The Insiders Guide to Buying a Condo in San Mateo County

The Insider’s Guide to Buying The Insider s Guide to Buying Condos in San Mateo County

Presented by

Chris WilliamsonMortgage Advisor

Mortgage California

Raymond StoklosaManaging Broker and Co-Owner

The RayChel Realty Group

The RayChel Realty Groupw w w . R a y C h e l R e a l t y G r o u p . c o m

Purpose and Goals of Tonight’s Program

Purpose• Inform, Educate and Empower Home Buyersp y

GoalsSh ith th thi ’ l d • Share with you the things we’ve learned over 30 years about buying a condominiumL d i f d b t th • Leave you more aware and informed about the issues that really matter about buying a condominiumcondominium


Topics Covered

• What Is a Condo?Wh D Th L k Lik ?• What Do They Look Like?

• Who is Best Suited For Condo Living?• Questions to Ask Before Buying One• How to Finance One

Affect of New Financing Rules

• How’s the Market?• How to Protect Yourself


Condominium – What is it?

• Legal TermSpecifically Defined Ownership Arrangement

• Ownership Created by DeclarationR d d i P bli R dRecorded in Public Records

Type of Common Interest Subdivision• Type of Common Interest SubdivisionStock Cooperative (Co-Op)Planned Unit Development (PUD)Planned Unit Development (PUD)


Ownership Components

• Where the Buyers Will Live• Unit Itself – A Box of Air

• What the Buyers Can Use• Set of Easements

Exclusive UseN E l i UNon-Exclusive Use

• Proportionate Interest in Common Property• Proportionate Interest in Common Property• Governed by Business Entity – HOA


Townhouse

• Architectural TermT S D lli U i• Two Story Dwelling Unit

• Not Ownership Term


What Do Condo’s Look Like?

Single Family Homes

The RayChel Realty Group1242 Hoover Street, Menlo Park


Apartment Buildings

Woodlake San Mateo

The RayChel Realty GroupWoodlake, San Mateo


Townhomes

Ownership Type: Condominium Ownership Type: PUDOwnership Type: CondominiumPark Bayshore TownhomesSan Mateo

Ownership Type: PUDClearviewSan Mateo


Who Are Best Suited For Condo Ownership?

• Seniors Looking to DownsizeTired of Hassles Tired of Hassles No Major MaintenanceNo Outdoor Upkeep or Gardening

• Young People or Couples Without ChildrenWithout Children

Career Advancement #1 PriorityHeavy Travel ScheduleInterests Don’t Include Upkeep of a Home


Buying a Lifestyle

• Shared Living• Intimate Lifestyle• Ownership by Consensus


Is A Condominium Right for You?

Key Questions You Must Answer…D Y W h C i ?• Do You Want the Community?

Shared OwnershipRule Book C C & R ’sRule Book – C.C. & R.’sMajority Rule

• Does the Community Function Well?• Does the Community Function Well?Homeowner’s Association


Special Consumer Protection Laws

C lif i L R iCalifornia Law Requires…

• Unless Exempt Seller’s Disclosures• Unless Exempt, Seller s DisclosuresTransfer Disclosure Statement

• Plus 27 Additional Condo Specific DisclosuresPlus 27 Additional Condo Specific DisclosuresSeller’s Responsibility


Homeowner’s Association Disclosure

HOA i R i d l t id t i ifi HOA is Required only to provide certain specific information and only to certain people - Owners…

• Governing Documents Governing Documents • Pro-forma Budget• Reserve Study • Financial Statement• Assessment Policies

Ins rance Policies• Insurance Policies• Current amount fees & assessments• Special Assessments approvedSpecial Assessments approved• Seller’s delinquencies • Information about construction defects & repair plans


Homeowner’s Association Disclosure

S ll i R i d t P id BSeller is Required to Provide Buyer…• All Governing Documentation, PLUS • Most recent year’s approved meeting minutesMost recent year s approved meeting minutes• Most recent year’s association newsletters• Rules and Architectural guidelines• Violations of guidelines that impact purchase• Details on HOA’s insurance coverage• Most recent year’s Income/Expense Statement• Most recent year s Income/Expense Statement• Status of Litigation• Reserve Account study• Current year’s budget• Monthly fee & assessments

Status of owner’s account

The RayChel Realty Group• Status of owner’s account

Financial Issues to Question

• Is there litigation pending or anticipated?• What are the monthly dues?• What do the monthly dues cover?• Are there current or anticipated special

assessments?assessments?• Are the reserves adequate for the age and

condition?condition?• Are unit owner’s current on fees and assessments?


