Buyer demand continues to outpace the supply of homes for sale across the country and it does not appear to be slowing down. If you are debating whether or not to list your house for sale this year, let’s get together to discuss the supply conditions in our neighborhood so that I can assist you in gaining access to the buyers who are ready, willing, and able to buy right now!
Should you buy a condo that is unwarranted? This is a great question. What exactly does it meant to be unwarranted? “Condo projects and properties which don’t meet Fannie Mae and Freddie Mac warrantability standards are known as non-warrantable. Meaning the financing may be harder to obtain” says Gina Pool-The Mortgage Reports.
“Condo projects and properties which don’t meet Fannie Mae and Freddie Mac warrantability standards are known as non-warrantable.
Non-warrantable condos are more challenging to borrow against.
Typically, a condo is considered warrantable if:
- No single entity owns more than 10% of the units in a project, including the developer
- At least 51% of the units are owner-occupied
- Fewer than 15% of the units are in arrears with their association dues
- There is no litigation in which the homeowners association (HOA) is named
- Commercial space accounts is 25 percent or less of the total building square footage
Because of these rules, some of the common property types which fall into the non-warrantable category include condotels, time shares, fractional ownership properties, and other projects which require owners to join an organization, such as a golf club.
Manufactured housing projects and other developments which are not legally considered real estate are also excluded from warrantability, including house boat and motor home projects.
When you’re buying a condo, one of the first questions you should ask your real estate agent or lender is related to the building’s warrantability.
A warrantable condo will get you access to lower mortgage rates than a non-warrantable condo because warrantable condos are lower risk to the bank.” According to a recent article written by Gina Pool- The Mortgage Reports.
As a buyer it is very important to do your due diligence in determining all the facts about a condo development before making the decision to purchase. You will need to have a detailed conversation with both your agent and lender to make sure you fully understand the risks involved in purchasing an non-warrantable condominium.
“The fourth quarter RESI found that title agents continue to believe that property valuation issues will be the most likely cause of title order cancellation over the coming year.”
So far this year I have already had to deal with a low appraisal and I have had other agents comment on the same issue, especially when the appraiser has been out of area appraiser. This caught both myself and the listing agent off guard as we both had supporting comps that supported both the listing price and the offer price.
“This shouldn’t come as a surprise. In a housing market where supply is very low and demand is very high, home values increase rapidly. One major challenge in such a market is the bank appraisal. If prices are jumping, it is difficult for appraisers to find adequate, comparable sales (similar houses in the neighborhood that closed recently) to defend the price when performing the appraisal for the bank.”
WORD FOR THE WISE
If you are listing your home and expect offers above listing price, be prepared for the conversation that the appraiser may not show the same value as the offer presented. Make sure there is a significant down payment and that you have a plan in place for negotiation in this situation.
If you are a buyer and you not putting a significant down payment down on a home, your agent had better be sure that the offer is supported by comparable comps and as recent as possible. Another buyer beware opportunity for the buyer to avoid the pit falls of not getting the home you love because of the appraisal.
“Every house on the market has to be sold twice; once to a prospective buyer and then to the bank (through the bank’s appraisal). With escalating prices, the second sale might be even more difficult than the first. ” According to an article by Keeping Current Matters.
Let’s get together and discuss how this may impact the sale of your home.
Holding Firm Against the Tide | Realtor Magazine
Steady U.S. economic growth will help lift home sales moderately in 2016, but persistent inventory shortages will continue to put upward pressure on prices, holding back first-time buyers. That’s a thumbnail of the year ahead for home sales, according to NAR Chief Economist Lawrence Yun.
Home buyers are difinately feeling the pinch as they are trying to find homes to purchase. Portland and its surrounding areas found the lowest months of inventory in the month of Decmeber. What is the forecast like for 2016? click on this article for a glimpse of whats to come in 2016.