I have to admit, to be perfectly honest, this was the listing from hell! In this market, listings are gold and that sentence seems like an oxymoron, but it so isn’t. Firstly, this condo is in a community in which the HOA is doing a terrible job managing this community, which makes selling a condo there very difficult. For all you condo owners, you really need to make sure to be involved, at least at some level with the HOA, to at the very least, protect your own investment. Seriously!
In this community, the owner occupied units are far less than the rental units which poses a problem to banks and lenders. Banks and lenders like to see a high ratio of owner occupied units because those types of communities tend to be better taken care of and more stable environments. This HOA allowed investors to basically take over the community to a point where now there are far more rentals than owner occupied units.
The first problem this poses is that once there are too many rentals, lenders don’t want to make loans there anymore because they feel the project is going downhill. And, to get an investment loan, the lenders require a high owner occupancy ratio, so there comes a point where the only way an investor can even buy there is to pay all cash and not need to obtain a loan. So, there goes one large buyer market off the bat, investors that need a loan and want to buy in the community.
The second issue is that once the owner occupancy ratio falls too low, the community does not qualify for FHA loans and even some other government loans, and that poses another big issue in that now another huge market that wants to buy a home and can afford to buy the home, can’t, because they need a FHA loan and FHA won’t loan in the community. So, there’s another large batch of buyers out the window.
So, now you have lost a huge bulk of first time buyers that are using a FHA loan and also a huge bulk of investors that need a loan to buy. And, that leaves us with only all cash buyers and buyers that have at least 20% down for the most part, there are a few exceptions, but not many. And, that dynamic, especially a first time buyer in this price range, with a large down payment, is not common. So, we have a predominately first time FHA buyer and investor price range who can’t even buy the condo if they want to.
However, even given this major issue, after the 1st open house weekend, we got 5 offers. Promising, right? Uhhhhhhh, no. We picked what seemed to be the no brainer choice, great offer, well over list price, I know the mortgage lender, the buyer’s agent was very professional, everything was in order, it looked like a slam dunk, etc. I get a call from their buyer’s agent about a week into the transaction and apparently, the buyer’s 401k plan had recently changed and the buyer was not allowed to withdrawal all of the money he needed for his down payment. He was only able to get 1/2 of what he expected to take out due to a recent policy change. Of course, they scurried and asked their entire family and everyone they knew to help out, no luck, and they had to cancel.
We went back to the next best buyer and that buyer we thought would be the next top choice. We didn’t actually make it to contract with that buyer. For that buyer there was some back and forth and we thought we had things in order and then when it came time to wrap up a deal, the buyer decided to send over an offer that was much lower than his original offer, and he did that with no warning to us. We had been discussing things assuming his original offer was still in place, but then he surprised the seller by coming in much lower, and for the seller, it was offensive and he axed that deal.
Then we went back to yet another buyer who was actually one of the LOWEST offers we received, but had a very high down payment and was a single mom and the seller liked her story. Due to the issues we had with the 1st two buyers, the seller decided that working with just a good and solid offer with a buyer that had almost 50% down seemed like a no brainer, and at that point, he just wanted to know he had a solid transaction with no drama. And, he liked the fact she wanted to owner occupy the home and also thought it would be nice to help out a single mom and go for an offer that he felt was low, but helped someone out in this crazy market.
To our surprise, even picking a low offer with a very high down payment was drama, but this one did close, eventually. This transaction should have been seamless with a buyer well over 20% down and owner occupying the property, but Chase was just as slow as molasses and tortured us every step of the way. Initially, it took forever to get an appraiser out, and then eventually closing a week late, and just pure drama all in between until the very minute we closed the transaction. I don’t want to re-live the nightmare, but let’s just say that even up to the final hours of recording the transaction, all parties were just on the edge of their seat waiting for confirmation that we were going to close. Chase was a huge headache and they didn’t care at all about our contract dates and just did things when they got to it, regardless of our contractual obligations. If we didn’t push so hard and make so many demands, and if I didn’t hand hold this transaction to the very final hour, we would probably still be waiting to close. We had to go to top management and literally walk with Chase to close the deal. I got to the point where I just wanted this to go away. Ever get that feeling? Well, luckily at the end of the day, there is a happy ending and it’s done. Phew!
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