Occupancy Issues to Question

• Are there occupancy rental or pet restrictions?• Are there occupancy, rental or pet restrictions?• How many units are owner occupied?• What is the sale history of the unit and • What is the sale history of the unit and

complex? • How are parking spaces and storage facilities p g p g

allocated?• Are any units in foreclosure?• What is the policy for handling delinquency?• What are the architectural guidelines, if any?


HOA Board Issues to Question

• Is complex Self-Managed or Professionally Managed?

• What are the foreseeable plans for maintenance and rehab?I B d l i d f l ?• Is Board approval required for resale?

• How much liability insurance coverage• What is the deductible?


Condo Financing – New Challenges

A New and Different Lending Environment

Financing Condominiums is…• More Difficult• More Difficult• More Problematic• More Time Consuming• More Time Consuming


Condo Financing – New Rules

FNMA & FHA – Stricter Underwriting Rules• Is Complex Approved?Is Complex Approved?• Is HOA “Cert” letter prepared?• Are current HOA Doc’s Available?• Are current HOA Doc s Available?

Get Your Lender Involved Early!Get Your Lender Involved Early!


Financing a Condominium

Four Financial Keys for a Successful Closing

Get Your Mortgage Professional Involved Early• Direct Lender• Mortgage Broker• Mortgage Banker

Get Pre-ApprovedKnow Your Financing OptionsPlan for New Condo Approval Regulations


Get Your Mortgage Advisor Involved Early

Financing Solutions to Match your Buying NeedsDetermine What you Can Afford Down Payment and Closing CostsPrograms that Meet your Short & Long Term Goals

Work with Your Condo Specialist toFind the Right ComplexStructure Contract to Reflect Loan Program and its Approval RequirementsU C t t C ti i t P t t Y lfUse Contract Contingencies to Protect Yourself


Pre-Approval vs. Pre-Qualification

Get Pre-Approved, Not Pre-Qualified

• Pre-QualificationAn informal estimate of what you can afford

• Pre-ApprovalA loan commitment from a reputable lender


Mortgage Pre-Approval

A Pre-Approval Requires Verification of…• Income• Asset • Credit Score• Continuing Liabilities

A Pre-Approval Gives You...A Pre Approval Gives You...• Purchasing Power

A Pre-Approved Buyer is a CASH Buyer

• The Upper Limit of What You Can Afford


What is a Genuine Pre-Approval?

A Formal, Firm Commitment to Loan…Employment Income Assets Debt and Credit • Employment, Income, Assets, Debt and Credit History and Score Substantiated

• Availability of Down Payment and Closing Costs Availability of Down Payment and Closing Costs Verified


Why Do You Need a Genuine Pre-Approval?

A Loan Pre-Approval• Demonstrates your credit worthiness• Determines your purchasing power• Determines your financing options

You won’t waste your time looking at homes you cannot afford.

Use the the financing contingency period to approve the complex.


approve the complex.

