Even in a great sellers market, condos can be a challenge. It's easier when there are cash buyers, but anyone requiring financing can be met with seemingly insurmountable obstacles.
Is the condominium complex on the FHA Approved List? If not, sellers can eliminate a huge number of potential buyers: those who are qualified for an FHA loan.
For those buyers who are pre-approved for a conventional loan, the lender will obtain enough information to complete a "condo questionnaire" to determine if the complex is warrantable. Examples of what they're looking for include whether there are enough cash reserves, if any one person or entity owns more than 10% of the units, and if the ratio of owner-occupied vs investment properties is acceptable. In some instances, if the anwers are not acceptable, a waiver can still be obtained.
In the event the condo complex is non-warrantable, the pool of potential eligible buyers is even smaller. Very few lenders will lend on non-warrantable condos. Those who do require at least 20% down, and in some cases, even more.
When condos are non-warrantable, the loans will not be purchased in the secondary market. That means that Fannie Mae and Freddie Mac won't buy the loans. Lenders who loan on non-warrantable properties keep the loans in house. These are usually small, local banks or other entities who will hold the loans and service them directly.
The 63 units at Pecan Square at 4067 Beltway Drive, Addison TX face more hurdles than most condo complexes. The complex is not on the FHA approved list - strike #1. The conventional buyer cannot get a waiver for this complex - strike #2. And Pecan Square is non-warrantable - strike #3. One entity owns 16 units, and currently more than 25% of the units are non-owner occupied.
Because financing is so difficult to get for these Pecan Square condos, many of the units are sold to cash buyers. This perpetuates the problem when the buyers are investors who are not occupying the units. The non-owner occupied ratio goes up and the chances of getting a waiver for conventional buyers goes down.
There is *some* good news for owners at Pecan Square in Addison Texas who want to sell. I have two lenders on speed dial who will approve loans for condos in the complex. One requires at least 20% down, the other at least 25% down. Both require a credit score of at least 620. And a second bit of good news: Pecan Square is on the VA approved condo list. No condo questionnaire is required, there is no non-warrantable issue, and buyers using VA loans do not have to have a downpayment.
If you are thinking about selling a Pecan Square condo, I'm here to help. I know what to look for in offers from buyers and will make sure that non-cash buyers have the information they need to submit a contract that has a good chance of closing. Call me to market and sell your Pecan Square Condominium condo.