Ten Things to Know Before Buying or Selling a San Francisco Condominium

Buying or selling San Francisco condiminium

In today’s market it is critical to know the answers to the following questions when attempting to buy or sell a condominium. Knowing the answers will help determine the financing available for the property.

  1. Is the project a live-work (a loft for example) property with a deed restriction? Some lenders will not lend on properties with certain types of deed restrictions.
  2. Does any single entity own more than one unit in a project that has fewer than 20 units? Lenders typically won’t lend on a property in buildings where one person owns several units.
  3. Does any single entity own more than 10% of a project with more than 20 units? This creates the same problem as in question 2.
  4. Is the project currently involved in any litigation? Lenders typically won’t lend on properties with litigation.
  5. Are there any current special assessments? If the HOA is going to charge an assessment for, let’s say, a new roof, the lender may have an issue with it.
  6. Concerning Home Owner Association Dues (HOA dues): Are more than 15% of the dues more than 30 days delinquent? Again, this is a typical reason for lenders to deny a loan.
  7. Are there plans to raise the HOA dues? If the dues are going up, this will affect how much the lender will allow you to borrow.
  8. What is the percentage of owner occupancy in the building? If too many units are rented, borrowing will be a problem.
  9. What is the percentage of square footage that is commercial space (ground floor commercial: barber shop, convenience store, coffee shop, restaurant etc)? If this percentage is 20% or more, you may find it hard to get a loan.
  10. Is this condominium in a building that was recently converted to condos? If so, you’ll need to check on whether the HOA is FHA and/or FNMA (Fannie Mae) approved, and in general whether the conversion was done properly. If it wasn’t, lenders may be reluctant, especially on down payments under 20%.