Condo Sales May Slow Down In Coming Months: Find Out Why
Posted by Ron Ogden at Dwell Utah on Monday, August 31st, 2009 at 5:56pm.Some of you know that condominium developments must meet stringent qualifications in order to qualify for FHA insured financing. Most of you don't know, however, that on October 1, 2009, all previously approved condominium projects must re-certify before any additional FHA loans can be approved. OK, so what's the big deal?
FHA Eligibility Requirements
To reduce the risk that FHA assumes when it insures condominium units, the FHA requires all condominium projects to meet certain eligibility requirements, such as:
- At least 50% of the condominium units must be owner occupied
- No more than 30% of the units in a condominium development can be insured by FHA
- The condominium HOA must demonstrate that they have enough reserve funds to meet ongoing capital expenditure and maintenance requirements
- plus about 10 other requirements
These risk-reduction rules have been around for a long time, so there's not much new here. However, it is a rather time-consuming process to verify all this information and submit it to the FHA. And that's why condo sales may slow down in the next few months: After October 1st, any new request by a Buyer for an FHA insured loan will trigger a re-certification of the condominium development's eligibility.
Backlog of FHA Condo Approvals Expected
Just gathering the information may take several weeks to accomplish. But, then, the application must be submitted to the FHA for approval. And since every condominium project in the US will be subject to this re-certification rule, you can only imagine the log jam that the FHA is going to experience from October 2009 through the end of the year, or even longer.
The good news is that once the 1st Buyer goes through the FHA approval process, subsequent buyers in the same complex will not need repeat the process.
Thinking of Selling Your Condominium?
If you are thinking about selling your condominium, get it on the market now! You still may have a chance to avoid the recertification process: If the buyer of your condo applies for an FHA loan BEFORE October 1st, they qualify under the prior certification, even if the sale does not close until after the deadline.
If you don't have a buyer by the deadline, you can at least begin now to work with your HOA to prepare the necessary paperwork so that when a buyer does come, you're ready to move forward with the application. To find out whether your Condominium development needs certification, visit this FHA Condominiums page.
Now Is The Time To Buy or Sell Your Condo!
Whether you are buying or selling a Condominium, now is the time to get busy. If you have any questions about what steps to take, please give me a call. I'll be glad to help!
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Share3 Responses to "Condo Sales May Slow Down In Coming Months: Find Out Why"
Very good blog, great information
Posted on Sunday, September 6th, 2009 at 11:43 AM.
I will certainly agree with you on this one. Myrtle Beach is looking the same way. Where is the light at the end of the tunnel
Posted on Tuesday, October 6th, 2009 at 8:30 AM.
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This is really the kind of information I like to see in a blog, news you can use. Thanks a million for the update. I'm sure your clients will find this to be a valuable news source.
Posted on Wednesday, September 2nd, 2009 at 1:59 PM.