Your client is interested in a Downtown Minneapolis loft (or condo); as their Realtor, what do you do first?
A. Show them the unit, to see if they like it;
B. Review the Association doc’s, to look for pet restrictions, prospective capital improvements, etc.;
C. Check out the MLS price history, to see how long it’s been on the market;
D. Call the Buyer’s lender, to see if the building is on their approved list.
Correct answer: “D.”
The Golden Rule (Again)
While all of the above steps are necessary, the first three are a waste of time if the Buyer’s lender won’t write a mortgage on the building in question.
That can be the case when there are too many investor-owned units (vs. owner-occupied); the building has a big liability or unpaid receivable on its books; or the association’s capital reserves are too skimpy.
In fact, depending on the lender and how restrictive their underwriting criteria are, step #1 may be to obtain the lender’s list of approved buildings, then look for available units only in those buildings.
Steps #2, #3, & #4
Of course, the foregoing assumes the Buyer needs a mortgage.
If they’re paying cash . . . the usual steps are “A.”, then “C.”, then reviewing the “Comp’s” (Comparable Sold Properties) prior to putting together an offer.
At least in Minnesota, Buyers typically review Association doc’s only once there is a signed Purchase Agreement (although it’s important to screen for deal breakers — like pet restrictions — well before then).
