Condominium Sellers Beware!
Are you trying to sell your condo right now?
If you are, you have a lot of competition, and you need every advantage that you can get, so it's helpful to know what buyers want and need.
Right now, almost 1/3 of all properties sold are done so with FHA financing. Buyers love this type of financing, if they can qualify for it, because of the low down payment (3.5%) and higher debt ratios than what is allowed under conventional financing guidelines.
Lenders like FHA financing because the loans are government insured, should the buyer default, taking the liability off of the lenders or investors shoulders.
Because of these benefits there are many rules and restrictions which could keep your condo from selling, if your potential buyers MUST use FHA financing for their purchase.
Below, I've outlined some of the potential pitfalls that may keep you from selling your condominium, some of which, are out of your control, unfortunatelyl.
If you are, you have a lot of competition, and you need every advantage that you can get, so it's helpful to know what buyers want and need.
Right now, almost 1/3 of all properties sold are done so with FHA financing. Buyers love this type of financing, if they can qualify for it, because of the low down payment (3.5%) and higher debt ratios than what is allowed under conventional financing guidelines.
Lenders like FHA financing because the loans are government insured, should the buyer default, taking the liability off of the lenders or investors shoulders.
Because of these benefits there are many rules and restrictions which could keep your condo from selling, if your potential buyers MUST use FHA financing for their purchase.
Below, I've outlined some of the potential pitfalls that may keep you from selling your condominium, some of which, are out of your control, unfortunatelyl.
To find out if your condo project is approved, check on the FHA website. Hover over the "Resources" tab and click on "HUD Approved Condominium Projects".
If your condominium project is NOT on the approved list, speak with your Homeowners Association or Property Management Company, to urge them to get the approval process started immediately. If all goes well, approval could be complete within 2 weeks, but, you don't want to take a chance and lose out on a hot buyer if something slows down the process.
If your condominium project is NOT on the approved list, speak with your Homeowners Association or Property Management Company, to urge them to get the approval process started immediately. If all goes well, approval could be complete within 2 weeks, but, you don't want to take a chance and lose out on a hot buyer if something slows down the process.
FHA Rules & Restrictions For Condo Complexes:
- No more than 50% of the condos in your project can be FHA financed
Unfortunately, there is nothing that you can do to change this. Although, it is unlikely that the percentage will be this high.
- No more than 50% of the condos in your project may be non-owner occupied (rented to a tenant)
Again, not much you can do, and in a stable real estate market, this is unlikely. However, with the economy in such a mess,more and more owners are renting out their homes, that they can't afford to live in, and staying with relatives or living in apartments.
- Litigation against the condominium developer, for defects
This is, again, something that you cannot personally change, but you should already be aware of this, if you own a property in the condominium project, and you may be able to get an idea of when the lawsuit may be settled, by speaking with your HOA or Property Management representative.
- 85% or more, of the condominium owners, must be current on HOA dues
Not a whole lot that you can do on this one either, unless, of course, you are one of the condo homeowners that is behind on your HOA monthly payment.
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