One of the most popular blog topics here on BloomingtonHomesforSale.com is when we write about bargains in the local real estate market. So, today I searched the MLS and, sure enough, I found some very low-priced condos for sale in Bloomington.
I looked first at how long they’ve been on the market and many of them have been sitting for quite some time. In fact, the lowest priced condo has been on the market for almost a year. Now why, I thought to myself, is that?
So, I then looked at the photos to see if there was anything there that might explain why an $80,000 condo in Bloomington isn’t flying off the market. Aside from a very dated kitchen with a missing refrigerator I didn’t see any obvious flaws.
Then, it grabbed me - $270 a month HOA fees. Now, that may not seem like a lot to some, but for someone who needs a starter home and an $80,000 price tag fits the budget, it could be a deal breaker.
FHA certification is important
But, there’s another reason it may not be selling. The majority of first-time homebuyers use loans backed by FHA and it has stringent qualifications when it comes to condos. The community must be FHA-approved for anyone to get FHA’s backing for a loan and many across the country aren’t.
It just so happens that this particular community is not FHA approved so between the high monthly HOA fees and the fact that it’s not approved for an FHA loan, the poor homeowner is having a rough time selling.
Pay attention to your HOA
If you own a condo in Bloomington it’s important to be active in your Homeowners Association. Even if all you do is attend the meetings, it pays to know what is going on. For instance, if the ratio of rentals to owner-occupied units happens to increase to more than half of all units, your community will lose its FHA approval. Even with some conventional loans there’s a cap on rentals (30 percent with Fannie and Freddie).
If 15 percent or more of the community’s homeowners are behind in their association dues, if someone decides to sue the association and it enters litigation or if the association’s cash reserves fall below one year’s worth of the fees collected, the community may lose FHA certification.
The biggest problem is the first one I mentioned – too many tenants. The wise buyer will refuse to buy a condo where the HOA doesn’t impose a cap on rentals. Then, he or she will be vigilant in monitoring the enforcement of that cap.
Yes, that’s easier said than done, which is why I, personally, wouldn’t buy in a community that allows ANY rentals. Hey, it’s important to pay attention to the future resale value of your property and the longer a home remains on the market the less you’ll make on it. If you can’t sell it at all, it’s worthless, right?
If you want to check if a particular Bloomington condo community is FHA certified, check HUD’s website. I must warn you, though (and this is pretty funny), their website is only “open” from 8 am to 10 pm Eastern time Monday through Friday.
You can’t make this stuff up.