The Blog

This morning, Zillow CEO Spencer Rascoff appeared on Bloomberg’s “In the Loop with Betty Liu” to discuss Zillow’s 2013 housing outlook, discount brokerages and the millions of listings (rentals, Make Me Move, pre-foreclosures and foreclosures) that can be found on Zillow and not on other real estate sites.

Watch the segment here or by clicking on the image below.

Ask enough condo owners, and you’ll likely hear at least one horror story about their homeowners association (HOA). One of the most extreme examples recently made the news when an HOA president in Evansville, IN directed a homeowner to implant a microchip in her dog.

Though they sometimes may go overboard, HOA rules and regulations are meant to protect home values and the homeowners’ quiet enjoyment of their property. What few buyers consider when embarking on a condo purchase is that, as an owner of a condo, you’re a member of the HOA that governs the condominium complex. You will be subject to the HOA’s rules.

That’s why it’s so important to take a close look at the HOA in advance. While the process varies by market, a buyer’s typical contract with the seller will allow time for disclosure review, which includes due diligence on the HOA.

Many buyers wonder how to do due diligence on the HOA. The answer is to request copies of the HOA documents (meeting minutes, financials, house rules and governing documents). The seller, as a member of the HOA, has access to these documents and should make them available to the buyer.

Here are three things potential condo buyers should do with those documents:

1. Read the past year’s meeting minutes

Above all, read the minutes of the HOA monthly or quarterly board meetings. You can learn a lot about the HOA’s inner workings, such as the politics and how enforceable its rules are. You’ll get a sense of how the HOA works, who’s on the board and how flexible or difficult they are to deal with.

The most obvious red flag is any discussion in the minutes of an upcoming assessment or any major project (painting, roof repair, boiler replacement). These conversations generally happen months or years before the work (and assessment) is enacted. Other potential red flags would be documented conflict between homeowners and board members, such as the case mentioned earlier about the HOA president telling the homeowner to put a microchip in her dog.

2. Review the house rules and regulations

Nearly every HOA has its house rules and regulations. In a suburban subdivision, typical rules would include restrictions on how your home looks from the street (no pink houses on Elm Street). In a condo building, restrictions often cover noise, such as no loud music or noise between 10 p.m. and 8 a.m., or that 85 percent of your hardwood floors must be covered by area rugs in living, dining and bedroom areas.

While there are generally accepted common rules, from time to time more excessive ones stand out that may not sit well with a potential buyer. Some examples include no RVs in the driveway or the required removal of Christmas lights by Jan. 15. A buyer’s response to such rules is subjective. But it’s better to know the type of HOA you’re buying into before you sign the final paperwork.

3. Review the financials

Be on the lookout for HOAs that can barely cover their monthly expenses. Since the housing crisis began, many HOAs have been forced to foreclose on homeowners who are behind on their HOA dues. If you have a third of homeowners not paying, that affects everyone, as the money needs to be made up somewhere.

Another red flag is the lack of a reserve fund. If the HOA only has $5,000 in reserves, and there’s mention in the meeting minutes of a major sidewalk replacement, you should assume that funding for the project will come from a one-time “special assessment” levied on the homeowners. Don’t want to be stuck with a $10,000 mandatory assessment six months after you move in? You may want to reconsider this property.

Advice to sellers

If you live in an HOA community that has some issues, be sure to disclose them upfront. It’s not much different from disclosing the leaky window or recent crime in the home. You don’t want to create a giant red flag for potential buyers, of course. But if they find out about something major after the fact, it could come back to haunt you. Work with your real estate agent and strategize about some of the best ways to make the HOA documents or disclosure information available to buyers during escrow.

Mortgage rates for 30-year fixed mortgages rose this week, with the current rate borrowers were quoted on Zillow Mortgage Marketplace at 3.55 percent, up from 3.37 percent at this same time last week.

The 30-year fixed mortgage rate peaked at 3.58 percent over the weekend, dropping to the current rate this morning.

“Mortgage rates surged to their highest level in 9 months in response to an unexpectedly strong jobs report,” said Erin Lantz, director of Zillow Mortgage Marketplace. “This coming week, we expect rates to gradually drift upward on continued improvement in economic growth and consumer confidence.”

