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Old 06-07-2011, 05:53 PM
 
88 posts, read 367,011 times
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I found this place for super cheap but the agent just emailed me and said it's not FHA approved and I'd need at least 20% down payment. That's no problem.

But is this indicative that there might be big problems in the building? Like a crappy HOA that is broke (special assessments) or some safety issues or something?

Would it make it harder to sell later? They have also been on the market for a long time. Hundreds of days. Is that another red flag?

Should I steer clear? What kind of things should I look for?
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Old 06-07-2011, 05:59 PM
 
Location: Simmering in DFW
6,948 posts, read 19,882,844 times
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Call the management office and ask them why they are not HOA approved. I believe that 60% of residents in a condo community must be owner occupants (used to be 80% until 2011, I believe) and that is the most common reason Condo communities don't qualify as FHA approved. Another reason I am aware of is the community simply has not gone to the trouble of completing the necessary forms to get approval. If the reason is the % of non-owners, the issue you face is that a large group of your neighbors are not owners. Something to think about.
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Old 06-07-2011, 06:17 PM
 
88 posts, read 367,011 times
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Quote:
Originally Posted by Squirl View Post
Call the management office and ask them why they are not HOA approved. I believe that 60% of residents in a condo community must be owner occupants (used to be 80% until 2011, I believe) and that is the most common reason Condo communities don't qualify as FHA approved. Another reason I am aware of is the community simply has not gone to the trouble of completing the necessary forms to get approval. If the reason is the % of non-owners, the issue you face is that a large group of your neighbors are not owners. Something to think about.
Not sure if I'm being dense or if you weren't being sarcastic.

Having many neighbors that are not owners means a greater chance of them "not caring" because it's "not their place," right? So all else being equal it's a bad thing?

So I can just call them and ask? Why didn't I think of that Should I do that or have my agent do it?

My agent is trying to talk me out of even going to visit this place. I wonder if it's because of all these "red flags" or if it's because the sale price is cheap and they won't make much commission. While I trust my agent, I don't trust sales people in general so I'm not sure.
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Old 06-07-2011, 07:59 PM
 
4,562 posts, read 8,692,231 times
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Check it out, but get info on the HOA financials before buying. Ask them if they have a recent re-sale certificate they did for another seller. It would be a shame if you moved in and were hit with a $25,000 special assessment.
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Old 06-07-2011, 08:20 PM
 
Location: Simmering in DFW
6,948 posts, read 19,882,844 times
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Quote:
Originally Posted by chitown noob View Post
Not sure if I'm being dense or if you weren't being sarcastic.

Having many neighbors that are not owners means a greater chance of them "not caring" because it's "not their place," right? So all else being equal it's a bad thing?

So I can just call them and ask? Why didn't I think of that Should I do that or have my agent do it?

My agent is trying to talk me out of even going to visit this place. I wonder if it's because of all these "red flags" or if it's because the sale price is cheap and they won't make much commission. While I trust my agent, I don't trust sales people in general so I'm not sure.
I wasn't being sarcastic. You do need to consider how you feel about living with a larger percentage of renters......often not the ideal. The management office is usually a good place to ask some questions. I own condos and always have called them directly with my questions. Ask your agent why she thinks this is a property to avoid. I don't think most agents try an steer clients to higher priced properties. I could be naive, but I don't think so.
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Old 06-07-2011, 08:49 PM
 
Location: Indiana
93 posts, read 190,300 times
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Quote:
Originally Posted by chitown noob View Post
I found this place for super cheap but the agent just emailed me and said it's not FHA approved and I'd need at least 20% down payment. That's no problem.

But is this indicative that there might be big problems in the building? Like a crappy HOA that is broke (special assessments) or some safety issues or something?

Would it make it harder to sell later? They have also been on the market for a long time. Hundreds of days. Is that another red flag?

Should I steer clear? What kind of things should I look for?
Hi Chitown noob! I know exactly what you are referring to. My husband and I live outside of Indianapolis, IN in a small condo community and just yesterday I too found out that my neighborhood is also not FHA approved.

