Many condominium Boards and Associations with whom I speak are hesitant to get approved with FHA. For one reason or another, they don’t believe that getting an FHA Condo Approval will be a benefit to the Association.
On the other hand, real estate agents “get it”. Nearly EVERY real estate agent with whom I have spoken has said that it is a “no-brainer”. Having the ability to use FHA, CHFA and even USDA loans to purchase units in a project absolutely affects their marketability.
Recently, I was speaking with a real estate agent in our area. She had a listing in a condominium project that had lost its FHA approval a couple of months ago. She said to me that she had spoken with other agents who also had listings in the same community and they all agreed that it was going to be difficult to sell the units without FHA buyers. In fact, she went so far as to say that “the units might as well just expire now; they won’t be sold.”
The units in this project sell in the $100,000-150,000 price range, which is within the range of the majority of FHA buyers. In addition, the FHA loan concentration in this project is 24%. This means that without FHA approval, the Association is effectively eliminating 1 out of 4 buyers.
The numbers don’t lie either. Here are some figures for CT compiled using sales data from 2013.
· Bristol: 18% of condos are FHA-approved yet accounted for 53% of all condo sales.
· Manchester: 22% of listings in FHA-approved condos expired versus 40% in non-FHA condos.
· Manchester: 45% of condo listings sold, 40% expired in non-FHA condos
· Newington: only 9 condos are FHA-approved yet accounted for 40% of all condo sales.
· Rocky Hill: 18% of condos are FHA-approved yet accounted for 72% of all condo sales.
· Rocky Hill: 72% of listings in FHA-approved condos sold versus only 44% in non-FHA condos
· South Windsor: Units in FHA-approved condos sold 2.5x faster than in non-FHA condos
[Data derived via CTMLS 2/6/2014]
I think that the expiration data effectively displays what real estate agents have been telling me: if the project is approved with FHA, there are more buyers which increase the chance of the units selling.
In Manchester, odds of selling are roughly 50:50 in non-approved projects. However, in FHA-approved projects, less than 1 in 4 of the listings expired.
In Rocky Hill, if the unit is in an FHA-approved condo, the odds are nearly 2:1 that it will sell versus the units in non-approved condos.
You don’t have to take my word for it.
The National Association of Realtors® has been very active in working to persuade FHA to make it easier to obtain financing in condominium projects. NAR, NAMB and CAI have all been involved in communication with FHA regarding this topic. These large groups know that it is a detriment to condominiums to not have the ability to finance units with FHA loans.
The easy solution is to simply get approved with FHA. The majority of the Associations that have contacted me are approvable. The process is simple and the approval is relatively easy to obtain if you know what you are doing and know what FHA is looking for. Hiring a professional can remove the pain and confusion from the process.
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The Condominium Project Approval Team at ReadySetLoan is dedicated to helping condominium projects across the nation to obtain their approvals with FHA and the VA or become recertified with FHA. We have assisted nearly 200 condominiums and we can help your association.
ReadySetLoan is an active member of the Connecticut and New England chapters of the Community Associations Institute (CAI) and is a frequent contributor to Common Interest Magazine as an expert in FHA/VA condominium project approvals.
Please contact us with any questions regarding FHA or VA condominium project approvals. You can email me at firstname.lastname@example.org or call me at 404-433-4565. I will be happy to answer any of your questions.
FHA/VA Condo Approval Specialist
404-433-4565 Cell Phone
860-644-3772 Fax Phone
Check out our article in Common Interest magazine on page 19!