Profile picture for Sophiew

Are non-warrantable and non-FHA approved condos hard to sell because buyer can't get financing?

Trying to decide between renting and buying a house or a condo for the couple years before we settle down with our jobs. Condo sounds like a better option but worry about resale value as a lot of new condos were converted to rentals and the high renter rate make them non FHA conforming let alone warrantable.
  • March 19 2012 - Downtown
  • 1
    1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

 
 

Answers (7)

Profile picture for howardft
Non-warrantable and non-FHA approved condos may not be harder to sell. If the condo is in a great location and the price is great, you will have a good opportunity to sell your property. With the condo not being warrantable it will make it harder to sell to more buyers because you've just now eliminated FHA buyers and other financed buyers who are qualified but not able to purchase your condo. 
  • July 22 2012
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for user702714

As someone who has gone through this very decision-making process, I thought I might offer you a cautionary tale, laced w/ my 2 cents worth

bought a house in 2002 - first time homeowner - ultimately ended up moving for work 4 years later or so. Kept it rented but finally sold in in 2011. Definitely lost money, but manageable.

A year after the move, bought a condo in right before the housing market went belly-up. Developers were only able to sell slightly under half the units before the market dried up, so rented rest. 5 years later, we're all still stuck. It may be some unconventional loans could work, but most buyers aren't willing to mess with it, or they'll really low-ball you. We've all tried to sell our units, and nobody has. Renting is tough since the developers can under-cut us, so we can rent our units if willing to take a significant loss each month.

Based on these experiences, and the lessons learned along the way, here are my recommendations:

1) Never buy a dwelling - house or condo - that you don't plan on owning or preferably living in for at least 10 years. if you buy a place anticipating living in it a couple years - expect to lose money unless it's 100% investment and you know you're getting an amazing deal.

2) house vs. condos – correct answer is house.  You can sell it, you have control over how the house is maintained, that maintenance costs no more than HOA dues and you can pick your vendors.  I'll never own another condo.  Period.

3) AND MOST IMPORTANTLY!!!! based on your scenario, i would highly recommend you rent for the next couple years before you settle down. It sounds like there's a fair chance your circumstance could change in the next couple years. Until you have a sense you're where you want to be, and a line of sight on being able (and wanting to) stay put for 10 years, save yourself money, time and headaches and just rent.

I sure wish I had.
Best of luck to you.

  • July 09 2012
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

This is a great question and I keep running into buyers who are interested in purchasing condos, only to find out that Conventional financing or cash are allowed. All the answers below are great... I wanted to add one more factor in which banks are using to determine if a condo is approved on FHA List. The amount of ownership by one particular investor makes a huge impact in determine if a complex qualifies for FHA. The guidelines state that the complex must not have an investor who controls majority ownership. This was implemented in a scenario where the investor runs into financial hardship causing numerous units to go into foreclosure status. Each states if different in their lending guidelines but a good rule of thumb is if one individual owns more than 20%-30% of the units usually the complex does not qualify.

Of course the condo complex condition is a major factor as well.



  • April 04 2012
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for JAKEBAXTER

You would have to find a portfolio lender that specializes in this type of property.  Fannie Mae and Freddie Mac will not pick up non-warrantable condos.  If you need more information on the subject just message me.  This is something we specialize in. 

Cheers,

Jake

  • March 27 2012
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Financing is more a concern in the lower priced condos and should be a part of your thought  process when you buy. If they are non FHA, they can certainly be harder to finance and sell. The higher priced condos usually attract buyers who can afford to put 15 or 20% down. So they can get financing through conventional loans.
  • March 21 2012
  • 2Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

You can sell them, just for A LOT less.
  • March 19 2012
  • 2Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Yes. One thing to consider is the quality of the project - I believe that when the economy recovers, some condos that are now "below the FHA line" will come up and appreciate in value faster than those that have remained "above the FHA line."

Some. Not all. But if it's a good project, and they've got good reserves, but they've got low owner-occupancy . . . the landlords will sell when the market improves.
  • March 19 2012
  • 2Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.