Selling your Condo – Do this FIRST

When Selling your Condo – Do this FIRST

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BJ Matson real estate agent

If you own a condominium and are thinking of selling it, make sure your Real Estate Agent helps you do this FIRST.

There is a lot to selling your home and if your home is a condo this process has an added layer that needs your attention and due diligence. It is very important and will save you time and frustration. It will avoid getting deep into the process and then finding out the buyer that you Ratified with can’t buy your condo. Because their lender won’t approve them given the information found out about the condo. It’s not the end of the world if the information comes back and does not meet Fannie Mae guidelines. There are still lenders out there available, but they will use what’s called a Portfolio Loan Product. Typically requiring at least 20 to 25% down payment. Your pool of potential buyers has changed and decreased but now you know what you need to focus on.

So what do you need to do, you ask?
Whatever lender is working with the buyer that you end up ratifying your contract with, will require what’s called a Condo Questionnaire

This questionnaire will cover several main issues that lenders are most concerned with and include; What is the investor concentration in the building? What is the condo fee delinquency rate? What do the reserves look like?

Investor concentration — What percentage of condo units are owner-occupied versus the percentage that are being rented out. https://selling-guide.fanniemae.com/Underwriting-Property-Projects/Project-Standards-Condos-Co-ops-PUDs/Project-Eligibility/Full-Review/1033001711/What-is-the-maximum-investment-concentration-for-a-condo-project.htm

At least half, 50%, of the total units must be principal residence or second home occupants.

Delinquency rate — What percentage of units in the condominium can be late on their condominium HOA dues. Guidelines state that no more than 15% of the total units may be 60 days or more past due on their condo fees. For example, if there are 100 condo units in the building no more than 15 units can be 60 days or more past due on these fees.
https://selling-guide.fanniemae.com/Underwriting-Property-Projects/Project-Standards-Condos-Co-ops-PUDs/Project-Eligibility/Full-Review/1081306121/What-percentage-of-units-in-a-condo-project-can-be-late-on-HOA-dues.htm 

Reserves — at least 10% of the annual budget must go to Reserves. The lender wants to see the condominium is healthy and has funds adequate to maintain the property.

 

**NOW YOU WILL ALSO NEED
The above is the way it has been for as long as I can remember in this industry during my 27+ years. From what I have been told the incident in Miami where the building collapsed has triggered additional guideline requirements on the questionnaires. It is very important that the Lender Loan Officer learns and understands this piece so they can get involved to the best of their ability when necessary. To push back as needed when an Underwriter is too strict or not interpreting the rules correctly. This is new to the condo management companies as well. You can imagine a lot of frustration happening on the lender side, the buyer, the seller, and at the Management Companies.

*Fannie Mae is asking the lender to review the past 6 months of the condos’ meeting minutes and obtain information about any maintenance or construction that may have significant safety soundness structural integrity or habitability impacts on the unit or building.
*References to improvements, renovations, inadequate reserve funding, budget deficits, negative cash flow should all be researched.
*They also want the lender to review any available inspection engineering and other certification reports completed within the last 5 years to identify deferred maintenance that needs addressed.
https://singlefamily.fanniemae.com/media/29411/display

This is no small task. How much information will satisfy that particular lender. What if this information is not available or the management company just doesn’t know the answers. Will the lender be okay? Fannie Mae be okay? Will the lender worry that Fannie Mae won’t be okay thus protect themselves and decide not to do the loan because they just don’t know what is acceptable to Fannie Mae… and don’t want to be stuck with a loan that Fannie Mae won’t buy from them.


So again, WHY IS THIS IMPORTANT TO YOU?
You can get the due diligence started NOW and get a copy of this Questionnaire ahead of time

As your Listing Agent this is the first thing I will tackle with you.
It’s no different than getting a pre-inspection completed so you can address issues that would come up on the buyer’s inspection report. Keeping our heads in the sand is the last thing we want to do with this.

These forms take time to get completed and returned. If you and your Agent wait, you will be in the middle of the process and THIS is what you are waiting for… Hoping and praying that it comes back ok.  And if I’m on the other side as the Buyer and I have spent money on the home inspection and appraisal ($1,000), and the Lender finally gets this questionnaire back to the buyer, and it doesn’t meet guidelines and it kills this buyer’s deal…
That’s going to leave a very bad taste in everyone’s mouth. What a waste of time and effort and money that could have been avoided!!  And it CAN be avoided, by doing this due diligence up front. 

If only Buyers who are able to put 20% down are eligible to buy your condominium, then that needs to be communicated from the get-go.  To all potential Buyers.  So you don’t waste everyone’s time. Most importantly yours. 

