The Escrow Process: Where are the #@%$ HOA Documents?!

This week's blog was completed with the generous assistance of Julie Ekstrom with CV Escrow in Palm Springs.

With any residential property purchase in California we use escrow as an independent third party to make sure the transaction proceeds according to what was agreed upon by all parties in the purchase contract.  Condos are no different in this regard.  However, condo sales do have a few additional issues that effect the escrow process.  Probably the most important and potentially most impactful issue has to do with the Homeowner's Association (HOA) documents.  Anyone that buys a condominium will need to receive all available information related to the operation and financial standing of the HOA.  After all, if the HOA is involved in a major lawsuit it would be nice to know about that before you purchase a condo there, right?  So the escrow process coordinates getting the buyer all pertinent information from the HOA board or its management company.

Per the standard template of the purchase contract from the California Association of Realtors (CAR) during the first 17 days of the escrow process the buyer has the opportunity to approve or disapprove virtually any aspect of the property with no risk of losing their earnest money deposit, including issues related to the operation of the HOA.  Specifically, the buyer has five days from receipt of the HOA documents to approve or disapprove of them.  HOWEVER, the five day HOA approval timeline trumps the 17 day investigation window, meaning that the five days do not start until the documents have been received by the buyer, regardless of when that happens.  So, if the documents are received by day 12 of the escrow process there's not a problem because the buyer can then have five days for review before they need to decide if they want to move forward with the purchase of the condo.  But if the documents don't arrive until day 13, or 18, or 62, they still have five days for review, putting them past the 17 day window agreed upon in the purchase contract.  Obviously it is vitally important to get the documents to the buyer as soon as possible so escrow can stay on the timeline the purchase contract outlined.

It is not uncommon that the HOA documents do not get completed within the 17 days.  There are a number of steps that have to happen before the buyer will get the documents, specifically:

• The buyer's earnest money deposit check must be received by the escrow company.
• The buyer's check must clear the bank.
• Some management companies may require the seller's written approval to release information.
• Escrow needs authorization to release the funds deposited into escrow.
• Funds have to be paid up-front prior to the management company releasing the documents.
• If the management company is not local the funds must be sent overnight.
• Management companies usually have a 5-10 day turn around time.

So it is imperative that all involved parties (escrow personnel, real estate agents, sellers, buyers) work together to get the documents to the buyer in a timely manner.  This can be accomplished if the following steps are kept in mind:

• Buyer's deposit check should be deposited as soon as possible after the contract has been approved by all parties.  Since the funds must clear the bank before the documents can be ordered a cashier's check would be days faster than a personal check from the buyer.
• Seller or their real estate agent help escrow by providing complete and accurate HOA and management company information.
• Even though seller may believe they have a complete set of HOA documents which they can give to the buyer the purchase contract provides that the seller will order a new document package from the association to be sure that it is complete.
• All parties should be mindful of the time periods expressed in the purchase contract for seller's delivery of the documents to the buyer and for buyer's approval of the package after receipt.  17 days is the standard number of days, but the two parties can negotiate whatever number of days they want.  With foreclosures it is typically even shorter.
• All parties should respond to escrow requests in a timely manner.

The escrow process doesn't need to be a stress filled event.  Hopefully, by following the steps in this blog you can eliminate or reduce some of the anxiety related to timeliness.

If you have any questions or concerns about the information contained here please contact me directly.

Alan Wilke
Condos@PalmSpringsCondoLiving.Com
760-464-6693

Designing a fabulous Palm Springs condo!

As I've discussed before, Palm Springs condos come in all shapes and sizes for all tastes and budgets.  The reality, though, is that most Palm Springs condos are typically 2 bedrooms in around 1000 to 1300 square feet...not huge.  Given their size, are there design or decorating ideas that are better suited for these smaller-scale homes?  To find out I interviewed Lisa Sullivan, local designer with Swank Interiors in Palm Springs.

Palm Springs Condo Living: Hi Lisa, thanks for joining me today.
Lisa Sullivan: Thanks for having me.

PSCL: Here at Palm Springs Condo Living we're all about condo living and how to do it spectacularly.  My issue today is related to size.  Given that the typical condo is about 1000 to 1300 square feet, with many even smaller, are there design issues or tips that homeowners can put to use to make the most out of their space?
LS: Definitely.  When designing for smaller spaces there are certain things to keep in mind.  One really great design tip that I love to see people embrace here in Palm Springs is Mid-Century Modern Design.

PSCL: Why's that?
LS: A couple reasons.  First, it was a design style that originated and came of age in Palm Springs.  It's part of our history, so I think it's awesome to honor it.  Second, it's a design style that works well in smaller spaces.  When you think of Mid-Century you think of open, uncluttered rooms.  That's exactly what someone with smaller spaces should keep in mind.  When you put a lot of large furniture and accessories in small spaces it makes them appear even smaller, but if you strategically place a few key items with clean, simple lines in a room it makes the room appear bigger.