Additionally, the 15-year fixed mortgage rate this morning was 2.7 percent, and for 5/1 ARMs, the rate was 2.3 percent.

What are the rates right now? Check Zillow Mortgage Marketplace for up-to-the-minute mortgage rates for your state.

*The weekly rate chart illustrates the average 30-year fixed interest rate in six-hour intervals

How did you fare this winter? If you’re a homeowner in a cold climate, the level of insulation in your home might have made a huge difference in your comfort and also in your pocketbook these past few months. If you found your house felt too cold and you broke into a sweat each time you had to face another energy bill, consider making an improvement by adding insulation.

Here are some tips on how to proceed:

Think ‘found’ money

Some municipalities, cities, states, the federal government and utility companies offer incentives and tax rebates when you purchase high-efficiency products and materials, says Daniel DiClerico, co-author of “The Just Right Home.” Start by checking the U.S. Department of Energy’s database for state-specific tax credits, rebates and efficiency-related savings.

Get a home energy audit

If you own an older home, consider a home energy audit to identify air leaks and areas where insulation may need improvement. Think of it as a physical exam for your house. An audit may include a blower door test, which uses a high-powered fan to lower the air pressure inside; the higher outside pressure then finds its way back in through unsealed openings and cracks, revealing your air leaks. A home energy audit will also examine existing insulation’s R-value, which is a measure of how well it resists heat — and cold — traveling through it.

Hire the right contractor

Many contractors are capable and honest, but it helps to work with a contractor who is licensed, bonded and insured (make sure to ask for references). To find a home energy audit pro, try the Residential Energy Services Network (RESNET) and the Building Performance Institute (BPI) as starting points; in many cases, the same contractor who does your audit can also do the insulation work. Make sure to check with your electric or gas company, too, because many perform home energy audits — some even for free.

Know your insulation

Contractors will use different materials, methods and amounts, depending on your area. Check Energy Star’s recommendations on the levels of insulation for different climates and in different areas of your home.

Here’s an overview of the different types of insulation:

• Blanket insulation, the most common type of insulation, comes in sheets or rolls. While it has traditionally been made of fiberglass, it can now be found in plastic or natural fibers. It’s sized to fit nicely between the standard spacing of studs on unfinished walls, and the joists and rafters of floors and ceilings. It’s also relatively inexpensive, and DIY types can find it in home improvement stores.
• Blown-in insulation consists of recycled fiberglass, newspaper (cellulose) or other material that is blown into a space. Because of its loose nature, this type of insulation conforms to fit an existing area without disturbing the surrounding structure and is well-suited to renovations.
• Spray foam, a mix of chemicals, expands into liquid foam that becomes rigid after it cures. It acts both as insulation and an air sealant. This type of installation requires more experienced installers, and tends to cost more (though the Department of Energy says that because it has a higher R-value and acts as an air sealant, it may ultimately save money by eliminating the need for other home weatherization tasks).

Install in the right places

Focus on where insulation needs beefing up or is missing (a home energy audit can help here). Many contractors suggest working from the top down, if your budget is tight:

• Attic: If you have one, you might install insulation on top of the floor or under the roof deck, depending on your home’s configuration and where heating, ventilation and air conditioning equipment is located.
• Walls: In cold climates, you might add insulation in interior or exterior walls by drilling 3-inch holes, blowing in cellulose and then covering openings.
• Basements: Install insulation along the rim joist around your home’s perimeter and where wood meets concrete to seal gaps.
• Additions: Room additions are frequently neglected when it comes to insulation; consider filling this gap.

Remember ‘low-hanging fruit’

Many do-it-yourself improvements can also increase your home’s insulation. Caulking and weather stripping around windows, doors and thresholds; plugging light holes and plumbing gaps; installing storm windows; and adding a programmable thermostat to lower temperatures automatically are all good tactics.

Planting can help, too, says BPI-certified contractor Scott Fischer of Ciel Power in New Jersey: Shrubs and foundation materials can help diffuse wind, he says, while leafy trees on a south-facing lawn can help cut summer heat.

Take on your insulation project now while the winter chill is still fresh — and definitely before summer’s hot days, as good insulation helps keep your house cool, too.