As your agent I will help you get this completed by your condo management company and ready to go. With this tackled upfront we can get your buyer contract to the closing table without delay.

The good news is that here in Montgomery County, Maryland most condos I’ve worked with are healthy with their reserve funds, and are mostly owner-occupied, and are not delinquent on their condo fees.  There are pockets here and there that are known for having issues.  Having worked our County for the last 3 decades I have a pretty good idea of which buildings we need to be very careful with.  And we’ll make sure we carefully tackle our due-diligence upfront.

Questions? Never hesitate to hit me up…

BJ Matson
301-678-1378
BJ Matson Realtor

 

 

 

 

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NATIONAL PARK SEMINARY

9610 DEWITT DRIVE • SILVER SPRING, Maryland 20910

1Bedroom(s)
1Bathroom(s)
AssignedParking(s)
30Picture(s)
1,023Sqft
Not interested in a cookie cutter condo or community? Then welcome to the spectacular historic National Park Seminary!n nThe first thing you’ll notice when you enter Ballroom Unit 105 is how bright and spacious this one-bedroom home is. Your eye will be drawn to its beautiful architectural details, including corbels that mimic those of the grand ballroom, as well as elongated windows.
$300,000

MICA CODM @ SILVER SPRING

1220 BLAIR MILL ROAD • SILVER SPRING, Maryland 20910

2Bedroom(s)
2Bathroom(s)
28Picture(s)
1,590Sqft
RARE OPPORTUNITY TO OWN THIS ONE-OF-A-KIND CONDO WITH IN-UNIT WASHER/DRYER. THIS IS THE LARGEST 2-BEDROOM FLOOR PLAN IN THE BUILDING AND DOES NOT COME ON THE MARKET OFTEN (ONLY THE 6TH ONE IN 4 YEARS). OVER $50K IN CUSTOMIZED UPGRADES AND RENOVATIONS.
$449,900

SILVER SPRING

7915 EASTERN AVENUE • SILVER SPRING, Maryland 20910

1Bedroom(s)
1Bathroom(s)
27Picture(s)
873Sqft
Live in the middle of the action, on the cusp of DC in this sun-filled and spacious 873 square foot, 1 bedroom condo at the Aurora Condominium. This unit features a NEW HVAC System, NEW Hot Water Heater, new Refrigerator and newer Washer and Dryer. The gourmet kitchen has granite counters and stainless steel appliances and opens up into a gorgeous sunlit living room with floor-to-ceiling windows.
$319,900

NATIONAL PARK SEMINARY

2701 HUME DRIVE • SILVER SPRING, Maryland 20910

2Bedroom(s)
2Bathroom(s)
16Picture(s)
Welcome to the National Park Seminary Condominium, a historic building offering a unique blend of modern amenities and historical charm. This captivating community is surrounded by idyllic grounds and is in close proximity to Rock Creek Park, providing access to numerous walking trails. The unit itself boasts a contemporary layout with 2 bedrooms and 2.
$599,000

AMERICANA FINMARK

9900 GEORGIA AVENUE • SILVER SPRING, Maryland 20902

2Bedroom(s)
2Bathroom(s)
18Picture(s)
1,296Sqft
Conveniently located off of Georgia Avenue in the heart of Forest Glen and just a 2-minute walk from the Forest Glen Metro subway station on the red line, Unit 27-T3 is a meticulously designed two-level home that marries luxury with convenience.
$254,000

SILVERTON CODM

1201 EAST WEST HIGHWAY • SILVER SPRING, Maryland 20910

1Bedroom(s)
1Bathroom(s)
AssignedParking(s)
35Picture(s)
777Sqft
Enjoy the fun and convenience of downtown life at an unbeatable price. This stunning 1-bedroom unit has been impeccably renovated. Inviting bamboo floors stretch throughout the unit. The kitchen boasts quartz countertops, stainless steel appliances, and a gorgeous backsplash. The remodeled bath is accessible from both the living area and bedroom.
$294,000

DOWNTOWN SILVER SPRING

1320 FENWICK LANE • SILVER SPRING, Maryland 20910

2Bedroom(s)
2Bathroom(s)
PublicParking(s)
42Picture(s)
850Sqft
Experience the Essence of Urban Luxury Living in the Heart of Silver Spring! Welcome to this exquisite 2-bedroom, 2-bathroom condominium, ideally positioned just moments from the Silver Spring Metro Station. Crafted in 2016, this exceptional home epitomizes modern elegance and ease.
$405,000
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