The February Numbers – Hoboken Condo Sales & Prices Continue to Lag
Categories: For Buyers, For Sellers, Hoboken Condos, Market Analysis, monthly results
The February results are in and there’s not much good news. Activity is still very low, new listings continue to accumulate, days on the market increased and prices are down. No surprise there. The only positive note is that units that have gone under contract are up. Here is the data:
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Why You Might Urge Your Condo Association to get FHA Approval for your Building
Categories: Finance, For Sellers, Hoboken Condos
Could This Help Get Your Home Sold?
We had a heated discussion on this board about the pros and cons of FHA financing with comment0rs on both sides of the argument making some good points. Putting aside for a moment the merits of whether there should be FHA financing, let’s take a look at what FHA lending accomplishes. Many young, first time home-buyers simply don’t have 20% of the purchase price saved to enable them to buy a home. It is possible under certain circumstances to get a conventional loan with 15% or maybe even 10% down but it’s very tough and you have to have stellar credit and pay PMI (purchase money insurance). The FHA program lets qualified buyers put down as little at 3.5% and to include closing costs in the loan. That opens up a whole new universe of buyers.
What Would A Condo Association Have to Do?
To get FHA approval for a building certain conditions must be met and it varies for new construction and pre-existing condos. Here, I’m talking about a building that’s been around for a while and is fully occupied, not brand new construction. For example, (and this is just an overview – for specifics, read this) to the at least 50% of the units must be owner occupied; there can’t be more than a 25% of commercial floor space and it has to be “of a nature that’s homogenous with residential use”; one owner cannot own more than 10% of the condos. There must be adequate insurance on the building, including flood insurance if it’s in a flood zone. Basically, the risk of default has to be spread as thinly as possible. Nonetheless, many condos in Hoboken already may or easily could meet the requirements. Obtaining FHA certification may make the units in those buildings more valuable. Why, you might wonder? Because now they are more marketable. Many potential buyers who might not have been able to purchase your unit now can with FHA approval.
How Do you Do It and What Does it Cost?
What you would need to do if you are interested is to have your Condo Board contact a good mortgage lender. They would help you through the approval process. According to one lender with whom I do a lot of business, it should cost about $3,000 and take about 6 months or less. Now that might seem expensive but the cost could be spread over all the unit owners since they will all benefit from the approval or, if your association has sufficient funds in reserve, could be paid for with that. Something to seriously consider in today’s Hoboken real estate market if you wish to increase your ability to sell your condo.
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Things Don’t Always Measure Up
Categories: For Buyers, For Sellers
When is a Square Foot Not a Square Foot?
I’ve had several situations arise lately involving discrepancies in square footage. Typically, when an agent lists a property for sale, the square footage number is taken directly from the tax records. The number in the tax records comes from the master deed for the condominium. 
The master deed, which is the document that must be recorded in the state of NJ, establishes the condominium and is the equivalent of its constitution. Its primary purpose is to divide the land into units and common elements and set out the most important aspects of the condominium, such as voting rights, liability for common expenses, and so forth. The master deed should include floor plans of each unit and also the square footage of each unit. The relative size of the units often determines the voting rights and maintenance fee of the unit. These floor plans typically include the name of the architect who prepared them.
What if the square footage on the floor plans is wrong?
It is possible that mistakes are made. I’ve seen units where the measurements on the floor plan do not add up to the square footage. Or where the floor plans do not coincide with each other. The unit upstairs is, let’s say 1000 square feet. The unit below it has the exact same footprint except for one room that is shown as 10 feet x 10 feet (100 sq. ft.) on the floor plans. The downstairs unit is listed in the master deed as only 750 sq. ft. So where did the missing 150 square feet go?
The discrepancy becomes a problem when the owner of the “too small” unit wants to sell. “My unit’s not only 750 square feet, it’s really 900,” says the seller. Of course, having the property listed as smaller than it really is makes the price per square foot seem too high. Like it or not, buyers do evaluate and compare properties based on price per square foot. So why didn’t the seller fix the mistake sooner? Well, for one thing, if your unit is mistakenly listed as smaller than it really is, the seller may have been paying less maintenance than he really should have for all those years.
I often have sellers tell me “I measured my property and it comes to 1500 square feet” even though it’s in the tax records at 1300 and the condo docs say it’s 1300 and the prior MLS listings had it as 1300. In this case, the owner has to realize that measuring is a bit of an art. Whether you count utility closets (which are not living space), the thickness of interior walls, even exterior features like balconies are often points of disagreement among owners, realtors, and appraisers. I asked the NJ Real Estate Commission if they have any guidelines about how to measure square footage but they do not. They told me to call the NJ Board of Appraisers, who referred me to the USPAP which are the uniform standards of professional appraisal practice. Even USPAP does not specify the method by which measurement must be done.
The Bottom Line
If a home owner thinks his condo docs are wrong, he would probably have to hire an attorney and seek to have the documents corrected. Changes to the master deed might require action by the condo board and possibly a majority vote of the unit owners. The amended deed would have to be re-filed with the state. Overall, it’s likely to be a costly process. So what should you, the potential buyer do? First of all, know the source of the square footage numbers. Did the listing agent get it from the tax records? The condo docs? Do they agree? Or was it just made up or ‘measured’ by the sellers. If there is a discrepancy, don’t just take the agent or seller’s explanation at face value. Have your attorney look into the issue during attorney review. If there is a mistake, you probably want to have it corrected. If there isn’t, you don’t want to overpay for a seller’s overestimation of the size of the property.
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I always thought it was built in 2002 or so. I must be mixing it...