I showed a Hoboken condo property to some potential investors the other day. They liked it and were considering making an offer so they wanted some more info about the building. I called the listing agent to ask her about the financial status of the building and to ask how many of the 10 units were currently rented out. Nowadays, if more than 50% of the units are rentals, the building will not meet Fannie Mae requirements, making it much harder for a buyer to obtain financing. The agent said he had not yet filled out a condo questionnaire or anything so he had no idea of the answer to any of my questions.
First of all, a condo questionnaire is something the lender requires to be completed during the underwriting process if the loan is going to be sold to Fannie. What normally happens, or should happen though, is that when an agent meets with a seller to list a property the agent, if he or she is at all competent, will ask the seller some basic and vitally important questions about the property. These questions include things like ‘does your condo association have any reserves’ and ‘how many units in the building are rented out’. If the agent is really good, he or she will advise the seller to get together the condo documents (Master Deed, by-laws, meeting minutes, financial statements) in advance of listing the property. This way, when an offer comes in, the seller has all that is going to be needed for attorney review readily available.
This agent did not have a clue as to the financial situation of the building. A week later, he called me to say the building had no reserves at all. Not a wise investment purchase to buy into an old, dilapidated building that has no money on hand for upkeep or repairs. Strike one.
To figure out if any of the units were investor owned, it took me all of two minutes to pull up the tax records on the internet – public records accessible to anyone – and see that almost none of the owners’ addresses were listed as the property address. The listing agent should have done this ages ago. That means almost the whole building is rented out and not owner occupied. Strike two.
My investors didn’t need a third strike to decide to move on. Though they did say that negotiations with an agent representing a seller on the other side of the transaction who was so ill-informed and ill-prepared was something in which they had no interest. What amazed me the most was that when I looked up the property in the MLS, this listing agent sold the property to the seller when the seller bought it not that long ago! Didn’t he ask these questions when the seller was buying the unit? Didn’t he see any of the the documents during the course of the deal? I guess not.
Taking nice pictures and posting them on the internet is surely an important task for the agent who is selling your property. Knowing the vital information with respect to the property they are selling is just as key to a successful sale.