Straight Talk & Tech Tips to Online Success

Condo Buyers Beware

02/21/08 | Kathy Drewien | Category: Atlanta Real Estate, Atlanta Relocation, Buyers, Mortgages

Just when you thought it was safe to go back in the water…

Retiring Woman Seeks Ranch Condo

We recently encountered a new wrinkle in lender approval (more accurately, disapproval) for the purchase of condominiums that took us by surprise.

Our clients - relocating home buyers - found the perfect home for their current lifestyle. Located in close proximity to work, shopping and entertainment, this ranch condo is in a small gated community with a neighborhood pool.

The 3-bedroom, 2-bath open floor plan is spacious and light filled. And, the condo is newly constructed by one of Atlanta’s top builders. It is absolutely perfect for this couple!

So, Nancy and Bill negotiated for upgrades, a builder price concession, and finalized the contract to purchase. Closing was scheduled to coincide with the termination of their temporary corporate apartment lease. All was right with the world, and they celebrated.

In keeping with the terms of the contract, Bill and Nancy completed a loan application with their preferred lender and enjoyed the Christmas and New Year holidays.

The lender denied the loan application - even with excellent credit scores, secure employment, and a 50% down payment. Why? Because this condominium complex is new.

Enter Fannie Mae and Freddie Mac, the two government sponsored entities behind the scenes in the lending process.The hangover of the sub-prime debacle has introduced changes in lending guidelines (see Mortgage Fees Rising) which now affects purchasers of new condominiums. Without a solid history of sales performance and owner occupancy of 80%, loans are not being underwritten.

Now, with just 2-weeks left in their corporate apartment, Bill and Nancy are shopping for a single-family residence and exploring financial decisions that will cost them the least in dollars and emotional well being.

What have I learned from this experience? Anytime I am representing clients interested in new construction condos I will ask the listing sales associate about the percentage of sales that have closed. I will explore whether these condos were financed. I will tell my clients about Nancy and Bill and do whatever it takes to give them peace of mind.

If you liked this post, you will also like these:

Read Comments

  1. Posted by Brad NixNo Gravatar on 02.21.08 7:45 pm

    I followed your comment over to this post and my jaw dropped as I the read the details. What an unbelievable story about the credit crisis. How will these new condo complexes ever reach 80% without anyone being able to qualify for the first purchase?

    Thanks for exposing this issue and let me know if you hear of any solutions.

Post Comments





XHTML allowed: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

* Required. Your email will never be displayed in public.