Two Types of Loans Today

• FHA G t I dGovernment Insured

• Conventional N t G t I dNot Government Insured


Conventional Financing

• “In-the-box”D P• Down Payment

5% down with loan amounts below $417,00010% down with loan amount $417 001 $729 75010% down with loan amount $417,001-$729,750Higher mortgage insurance than FHA

• Ideally Put 20% Down• Ideally Put 20% DownBest interest ratesNo Mortgage InsuranceNo Mortgage Insurance

• Condo Requirements Set by Fannie MaeNot by the lender


y

FHA Financing

• Storybook LoanL t i t dit d dit hi tLess stringent on credit scores and credit historyMore flexible on work historyNo reserves requiredNo reserves required

• Down Payment as Little as 3.5%• Mortgage Insurance Cheaper than • Mortgage Insurance Cheaper than

Conventional• Condo Requirements Set by HUD• Condo Requirements Set by HUD


Complex Approval

Condominium Complex Approval is Determined by the Financing You Chooseby the Financing You Choose


Quickest & Easiest Way to Get Approval

Choose a Complex on theF i M A d C d Li • Fannie Mae Approved Condo List

Conventional Financing

FHA/HUD A d C d Li t • FHA/HUD Approved Condo List FHA Financing


Not on the Approved List?

• Complex Requires a “Spot Approval”T k M TiTakes More TimeAdds Additional Steps

• Important to Get Your Lender Involved Early • Important to Get Your Lender Involved Early in this Process


New Rules for Approvals

• Effective December 7, 2009C i l Fi i E i h FHA• Conventional Financing Easier than FHA

Automated System Determines Eligibility

FHA M L b i P• FHA More Laborious ProcessReview and Approval by Underwriter Determines EligibilityEligibility


Documentation Needed for Approval

• Condo Questionnaire/HOA CertificationAll C d L l D• All Condo Legal Documents

• All CC&R’s• Financial Statements and Budget


Requirements for Approval

• Complex Must Have 2 Units or MoreM 25% f T l Fl C i l• Max 25% of Total Floor Commercial

• Max10% of Units Owned by One Investor• Max15% of Units Delinquent in Fees• FHA: Minimum 50% Sold • Conventional: Minimum 70% Sold• Walls-in Insurance Required



• 50% Owner Occupied for Existing Condos70% O O i d f N C i• 70% Owner Occupied for New Construction

• No Litigation• Reserve Study

No more than 12 months old M t h j t i 60% f d dMust show project is 60% funded



FHA Only RequirementsC l ith 3 l it th 1 it Complexes with 3 or less units, no more than 1 unit can be encumbered by FHA financingComplexes with 4 or more units, no more than 30% Complexes with 4 or more units, no more than 30% of the total units encumbered by FHA financing


Lengthy Approvals Won’t Last Forever

• New Regulations Give Lenders Power to Approve ComplexesApprove Complexes

• First 5 by Each Lender Must go to HUD or FHA for Approvalfor Approval

Can take up to 8 weeks

• After First 5 Should Move Much Quicker• After First 5, Should Move Much Quicker


My Job As a Mortgage Professional

• Package the Transaction to DemonstrateCredit worthiness of the buyerValue of the unitFinancial health of the association

Fi i g S l ti t M t h B i g N d• Financing Solutions to Match Buying NeedsDown Payment and Closing CostsPrograms that Meet your Short & Long Term GoalsPrograms that Meet your Short & Long Term Goals


My Job As a Mortgage Professional

• Structure an Affordable Monthly Mortgage PaymentPayment

• Find Most Competitive Interest RatesC P d L d• Compare Programs and Lenders

• Minimize Out of Pocket Costs


Knowledge is the Key

• Don’t Use the Media as Your Only Resource• Don’t Fall into the Trap of Online LendersDon t Fall into the Trap of Online Lenders• Know All Your Options• Choose a Mortgage Professional you trust have • Choose a Mortgage Professional you trust, have

confidence in, and feel comfortable with

The opportunity is out there, you just have to take advantage of it!have to take advantage of it!


The Opportunity is Out There

• You Have the Perfect StormInterest rates are at historic lowsInterest rates are at historic lowsRealistic home prices

Find a Loan First, Then Find a Home


How’s the Condo Market?

