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Daily Real Estate News | May 21, 2009 |
Foreclosed Condos: Attractive Price Not Enough
A foreclosed condo can seem like an attractive bargain, but buyers without cash might have trouble getting financing and any buyer should investigate the property carefully to ensure that it is financially stable, experts say.
In markets that are dominated by condo developments--like southern Florida--many buildings have multiple foreclosures and vacancies. As a result, the condo associations are struggling with shortfalls.
To compensate, condo boards are raising fees for remaining owners and tacking on special charges.
Fannie Mae won’t purchase mortgages in condo buildings in which more than 15 percent of the owners are late paying their association fees. Also Fannie requires that 70 percent of units in a new building be presold – up from the previous 51 percent standard. Both these factors discourage lenders from approving condo loans.
"If a building is in trouble and a buyer can't get a loan, then it means the building will continue spiraling down,” says Summer Greene, managing director for Prudential Florida 1st Realty in Fort Lauderdale, Fla.
Source: The South Florida Sun-Sentinel, Paul Owers (05/21/2009)
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