I’m getting pretty tired of all the condominium developers and realtors out there claiming and clamoring that the new FHA condominium guidelines which went into effect this week are the next coming of the Apocalypse. The fact remains that the new guidelines will ensure that condominiums are financially sound and well-run, and that’s good news for everyone: lenders, consumers, buyers, unit owners and realtors alike.
David Fletcher, a Florida real estate broker and former developer who has survived every recession since the 1970’s, gets it. In an article in Realty Times yesterday, he outlines 10 benefits of the new rules, especially from a sales and marketing perspective:
- More buyers will enter the market because they can afford the lower down payment.
- No single investor can purchase more than 10% of the units, so the idea of a controlled association by one or two investors is no longer a threat.
- More inventory will offer wider choices tending to keep prices in check, as “FHA approved’ condominiums come on line.
- More real estate agents will be willing to show condominiums to their buyers, because the lender who provides the mortgage will have to approve not only the condo documents, but the condo association’s budget, reserve account and its fidelity insurance policy.
- New construction developers have the guidelines needed to create urgency in their pricing strategies, which is key to building and maintaining momentum.
- Commercial lenders will have a more comfortable level with developers. While the 50% presale requirement may look obtrusive, it is actually a benefit to the developer, because it will create urgency for buyers to purchase.
- Established associations that have dragged their feet to get their finances in order, now have a valid value-based reason to become “FHA Approved.”
- Real estate agents will show FHA approved condominiums with confidence in the association’s finances, not just because the down payment is low.
- Forward thinking lenders will hustle to become a “an approved lender’ in resale and new communities alike
- Knowing the property already has approved lenders will make competition for listings tighter and will attract more buyers and more prospects to the listing.
David believes — and I agree with him — that “FHA Approved” will become one of the most sought after seals of approvals for condominiums in 2010 and beyond. Let’s hope that all the realtors, lenders, and condominium developers out there realize the benefits that can be gained from obtaining FHA approved status.
