Buying a condominium!

Buying a Condominium

Jacob David

Most clients who prefer to buy a condominium buy one for the reasons of convenience, easy access to major shopping centers, the best schools, and city entertainment. A condominium also offers joint expense sharing in the exterior maintenance, lesser personal insurance than a free standing home, takes out the hassle of having to make individual decisions when it comes to the upkeep of the property - like painting, roofing, lawn care, pool care, etc. With a condominium, buyers have to just take care of the upkeep of their interiors and pay a regular monthly maintenance fee and forget about the worries of owning a home and having to maintain it all by themselves.

While buying a condominium, there are several variables the agent to check on behalf of his client. A prior visit to the actual condominium in question would be helpful.

1. Location matters to most clients, make sure their preferences are met.
   
2. Talk to the residents of the condominium and ask them how they like living there.
   
3. Talk to the members and / or President of the Home Owners Association
   
4. Ask the President of the Home Owner’s Association the following:
   1. Are there any cases pending in court against the condominium?
   2. Are there any cases pending in court against the builder?
   3. Are there any cases pending in court against the Management company?
   4. Are there any new structural assessments pending?

For example: The condominium may have decided to change the roofing of all the buildings in that compound. That would require a special assessment.

For example: The condominium can have structural repairs, foundation problems that would require a special assessment.

5. Are regular meetings held by the Home Owner’s Association?
6. Are the minutes to the meeting kept regularly and will it be available on request?
7. Have the by-laws undergone any major changes and will it be available?
8. What is the reserve fund level? All Condos have a reserve for repairs and yearly maintenance.
9. What is the budget for Reserves proposed for the coming year?
10. What is the ownership ratio? Lenders will fund loans to your buyer only if the ownership is above 51%, some lenders have a higher percentage they adhere to.
11. What is the percentage of people who lease the condo units?
12. What is the current percentage of vacancies?

The Management company can make available a detailed report by fax or email to the lender of your client’s choice.

        m.  Are there any ongoing foreclosures?

5. Visit the actual unit that is being considered for purchase with your clients. Conduct a thorough visual inspection and make sure everything is in place. For example: Even small things like door knobs, light switches, fire alarms may be broken or missing.
   
6. Advise your client to employ the services of a Home Inspector.
   
7. If the condominium is on the ground floor, the client will have to employ the services of a Termite Specialist to check for infestation.
   
8. Your client can get approved by the lender for FHA (Federal Housing Assistance) or Conventional Loan. For FHA loans, the appraisal, valuation and procedures in place are strenuous and take longer than the conventional loan. The down payment in a conventional loan is higher and it offers a tad bit relief in closing costs. The closing costs to the FHA are slightly higher. The PMI (Private Mortgage Insurance) is higher in an FHA loan. The Conventional loan PMI is not higher as the buyer puts down a larger down payment.  Allow the buyer’s lender to deal with all the financial niceties; don’t get in the middle / thick of it, unless you are a certified lender yourself.
   
9. Make sure you keep an open line of communication with the other agent during this process that you both are on the same page. Cooperate with the other agent to make sure that every procedure goes smoothly to finalize the closing and transfer title and deed.
   
10. Make sure that you serve your client’s best interest at all times, communicating with them and keeping them informed of all that is happening.

During the process, it will do good to visit the Home Owner’s Association meetings or meet with the Management Company to get the interview for the lender completed. The Management Company will charge you an administrative fee to get this interview / questionnaire completed. This questionnaire (Spot questionnaire) is necessary for lenders and is worded differently by each lender, but it helps them make a sound financial decision to fund the loan for the buyer.

Keep an open line with the Title House to help them collect all necessary documents that are necessary for closing. Keep your client informed and help transact all documents in a timely manner by fax, email and mail / personal drop-off (whichever is quicker) to help meet the closing date.

Above all, make sure that both agents agree on a mutual closing date right at the start once the buyer and seller arrive at a satisfactory sale / buying price.

Goodluck!