Oh what a slippery slope we climb when trying to list and purchase a condominium.
FHA has tightened the thumb screws on condominium purchases.
The reason for this is they don't want to loan on condos where the homeowner's association (HOA) is unable to pays bills (i.e. maintain the common areas) due to too many vacancies or current homeowners behind paying monthly dues.
So what's the big deal? A lot of perspective buyers of a condominium will be using an FHA loan to purchase (decent rates and low down requirements). That leaves all-cash buyers and there are not that many running around wanting to purchase a condo with high dues and defunct HOA!
Both the above are creating a vicious cycle with some condominium complexes.
1-Can't get loans on units for sale
2-HOA dues are not paid
3-Complex is not kept up
FHA has created an approval process that all of us in real estate land need to pay attention to.
Condominium complexes must go through a complex certification process and be approved. This can take months! (Note there are no longer spot approval).
A pro-active HOA will have begun the process as an added value service to unit owners who are or may in the future be selling. A smart agent will have confirmed its approval status PRIOR to listing and/or writing an offer on the property.
There are two ways to determine FHA approval;
1-Contact a loan officer and ask, "Is this condo FHA approved?"
2-Visit https://entp.hud.gov/idapp/html/condlook.cfm to check status.
Buyer's Agents DO NOT WASTE TIME writing an offer on a condo until you have verified FHA status! Status should be disclosed to ALL buyers.
Listing Agents Find out the status of certification BEFORE you list the property. Be willing to disclose this to any perspective buyers.
Being open and honest up front is going to prevent a lot of wasted time for the team and disappointment for the buyer and seller. EYES WIDE OPEN BABY!