Home Selling in Annapolis>Question Details

Aj Richards,  in Annapolis, MD

If a condo conversion reverts back to rentals does it hurt my value

Asked by Aj Richards, Annapolis, MD Mon Oct 29, 2007

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The problem you may run into is that when you try to sell it, the buyer may have a hard time getting financing. Condo projects are either considered insurable or uninsurable by fannie mae. This makes a difference because Fannie Mae & Freddie Mac are the largest purchasers of loans on the secondary mortgage market and without their blessing, it can be difficult to find an entity to purchase the loan. Especially with the recent changes in mortgage guidelines, it will be more difficult to get financing for an uninsurable condo. Projects that are less than 50% owner occupied are considered uninsurable. You can check with the property management company as to whether or not the property is Fannie Mae insurable, they should be able to tell you.

It is certainly possible to get financing on an uninsured condo, but your buyer has to be in excellent financial shape, and could be required to put more down than usual, so you might end up with a smaller pool of potential buyers. All of that could certainly hurt property values some.
0 votes Thank Flag Link Mon Oct 29, 2007

I would say that would depend on the market value as condos versus the cash flow produced by rentals.
0 votes Thank Flag Link Mon Oct 29, 2007
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