Condos are a hot topic for discussion, as many recent transactions have had issues or even been terminated due to the guidelines surrounding condominium financing. Our Chicago agents live and breathe this reality daily, but our friends in the suburbs are just as susceptible to these challenges as many townhome-style properties are actually condominiums.
Condominiums represent over 25% of our overall production — higher than the average for our local competitors — so we know we need to be a resource for you, your buyers, and your sellers to ensure buyers and sellers understand their available financing options. Below, we’ve recapped some key points to help you open up a dialogue when consulting your buyer and seller clients.
- Know if the project is approved by Fannie Mae, Freddie Mac, FHA, or VA
Each of these entities keeps its own databases of approved, unreviewed, or rejected projects. Fannie and Freddie now have a real-time database of condos throughout the U.S. that shows if the condo meets their guidelines, if it’s never been reviewed, or if it is ineligible. Your Key Mortgage loan officer can access all of these databases and let you know its status. This can dramatically impact the financing process, and possibly even make it ineligible for financing. That’s powerful information for a buyer or seller.
- Know the major statistics of the association.
Take into account HOA factors like the owner occupancy percentage, the HOA fee delinquency rate (15% or more, 60+ delinquent could be an issue), and if they budget at least 10% of their association dues into the reserve account. These all can affect the type of offers and financing that can be accepted.
- Know if any litigation or structural issues need to be addressed.
These can be deal killers, so understanding what the litigation is for, what stage, and what repairs need to be completed can make or break the ability to finance the building. Can’t stress this one enough, it is the #1 reason projects get declined!
- Find yourself an unreviewed or expired project — for listings!
Get together with your Key Mortgage loan officer and look for projects in your market that are unreviewed or expired and work on getting them updated and approved. Then, market to the association on the available financing. This is especially powerful if the association has an attribute that would make it only available to non-agency lenders with which we have partnerships. Exclusivity can lead to more business!
When you work with Key Mortgage, your loan officer has expertise and access to the tools that will help you and your clients know if the condo has known issues that could affect financing. This is just as important to your sellers as your buyers, so who provides the financing does matter. This is just another value-add that you can share with your clients.
Reach out to your Key Mortgage loan officer today to learn more about how you can be prepared to work with condominium buyers and sellers.