Sponsored: 5 Tips for Buying a Condo in Fall 2010

August 3, 2010

by UrbanTurf Sponsor

The Icon at 1320 13th Street NW

UrbanTurf readers know that the inventory for condominiums in the District and close-in suburbs is tight, especially in popular neighborhoods. The limited supply means that buyers are competing for well-priced, attractive units, so it’s important to be knowledgeable and prepared as you embark on the hunt for your condo.

Lance Horsley and his team specialize in condos and lofts, and they have put together the following five tips that those in the market for a condo in the DC area this fall should keep in mind.

#1 – Obtain a Completed Condo Questionnaire Before Submitting an Offer.

This questionnaire is completed by the property manager of the building where the condo is located. Typically 30 to 40 questions long, it is used by the lender to determine whether the building is “lendable” based on the answers provided. Some of the reasons a building might not be lendable include too many renters, payment delinquencies, or the lack of a master insurance policy.

“As a buyer, you don’t want to get all excited — even submitting an offer — without knowing if your lender will even loan against the property,” explains Horsley.

Lance Horsley with clients at The Icon

#2 – Get Pre-approved.

Getting approved by a lender for a certain mortgage amount even before you start your search for a condo can be invaluable, according to Horsley. “Research the mortgage lenders that are out there, find someone you’re comfortable working with, and ask them to get pre-approved.”

“We went from a condo glut in DC to a condo shortage in two years,” says Horsley. “We are back in a seller’s market, so as a buyer, presenting a strong offer is important. Being pre-approved will really distinguish your offer from someone’s offer who isn’t pre-approved.”

Getting pre-approved will also help you understand the lending process. You’ll understand the time line much better, which can be very valuable if you find yourself in competition to buy the condo in which you are most interested.

#3 – Review the Resale Package.

Like the questionnaire, the resale package is generated by a condo’s property manager and includes some crucial information about the building, namely its financial status (the reserves, etc.) and rules and regulations. You’ll want to know that the building you’re buying into is financially sound, and you’ll want to acquaint yourself with the rules for living there, which vary considerably from building to building.

“If you’ve got an elephant and the building doesn’t allow elephants, you’ll need to void your offer,” says Horsley.

A lot of listing agents will provide the resale package ahead of time. If not, they can usually get it to you promptly if you ask. You’ll have three business days in DC to review it, which you should do thoroughly and carefully.

In new construction, things are a bit different. The document you want to request is the “condo docs,” which you will have 15 days to review.

#4 – Find Out If the Building Is FHA Approved.

If a buyer wants to use an FHA-approved loan to acquire a condo, the building where the condo is located must be approved by the FHA (Federal Housing Administration), the federal agency that administers the lending program insurance. So if you are an FHA buyer interested in a condo whose building is not FHA approved, you might need to set your sights elsewhere. Fortunately, there are lenders that can get buildings approved if need be. (Contact The Lance Horsley Team for further information.)

Horsley points out that even if you are not an FHA buyer, it can be beneficial to buy in an FHA-approved building for resale purposes.

“You might not be an FHA buyer, but if the future buyer of your condo is, you need to be able to sell to them,” Horsley says.

Roughly five to ten percent of buildings in DC are FHA approved. You can determine whether a particular building is FHA approved by searching this database.

#5 – Work With an Agent Who Specializes in Condos.

There’s a huge amount of knowledge and expertise that can be offered by agents who work specifically in condos. As this article makes clear, there are a lot of issues related to condos that don’t occur in traditional home purchases. Any one of these issues could break the deal for you if your agent doesn’t understand all the idiosyncrasies of buying a condo.