Condo financing problems can create considerable problems for you and your clients; Anna Mayer-Huls explains how to avoid them.
How many times have your buyers or buyers for your listings run into problems with their financing? This can be devastating for them and for the deal. What’s worse is that most times, the deal falls apart weeks after the contract has been accepted. For your buyer, that means money spent on a home inspection and time not looking for a home. For your seller, that means valuable time off the market.
When listing a condo, it is important to ask as many questions related to buyer financing as possible, so you protect not only your seller from unqualified buyers, but yourself as well. Troubleshooting these potential deal killers up front will prove your value to your clients no matter what party you represent.
Here are four potential deal killers in the world of condo financing:
1. Number or percentage of rentals in the building. A buyer with a low down payment may not be able to purchase in a building if more than 49 percent of the building is rented.
2. Does any one party or entity own more than 10 percent of the total number of units in the building? I have already experienced this twice. The reason for this rule is to safeguard the other owners from an unfair advantage from one owner.
3. Are more than 15 percent of the total condo units 30 days delinquent on their monthly assessments?
4. Is the condo association contributing enough money into the reserve fund? Lenders typically require that at least 10 percent of the association’s annual assessment income be allocated towards reserves.
These issues may not be enough to kill your deal if your buyer is putting down 20 percent. Either way, it is always a good idea to confront these issues head on, before they become a problem.
Anna Mayer-Huls is a broker associate with @properties in Chicago. She can be reached at:
1875 North Damen
Chicago, IL 60647
Email: [email protected]