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6 Key Items You Need To Know About Buying A Condo
Prior to any offer being submitted, both the Realtor and the Lender need to have the correct information in hand via an HOA Questionnaire. This will save all parties involved time, and more important it will save the homebuyer hard-earned money and the potential loss of ability of making an offer on a “Like” home sooner. The questionnaire will show if the complex is even warrantable for the purposes of obtaining a home loan. The questionnaire may come in several different versions, but five items on the questionnaire may make or break the homebuyers ability to get to closing.
1) Ensure that the home is in fact a condo. In looking at several units listed on MLS as “Townhomes-Paired Homes”, it turns out that they are actually legal Condominiums that are listed in the vast pool of attached housing. The only way to KNOW for sure IF you’re buying a condo versus an attached PUD is to search the property on the County’s tax assessor website. Homes that appear to be a “townhouse” may have been built in townhouse ‘style’ but legally a condo making legal ownership a whole different “ball game” for your client.
2) HOA Litigation: This has been a big issue for most HOA’s. If a complex has pending litigation for one reason, or another (“Slip and fall”, or weather related “Hail Damage”) this may be a “Hard stop” for most lending institutions. Please keep in mind that lending exceptions may be available depending on the status and type of the litigation.
3) HOA Reserves: The common amount that an HOA needs to hold in reserves is 10.00% (This can be found by requesting a copy of the budget from the HOA). If the HOA has pending litigation, the amount held in reserves may make, or break the homebuyers ability to close.
4) Owner Occupancy: This is the amount of homeowners that reside in the condominium complex as a primary residence divided by the total number of units. The common percentage allowed for financing is 51%. However, there can be exceptions to the owner occupancy ratio if the purchaser is an owner occupant.
5) Investor Concentration: This is the amount of homeowners that rent in the condominium complex divided by the amount of units in the complex. This amount may be skewed depending on the HOA’s ability to differentiate the units that have “off-site” mailing addresses.
6) HOA Delinquency: This is the percentage of owners in the Condominium complex that have not paid the HOA dues for 30-60-90 days. The common threshold is 15% or less.
Most owners of Condo units tend to think that when it’s time to sell the home, or maybe move up in size or change location that it’s as easy as contacting a Realtor to place the home on the market. This is not always the case, and without having the information in hand, the seller may limit their ability to sell the home to only cash buyers. Please contact Drew Crosier for more information. https://www.catalystlending.com/drewcrosier/Default.aspx
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13 years Experiance with sales involving all types of buyers and sellers needs. Single family home, town-home or condos no matter the need or location through out the greater Denver area and all surro....