Sun, 27 September 2015
New Condos: June 12, 2008 From our archives: Pricing on real estate depends on the market and the circumstance. And recently I would also add the strength of the buyer. But it is not unusual to see new construction drop the prices on the last units or even the last single family homes. I can list projects where I have seen that happen…to my dismay and to the values of the folks who purchased at full price. Existing condominium projects are starting to have concerns- and problems- where here are too many renters as compared to owner occupied units.Mortgage lenders are sometimes reluctant to approve loans where the investor ratios are higher than the owner occupied units. The secondary mortgage market such as Freddie Mac and Fannie Mae have imposed certain restrictions, such as no more than 40 or 60 percent of the units’ owners can be landlords.Many community associations’ leaders believe renters do not have the same incentive as owners to honor and respect the rules and regulations of the association and do not take good care of the property. Maybe that is a grey area, but it is more possible than not. So, if there are problems with existing condominiums, I suspect there will be even more issues when the association is brand new. Legally, the developer- as owner of the unsold, rented units-may be obligated to pay the condominium fees for the units that are rented, but the legal documents of the association have to be reviewed to make sure what he obligations of the developer are.The price was lowered to attract buyers. Do you have any guarantee the price will not be lowered more- after you buy? Real estate is in flux now and maybe for a while to come. Your investment is no longer guaranteed to give you a good return. If you are considering living in the unit and can get some more perks from the developer, then it may be something to consider. This is what you should ask the developer to do for you: 1. Pay all the closings costs and pre-paids, and 2.If the price of similar units is lowered within the next year, provide a proportionate rebate.If you are hesitant about number 2, ask them if they have ever practiced lowering the price on the last 10%...or look it up in your tax records. Again, the web is a great tool. As you know, I read a good bit about condos and about real estate and Benny Kass, a practicing attorney in Washington, has written some great articles on condominiums and I am learning a lot by being an avid reader of his columns. With thanks.