Gene Mundt - Let's Talk Mortgages & Real Estate!

     Here's a cold hard truth ... Buying and Selling condominiums in the current real estate market can be very challenging.       

     Market conditions have made condominiums harder than ever to sell in many regions of the country.  Guideline requirements have made the condominium properties themselves difficult to qualify for financing.      

     Being successful in condominium transactions is achievable.  But doing so demands hard work, large amounts of documentation, access and accruing of vital information, and partnership with an experienced and knowledgeable mortgage lender.  They together determine if listing (or viewing) the condominium is something you will find worth time and effort ... or if it will be a successful transaction.        

     Establishing the basic eligibility of a condominium is absolutely vital to determining the quality of sale you face.  In order to determine a condominium's eligibility you must require that the seller provide you the following information:  

• A complete and factual address of the property to be listed 
• The Name, Contact Person, Phone Number, and Email address of the Homeowner's Association involved
• The Name, Contact Person, Phone Number, and Email  address of the HOA Management Company
• A complete copy of the recorded Condominium Declarations and Bylaws, ALL Amendments, ALL Pages

       The following information/documentation must be acquired from the Management Company or Homeowner's Association:  

• A completed Condominium Questionnaire
• A copy of the most recent year's budget
• Check the  FHA  and  VA websites to see if the condominium is an approved lending properties
• Is the HOA involved in any litigation?  (If the answer is Yes, then you will have a problem financing the unit.  Further information to determine the nature of the litigation will be needed.)  
• Find the number of 30-day delinquent units
• Find the total number of units within the project
• Divide the number of 30-day delinquent units by the total number of units within the project. 

    **  Important Factor: If the percentage determined above is more than 15% (.15), you will have real difficulty obtaining financing for the unit being considered for purchase/sale.       

     At this point, you need to call your professional lender for more detailed information and guidance.  There ARE lenders and mortgage programs currently available that can address challenging condominium issues.        

     However,you and your client must know and understand that these transactions WILL be more complex in nature, DO require more time to close, and will most likely face more challenges during their processing.       

     The good news is this ... condominium prices in many markets have lowered significantly. Interest rates have held fairly steady.  For those interested in becoming condominium buyers, the market appears sunny.       

     But the shadow that hovers over these transactions is the number of sellers, condominium developers, and Homeowner Associations that are currently facing financial distress.  This distress is highlighted in the percentage of initial foreclosure filings found in the 6-county Chicagoland area.  A stunning 42.5% were against condominiums. (Statistics taken from Chicago Tribune article dated, 2/28/11 by Mary Ellen Podmolik)        

     That foreclosure percentage and distress felt in turn effects the number of condominium projects or buildings currently being found that are simply ... "un-financable" ... or at minimum, greatly challenged.    

     This lending challenge should serve as a huge red-flag to potential buyers.  Buyers should question ... WHY lenders are making a particular condominium property so hard to finance/purchase.  Answers are needed.  Caution should be observed moving forward.         

      As a realtor or broker you must decide ... "Is the condominium market one I wish to focus on?  Do I want to devote the time, energy, and attention it takes to navigate and be successful within this market?"  Or cause you to simply question, "Do I want to take this particular listing ... or take my buyer to view ... this property?"       

     Should you decide yes and you enter into this more specialized type of sale/representation ... your alliance with an experienced professional lender is crucial to finding success.        

     I personally have a seminar which I offer to individuals and agencies in the Chicagoland area that helps explain and simplify the many steps it takes to achieve that success.  I have helpful forms and informational handouts that I supply to my referral agents/brokers to make their sale and representation as easy and fluid as possible.  (Contact me for access.)       

     Again, it has never been more important than now to have an educated and experienced lender at your side and guiding you through these condominium transactions.  Contact me today, should you or your client need mortgage financing or answers regarding financing options.                      

     **  Although this post is written to address concerns and issues that real estate agents/brokers face prior to and during representation/purchases of condominiums ... the information will prove educational and important for buyers and sellers of condominiums as well.   Please ... should you have questions regarding the sale, purchase, or agent representation of these properties, go to my website or contact me.  I will assist and guide you in the best manner possible.