A three months summary of market activity for condonimiums and townhouses in San Mateo


Condo Sold Summary – San Mateo

Sold Summary

# Sold After Highest Lowest

# Sold Price Reduction Sold Price Sold Price# Sold Price Reduction Sold Price Sold Price

3+ BR 5 2 $1,537,000 $394,000

2 BR 38 14 $700 000 $232 0002 BR 38 14 $700,000 $232,000

1 BR 16 5 $545,000 $260,000

Studio 2 2 $237,000 $230,000

Total 61


Condo Days on Market – San Mateo

Days on Market Comparison Summaryy p y

Note: OLP = Original List Price

# Sold in 30 Days or Less # Sold in 31 Days or More# Sold in 30 Days or Less # Sold in 31 Days or More

# Sold <OLP @OLP >OLP <OLP @OLP >OLP

3 BR 5 0 0 0 4 1 03+ BR 5 0 0 0 4 1 0

2 BR 38 10 4 3 20 0 1

1 BR 16 3 0 1 11 0 1

Studio 2 2 0 0 0 0 0


Condo Active Listings – San Mateo

Active for Sale ListingsNote: PR = Price Reduction

# Active Listings On the Market 30 Days or Less

# Active Listings On the Market 31 Days or More# Active

Listings PR No PR PR No PR Highest Price Lowest Price

3+ BR 17 1 9 7 $939,000 $300,000

2 BR 60 1 17 19 23 $1,698,000 $311,000

1 BR 30 2 5 13 10 $489 900 $179 0001 BR 30 2 5 13 10 $489,900 $179,000

Studio 0


The Best Experience Possible

• Buying a Condominium is a…C lComplexComplicatedLegal Mine FieldLegal Mine Field

• Utilize Professional ExpertiseHOA Documentation Review SpecialistHOA Documentation Review SpecialistCondominium Experts


Professionals Help You Succeed

W k i h C d i i E• Work with Condominium ExpertTransaction ExpertiseMarket Kno ledgeMarket Knowledge

• Expert – How can you tell?Informs and EducatesInforms and Educates

• Your AdvocatePuts Your Interests FirstPuts Your Interests FirstCounsels, Advises & Negotiates on Your Behalf


How to Protect Yourself

S L k Li d L k A i !Stop, Look, Listen and Look Again!

• Include Contract ContingenciesInclude Contract Contingencies• Conduct Investigation• Review DisclosuresReview Disclosures• Evaluate HOA Documentation


Technology Tools


www.SanMateoMortgageBlog.com


Ask a Financing Question

http://SanMateoMortgageBlog.com/ask-a-question/


www.LivingWellinSanMateo.com


Home Search

http://LivingWellinSanMateo.com/home-search/


Ask a Real Esate Question

http://LivingWellinSanMateo.com/San-Mateo-Real-Estate-Question/


www.PropertyValuesNow.com


Our Next Webinar

12 Costly Home Buying Mistakes Even Smart People MakeEven Smart People Make

Saturday, November 7th 10amSaturday, November 7 10amTo Register Visit:

http://budurl.com/HomeBuyingMistakesThe RayChel Realty Group

http://budurl.com/HomeBuyingMistakes

Webinar: Trustee Sales

Trustee Sales – The Most Dangerous & Most Profitable Dangerous & Most Profitable

Way to Buy Real Estate

Tuesday, November 17th 6pmTuesday, November 17 6pmTo Register Visit:

http://budurl.com/TrusteeSaleThe RayChel Realty Group

http://budurl.com/TrusteeSale

All About Getting Your Money’s Worth

• For the Right PersonA h Ri h Ti• At the Right Time

• The Right Condominium Unit…

Can Be Right For You!Can Be Right For You!


Free Conversation

Raymond Chela Rebecca Chris Williamson Raymond Stoklosa

Managing Broker/Owner

Chela StoklosaAgent/Owner

Rebecca Williamson

Agent

Chris WilliamsonMortgage Advisor

Phone: (650) 655-2500i f @R Ch lR lt G

Phone: (650) 520-0915Ch i @Ch i EWilli [email protected]

[email protected]

www.SanMateoMortgageBlog.com


Date post:	09-May-2015
Category:	Real Estate
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