Property Management Report: Buying and Selling a Condominium in a Difficult Market
January 6th, 2012By Tom Simon, Owner, Westgate Properties, LLC
According to the National Bureau of Economic Research, the “Great Recession” began in December of 2007 and ended in June of 2009. However, the pain is by no means over, as unemployment remains stubbornly high and real estate values, particularly the value of condominiums, remain stubbornly low. If you are considering selling or buying a condo in Santa Fe in 2012, there are several things you should prepare for and consider.
According to the Santa Fe Association of Realtors (www.sfar.com), the median sales price of condos and townhomes that were listed on the Multiple Listing Service (MLS) were $338,390 in the third quarter of 2007 based on 104 sales. In the third quarter of 2011, the median price was $268,000 based on 57 sales. In percentage terms, there was a 21 percent reduction in median condo/townhome price and 48 percent reduction in the number of sales. These statistics do not include private sales or mortgage transfers. Therefore, the actual median price in the fourth quarter is likely to be less and the volume higher.
The Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, securitizes or buys the loans originated by others and therefore sets mortgage approval standards in the U.S. In recent years, Fannie Mae began imposing a higher standard on condo mortgages. Among the changes, reserves must be held in a segregated account and be at least 10 percent of the annual budget; no more than 15 percent of the unit owners may be more than 30 days past due. For these reasons, mortgages are being denied to even the most credit worthy buyer because of the status of the condominium
association. These are two of many criteria so it’s a good idea for prospective buyers to contact an experienced mortgage broker to get pre-qualified and to ask for his or her assistance in understanding what to look for in a condominium purchase. Sellers should ask their Realtor to assist in analyzing the condominium association and try to resolve anticipated problems before the unit is under contract.
Working with an experienced Realtor and mortgage broker will go a long way toward a smooth selling or buying experience in the current market, and a professional, credentialed association manager plays a crucial role in providing timely and accurate information about the association. Give these professionals, and yourself, plenty of time for the process to be completed.
Tom Simon is a Professional Manager of Community Associations (PCAM) and owner of WestGate Properties, LLC.