Buying a Foreclosed Condo

August 7, 2011 5:42:26 AM PDT
A survey conducted this past April by San Francisco-based online real estate services RealtyTrac and Trulia revealed that 85 percent of current homebuyers are looking to distressed properties for the best real estate buys and topping the shopping list are foreclosed condominiums.

And while buying a foreclosed condo has its own set of distinct advantages, it is also rife with potential pitfalls. Unlike the purchase of a single-family dwelling where the homeowner is responsible for maintenance and upkeep, when you buy into a condo, ownership, responsibility is shared among all owners.

Joan Jensen, president and CEO of Central Credit Union of Illinois, visited ABC7 Sunday to share the ABC's of successfully buying a foreclosed condo.

The ABC's of a Successful Purchase

Assessments and Associations:

-Ask if there are any past due assessments over the six months prior to purchase.
-Find out if there are any special assessments or increases planned in the works.
-Inquire into the percent of homeowners who are behind on their assessments.
-Does the association have first right of refusal on contracts?

Building Background:

-Who needs to approve your purchase?
-Is maintenance up to date or has it been deferred?
-Find out the ratio of renters to owners. Most lenders won't finance purchases for units with big numbers of renters because it can devalue a unit.
-Determine if the building has been blacklisted by mortgage brokers. Even if you have cash, it is advisable to avoid these buildings.

Cashing In:

-Have a contractor and building inspector involved early so you know the cost of any necessary repairs.
-Cash is king. Have your finances in order and money ready before you get started.
-Be prepared to move fast.
-The larger the down payments the better.

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