This does NOT mean there is a big problem in the community. Not at all. The only thing this may mean is that the board neglected to file for this approval. All this means is that the board of directors did not understand the importance of applying for FHA Condo Project approval. There is a certain amount of cost the board of directors would have had to approve for someone to fill out the application forms and see this approval through. My board of directors is very, very money conscious and they try very hard to safeguard the condo fees and only use them for absolutely necessary expenses.

Unfortunately, because the neighborhood/building is not FHA approved, this means you will not be able to get a FHA loan and will need to put down a larger down payment. Have you asked your lender if they will give you a conventional loan with 20% down.

The window of opportunity for condo associations to apply for this approval has now passed, unless there are some future changes in this law. This is unfortunate and really quite unfair, as it obviously could affect your ability to sell down the road, as there is a possibility it could be harder for you to find a buyer who can obtain financing, for example the buyer will definitely need a larger down payment. Many, many condo associations did not apply for this approval.

If you love the condo you are trying to purchase and you can afford the extra down payment, your real estate agent and you should be able to do a small amount of research to find out if the association is healthy. For example, are most of the tenants current on their monthly association fees, are there law suits pending against the association, are there adequate financial reserves? If your agent does not want to help you determine these things, then IMO she is not doing a good job.

My association is very healthy and the property is very well maintained. My board of directors just did not understand the importance of applying for FHA approval, so now owners may have a harder time selling their condos. If you plan to reside in your condo for a while, then you do not know what kinds of economy/lending/FHA changes will transpire in the future and how this will affect your future ability to sell. If you are not planning on staying in your condo awhile, it is probably not a good time to buy, anyway.

To say that it will definitely be difficult to sell in the future may not be true, but it is definitely harder to sell a condo right now. This may be why many of the condo's in your building are not selling. The lack of sales may be due to the omission of the board to obtain the FHA approval, not necessarily due to the board being refused FHA approval. I also think this situation may not be well understood by some of today's real estate agents.

As long as you are planning on staying in your condo a long while (not two or three years) and the association is healthy, the price for the condo is good and you love the unit and it is what you want and you can come up with the larger down payment, you may want to go ahead with the deal. Only you can make this decision. All real estate is a risk. Don't let anyone tell you otherwise.

Because the community does not have FHA approval is why the unit is cheap. But it still could be a fantastic deal for you.

I will be selling my condo soon, due to retirement and relocation to the south and I will be selling my condo "cheap" due to these exact same circumstances. This means whoever buys my condo will get a beautiful home, in a lovely area, with an association that has low monthly dues and a condo board that watches over our association money with an eagle eye. In other words, my loss will be my buyer's gain. This may be what is happening to you, also.

I hope everything works out to your benefit. If you have any questions, I will be happy to answer them, to the best of my ability or steer you to good sources of information.

Last edited by thereandbacktwotimes; 06-07-2011 at 09:01 PM..
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Old 06-07-2011, 11:20 PM
 
88 posts, read 367,011 times
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Yeah, there are some financial issues with the HOA. I think I'm going to steer clear of this place. Assessments are very high and there is a good chance they may be increasing further, around 40%, due to some HOA drama.

Too bad, too. I was really digging this place. Oh well. Now I understand why they are so affordable and why they have been on the market for so long.
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Old 06-08-2011, 08:34 AM
 
2,060 posts, read 5,145,569 times
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That's probably why it was on the market to start with, or at least partly.
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Old 06-08-2011, 12:22 PM
 
88 posts, read 367,011 times
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Can you low ball the heck out of it? So this place is around $100k after some significant price reductions and it's a 2 bedroom. A few years ago, 1 bedrooms were selling for $140s.

It's been on the market for over a year. Think they'd take like $50 or $60k?
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Old 06-08-2011, 04:53 PM
 
Location: Simmering in DFW
6,948 posts, read 19,882,844 times
Reputation: 7211
Quote:
Originally Posted by chitown noob View Post
Can you low ball the heck out of it? So this place is around $100k after some significant price reductions and it's a 2 bedroom. A few years ago, 1 bedrooms were selling for $140s.

It's been on the market for over a year. Think they'd take like $50 or $60k?
Ask your realtor to run comps. I think banks might sell distressed properties for really low amounts but sellers probably not. But, heck, what do you have to lose by making an offer?
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