Actually, the new Fannie Mae and Freddie Mac guidelines have very recently changed and a building where the sponsor owns more than 30% will not be approved by a major lender that follows these guidelines. This doesn't only apply to new conversions. I have a current deal at Ruppert-Yorkville Towers on 3rd Ave. and 91st Street, which has been a condo for many years now and buyers never had a problem buying there. My buyer was recently turned down because the sponsor still owns 33%. Until very recently it was 50% and she would have been fine. Yes, you could run into a problem. Similarly I have a listing at 20 Pine St. in the Financial District and since the new regulations went into effect, I was holding my breath waiting for it to get to 70% sold. Fortunately now we have a deal and it is 80% sold (or in contract, which counts). See if there is sponsor financing or find out if they have a particular arrangement with a lender. You definitely want a mortgage contingency in your contract just to make sure you don't lose your deposit if you can't get financing.

Jenet Levy

Hi Anon,

Richard and Glenn are right. Just also try to assess your risk tolerance for this purchase - what is your exit strategy if the building does not complete it's transformation.

Speak with Mortgage professionals at banks but also Mortgage brokers who have access to many banks (including local and regional banks,) and see who has the best plan to get you into a 50% sold building. 51% is the magic number on a building that is already built but not finished.

Call me if you need any clarification on any of the above. 646.442.7407

Good Luck!

OF course if everyone did not buy until it was over 50% sold, then NO development would ever get to 50% sold! Basic logic

There are programs for financing new buildings with lower presales, Countrywide has one. SO do a few others, and the sponsor should be lining up financing to deal with this so the development does not fail.

It all depends on how reputable the sponsor/builder is. Also you need to realize that it will be extremely difficult to get financing, most banks now want a building to be at least 70% sold. They're also asking for between 30-50% cash down...especially for new condo conversions.

All you need to do is have your atty add a clause in the contract that gets you a full refund if the deal cant close or doesn't close in a certain amount of time.

Buyers don't realize that they can send out time of the essence letters on purchases.

Look at teh reputation of the company that is converting it. In this market it still might be risky.