PSCL: So, it sounds like you're saying, "less is more", right?
LS: Exactly.  Less of everything, from the size of the pieces, no overstuffed or bulky furniture, to the amount, do more with fewer really cool streamline pieces that are to scale in the room.

PSCL: What else?
LS: With flooring, homeowners should have the same hard surface floor throughout the entire condo.  By having the same hard surface flooring it won't seem choppy.  Chopped up spaces don't feel right to people and seem smaller.

PSCL: The concept of a single surface makes sense, but why hard surface, why no carpeting?
LS: Carpet is okay, but this is the desert.  Carpet gets dirty easier and is harder to keep clean.  Also, carpet doesn't wear as well as hard surface.  Finally, since I'm suggesting one flooring throughout are you going to have carpeting in the kitchen and bathrooms?  I don't think so!

PSCL: Enough said.  Hard surface flooring it is.  What other ideas can you share?
LS: Larger spaces have a lot of drama, just because of their size.  So my next suggestion is to create drama in smaller spaces.

PSCL: How do you do that?
LS: There are a few ways.  First with color.  I always recommend a color consultation with a professional because color is so important and a good color can make a room and a bad color can kill it.  With smaller spaces I'd recommend basic colors, but with pops of dramatic colors on an accent wall.  Not too much color, because that would be overpowering, but just enough to give the room some visual interest.

PSCL: I like that look a lot.
LS: Another way to create drama is through lighting.  Appropriate lighting can change the ambiance of a room.  Also, lighting can help define architectural features in a room, for example, an archway.  But don't overdue it.  A little goes a long way.

PSCL: Any more ways to create drama in a condo?
LS: One more way is with window treatments.  As with flooring I recommend using the same window treatment throughout the condo.  A variety of window treatments will make the condo feel choppy and smaller.  The same treatment throughout will be clean and make it seem larger.  And keep it simple.  Blinds or curtains are fine, but shutters in a smaller space are too much, they're just too big for the window and room.

PSCL: What about using glass furniture in condos?  I heard that glass makes a room feel bigger, too.
LS: Glass may help with making the room seem bigger, but again, this is the desert.  Glass is difficult to keep clean.  I actually don't recommend glass much in the desert.

PSCL: We're just about out of time for this week, Lisa.  Any further ideas for making the most of condo living?
LS: I have a great idea for condo living.  If you have common walls with an adjacent condo a library or bookcase is a beautiful and interesting look and all the books help cut down on noise.  After all, how noisy is your local library?  Books deaden the noise in a space.

PSCL: That's an awesome idea, Lisa...I never knew that.  Thank you so much for talking with me today.
LS:  It was my pleasure.

If you have any questions for Lisa or would like her advice with a design issue you can contact her at the following:
Lisa Sullivan
Swank Interiors
462 S. Palm Canyon Drive, Palm Springs
760-327-1731

If you have any questions or concerns for Palm Springs Condo Living please contact me.
Alan Wilke
Condos@PalmSpringsCondoLiving.Com
760-464-6693

July 2010 Sales Analysis

The following sales analysis compares July 2010 sales data with data from the preceding month (June 2010) and the previous year (July 2009). Data is analyzed by region in the city: South Palm Springs, Central Palm Springs, and North Palm Springs.

South Palm Springs - South of Ramon Road

	July 2010	June 2010	July 2009
Condos Sold	24	45	37
Price Range	$39,000 - $335,000	$67,500 - $525,000	$48,000 - $503,000
Average Price	$179,667	$200,749	$194,955
Median Price	$182,500	$189,000	$165,000
Price/Square Foot	$128.18	$132.85	$131.84
Days on Market	131	121	143
% Distressed Sales (REO or Short Sale)	29%	36%	43%

Condo sales have dropped dramatically in South Palm Springs from July 2009 to July 2010, from 37 units to 24...a decrease of 35%.  Additionally, compared with sales from just a month earlier, June 2010, sales decreased by 47% in July.  Higher end condo sales disappeared in this area as the top price paid was only $335,000 compared with over $500,000 last month and last year.  The average price paid dropped 9% from 2009, but the median price actually increased by 11%.  All of this information tells me that the sales that occurred in July 2010 were closer together than those that occurred in July 2009, in other words not much fluctuation in sold prices.  The average price per square foot changed very little year-over-year, dropping by only 3% or $3.66 per square foot.  Days on Market also dropped from 143 to 131 days, a decrease of 8%, however, it increased by the same 8% in comparison with June 2010.  Finally, the percent of sold properties that are distressed has continued dropping from 43% of all sold properties a year ago to 29% this July.

