At the time of this writing, June 2008 there are about 600 condos and townhouses for sale in Oak Park, River Forest and Forest Park
As you know all condominium associations have what is called condo "Documents and Bylaws" that for the most part outline the rules and regulations that govern that association. Over the years many of those bylaws were assembled by using what's called "boiler plate" or a predetermined master document that contains the basic guidelines. As an association becomes established these bylaws are amended to the wishes of that Association.
One of the "boiler plate" bylaws contained in these documents gives the condo association the ability of what is called the "right of first refusal." What this means simply is that if a condo unit in a building that is about to be sold, the association has the right of first refusal. That is, if the association wishes to purchase that unit for whatever reason, they have the right by way of this Bylaw to kick out the potential buyer and purchase the unit themselves.
And here is where the problem lies. As we all know, in years past acquiring a loan to purchase a home or condo was a lot simpler than it is today. Folks could qualify for a loan with little or no money down. Those days are gone forever (thank goodness) and today's buyers must come up with a very significant down payment. Well, many and perhaps even most potential buyers don't have this significant down payment. However, there is a loan product that allows just 3% down and is backed and guaranteed by the federal government. This loan type we all know as the FHA loan. This product is making a big come back in this current real estate market and most likely will continue to be a major player in loan products for many years to come.
If you happen to be a condo buyer, this FHA loan, will for the most part not be available to you. The fact is that FHA guidelines do not allow condo associations to have contained in their bylaws the "right of first refusal" and this is for obvious reasons. In all the years I have been selling real estate I never once seen a condo association exercise that "right of first refusal." Never once have I witnessed a condo association kick out a potential buyer and in turn that association buys the condo unit.
My advice to condo associations is simple. Strike this outdated, useless, potentially discriminating restriction from your bylaws, open up your condo units to be offered to the entire real estate buyer community. This will allow more buyers seeing your units and we all know that the more buyers viewing the property will promote more offers which will lead, in turn, to potentially higher prices for that building and the stabilization of a market flooded by condo units.
Shed that stigmatism you may have towards FHA loans and embrace the comeback of the FHA loan that will help restore the American dream of home ownership.
Gary Mancuso is the current president of the Oak Park Area Association Of Realtors and is a Realtor with RE/MAX In The Village. 708-386-1400
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