state park or undeveloped canyon, be prepared for a hefty fire-insurance premium. Consider contacting various insurance carriers regarding wildfire home hardening materials and techniques to not only protect your home but decrease your insurance costs.
Most buyers ignore the homeowners’ association packet because it’s lengthy and comes late in the process. But buyers should read it because it often includes rules, deed restrictions, board minutes and whether a whopping special assessment could be looming.
If the home has solar panels, make sure you know the details on the payments. Find out if the system is owned outright, on a lease or on a purchase contract. Be aware of what payments you are inheriting. The last thing you want to find out is that the sellers signed a 30-year purchase contract, are in year 6, have been making the minimum payment and the cost of the panels, plus the 6.9% interest, will land squarely in your court after the close.
It all adds up. Make sure you can swing the total.
Leslie Sargent Eskildsen is an agent with RealtyOne Group West and a member of the California Association of Realtors’ board of directors. She can be reached at 949-678-3373 or email@example.com.