Central Palm Springs - Between Ramon Road and Vista Chino

	July 2010	June 2010	July 2009
Condos Sold	16	27	24
Price Range	$23,000 - $345,000	$80,000 - $610,000	$60,000 - $380,000
Average Price	$181,525	$218,734	$191,123
Median Price	$172,750	$175,500	$192,000
Price/Square Foot	$155.77	$145.90	$156.68
Days on Market	91	75	133
% Distressed Sales (REO or Short Sale)	31%	44%	27%

The number of condos sold year-over-year has dropped 33% in Central Palm Springs, with only 16 sales happening in July 2010.  In comparison with just a month earlier, June 2010, sales have dropped 41%.  The price range of condos sold is lower in July 2010, with the average price paid being a decrease of 5% over last year and the median price decreasing by 10% over last year.  Happily, the average price per square foot is almost identical to last year, dropping by only $.91 per square foot...a less than 1% decrease.  The big news in this region is the continuing decrease in the number of Days on Market, dropping by 42 days or a decrease of 32%.  However, in contrast to South Palm Springs the percent of sold condos that are distressed properties is increasing from 27% of the market last year to 31% this year.

North Palm Springs - North of Vista Chino

	July 2010	June 2010	July 2009
Condos Sold	11	10	7
Price Range	$46,600 - $178,000	$43,000 - $165,000	$48,900 - $265,000
Average Price	$102,841	$84,850	$113,271
Median Price	$99,900	$58,750	$85,000
Price/Square Foot	$111.00	$98.70	$119.58
Days on Market	63	53	155
% Distressed Sales (REO or Short Sale)	55%	80%	57%

The condo market in North Palm Springs is the smallest of any of the Palm Springs regions, with only 11 sales last month, but it is also the only region with an increase (57%) over last year.  The bottom of the price range is similar to last year and last month, but the higher priced condos have disappeared.  The average price per condo has decreased 9%, however the median price has increased by 15% over last year.  As with South Palm Springs this tells me that the prices paid this year are all in a tighter range than they were last year.  Average price per square foot has decreased by 7% compared with last year.  Similar to Central Palm Springs the big news is the Days on Market, which has decreased by 59%, down to a very short 63 days.  Finally, the percent of all sales that are distressed is very similar to last year (55% vs. 57%), but a huge drop compared to just last month when distressed sales represented 80% of all sold properties.

In general, we are in a very unusual and volatile real estate marketplace.  In June 2010 the number of sales were up, but in July 2010 the numbers are down.  I think some of the increase in June, and then the decrease in July, can be attributable to the federal tax incentives that originally ended on June 30 (it has since been extended to closings up until September 30).  This tax benefit caused buyers to try to close in June in order to receive the benefit, thereby diminishing sales that would have closed in July.  Another interesting feature of the current market is that condos are not closing for the higher prices they were even one year ago.  Entry level and mid-priced condos are selling, but luxury condos are not, at least not in July. A final issue that is at play is the dramatic decrease in the number of Days on Market, perhaps signaling that sellers are understanding what they need to do, price-wise, to get a property sold.

If you have any questions or comments regarding this data please feel free to contact me...I'd love to hear from you!

Alan Wilke
Condos@PalmSpringsCondoLiving.Com
760-464-6693

Featured Community: Canyon Sands

Every so often I'd like to spend some time getting to know a community more in-depth, to find out details about a community and see why it's such a great place to live.  To start this series I'm going to focus on one of my favorite communities Canyon Sands.

GEOGRAPHY

Canyon Sands is located on 33 acres in south Palm Springs.  It is bordered on the south by Palm Canyon Drive, on the east by Gene Autry Trail, on the north by Seven Lakes Drive, and on west by Linden Drive.

DEVELOPMENT

Canyon Sands was built in several phases in the mid 1970s by the Hawaii based Amfac Communities, Inc.  Once completed the community had a total of 299 condominiums.  Of these, 250 are 2-bedroom units and 49 are 3-bedroom units (some may call these 2-bedrooms and a den).  There are a total of 7 different models with sizes ranging from 1155 square feet to 1404 square feet.  

The condominiums were constructed in "pods" of six condos each. Each condo in a pod is accessed via a shared driveway which leads to the 2 car garage.  The only shared interior walls are in the garages, which adds to the privacy in the community.  Additional interesting or unusual features of Canyon Sands condominiums include cathedral ceilings in the living/dining areas and some of the master bedrooms, private patios and atriums, and 2 car garages.

COMMUNITY FEATURES

The community has a total of 7 pools and spas, 2 saunas, 6 tennis courts (3 of which are lit for night play), all on beautiful grounds with incredible mountain views. 

The management company for the home owner's association, Albert Association Management, maintains an on-site office and Sharlene Pierce is the manager. 

The community is on lease land and the lease has been extended to the year 2061.  The current lease rate is $108 per month, which is very low in comparison with other land leases, and this rate is in effect until 2018 when it would fluctuate in relation with the consumer price index (CPI).

RECENT UPGRADES

The community is constantly improving, and the following upgrades have occurred to the common and home owner areas over the past few years:

*Re-roofed all tile roofs - 2006/2007.

*Re-painted structures - 2007.

*Re-surfaced tennis courts - 2007.

*Re-plastered all pools - ongoing.

*Conversion to saltwater in pools - 2009.

*Conversion to desert landscaping and improved irrigation system - ongoing.

If you have any comments or questions about the information you read here please contact me...I'd love to hear from you!

Alan Wilke

Condos@PalmSpringsCondoLiving.Com

760-464-6693