Fast Facts For Buying Desert Properties

Fee Simple vs. Lease Land – What’s the Difference?

In the Greater Palm Springs area, part of the Coachella Valley, you’ll find homes, including those in condominium and country club communities, on both Fee Simple land (land that you own) and Lease land (Indian or Developer leases). Most Lease land properties are in located in the cities of Palm Springs and Rancho Mirage.

When you look at listings, Fee Simple is often abbreviated to Fee land.  This can be confusing because you own the land but it sounds like you have to pay a fee.  Think of Lease land like you own the structure but are merely renting the land on which it resides.  Most leases are either paid monthly or annually and generally average around $125. monthly, depending on a number of variables.  Property taxes are charged for both Fee Simple and Lease land.  For more information about the differences see http://www.octitle.com/pdf/leaselandvs.pdf .

There are also some limitations on the number of Financial Institutions who will finance loans on leased land.  The general rule is that the land lease must exceed the term of the loan by at least five years.  Lease land may also limit the pool of potential Buyers for resale.

Gated vs. Non-Gated – Which one is best for you?

Gated communities may provide a lot of benefits to the residents who live within them, however they may also be too restrictive for some.  Some of the most common elements to these communities are outlined below.

ADVANTAGES

Privacy and Security	The number one reason people choose these communities is because they are more difficult to access than a standard community.  This can provide peace of mind to homeowners, especially to those who are absent for extended periods. Criminal activity may be reduced in gated communities, and solicitors may have a more difficult (if not impossible) time bothering residents.
Quieter and Safer	Traffic speed and the noise from vehicles is reduced, making it quieter and safer.
Higher Home Values	Homeowners in these neighborhoods also generally have a higher pride of ownership, and keep their homes in good condition. Another positive aspect of gated communities is a higher standard of home quality, and stricter building codes that promote uniformity in design. That means more comparable sales and better value for all the homeowners within the community. There may also be social benefits, such as a having a community center or events that promote group activities for families to get to know each other.

DISADVANTAGES

Higher Costs	Along with the higher home values come additional expenses to cover the amenities. Also, most roads are deemed private, so the HOA may have to foot the bill to fix those potholes or repave a bumpy road.
Access Delays or Difficulties	Visitors and contractors may get aggravated waiting in line to come to your home. This occurs more frequently at guard-gated or controlled entrances.
More Controls on Access To and Use Of Property	Many gated communities limit the time contractors can come work at your home, and may block them altogether on holidays. Changes to the property exterior may require Board approval.

HOA Dues

Homeowners Association (HOA) fees are funds that are collected from homeowners in a condominium complex to obtain the income needed to pay operational expenses.  Most HOAs hire a property management company to manage these expenses and ongoing operations.

HOA fees typically cover master insurance, exterior maintenance, landscaping, water, sewer, and garbage disposal costs.  The Homeowner may still want to purchase “walls-in” or Earthquake insurance.  Fees are normally set by the HOA’s board of directors and adjusted annually.  Any excess HOA fees that exist after paying ongoing expenses are stored in an account and called Reserve Funds.  One thing to watch for is whether the HOA charges a reinstatement penalty when delinquent (for a prolonged period) as these can amount to thousands of dollars.

Amenities

Many communities offer a number of amenities.  Typically the more amenities a community has, the higher the HOA costs.  Some of the fees could be mandatory but some could be optional, depending on which amenities a resident would like to enjoy. 

Average monthly HOA costs range from $125. for a card or code/transponder (not guard-gated) access community, with common landscaping, the other extreme of $900. for communities with a golf course (membership extra), clubhouse and community pools/spas.   Here is a list of some of the more common amenities:

Clubhouse	Sometimes there is an additional fee for access to and use of a Clubhouse.
Concierge service	This may be an optional service.
Dining / Restaurant	Food & beverage minimums may be applied.
Gated	Guard gated communities generally cost more however may also provide a greater control over access into the area.
Fitness facilities	Use may require an additional fee/membership.
Golf	Most golf communities require the purchase of an additional golf membership or user-pay system.  There may also be a membership transfer fee applied.
Swimming pools /spas	Some communities do not heat all or any of the pools during winter as a cost savings.
Tennis/Racquet Sports	There is sometimes an additional fee for membership or user-pay.

There are also different amenities available to residents of many of the Desert Cities, such as highly discounted golf fees.

What’s Next…I’m ready to buy?

Check out our Buying tab at www.Desert-Dreamhomes.com for more information.

Attempts have been made to insure that this information is accurate.  However the variables can change at any time, so please consider the information provided as a general guideline or estimate.

Pre-approval vs. pre-qualification; what's better?

Position your offer ahead of the pack with a pre-approval letter! With the housing market heating up in many areas, and multiple offers becoming more commonplace, buyers who want an advantage in the bidding process will need more than a prequalification, they need a preapproval.

The difference is significant.

• Prequalifying for a mortgage is based solely on what you disclose to the loan officer or broker about your earnings, credit score and total assets, including what is available for a down payment. It’s really just taking someone's work on what they report their financial status is.       
• Preapproval, by contrast, requires borrowers to provide documentation of their income and their assets.

Preapproval carries more weight and gives you bargaining power when negotiation a deal.  Borrowers should ask the lender to provide a good-faith estimate on closing costs and fees along with the preapproval.       

The preapproval       

• Timing is important. Buyers should aim for obtaining a preapproval letter from a lender within 30 to 60 days of the expected purchase date, as one's financial status can change.
• Your income and bank statements may also need to be updated if it has been a few months between preapproval and the signed contract for buying. 

Don't lose your dream property because you didn't do your homework.   Ask us today at Desertdreamhomes@gmail.com today for a sample pre-approval letter.