Advice for Buying Foreclosed Condos in Chicago
Many Chicago homebuyers are finding deals in foreclosed condos and condos in short sale situations. Before putting in an offer, there are certain things you should learn about any distressed property you want to buy. Here’s what foreclosure specialists suggest. . .
What’s the state of the condo association?
This is an important question to ask because a number of banks won’t approve mortgages for condos in a building where more than 15% of the owners are behind in paying their assessments. Usually, you can request for this information from the association. In some cases, the sellers may provide it for you along with the property details. The more stable a condo association is, the more attractive it is to buyers (who will be governed by the association and partly responsible for its success) and to lenders (who will be financing the home loan).
What’s the state of the assessments for the condo unit?
You will want to know if there are any back assessments owed on the condo unit because in Illinois the buyer can be held liable for up to 6 months of unpaid association dues on a foreclosed property. Legally, this information should be included on the property’s listing sheet, so take note! Buyers can sometimes negotiate with the bank to waive back assessments owed on the foreclosed condo they want to purchase.
Is the condo building considered “financeable” by your lender?
Mortgage brokers may have a list of Chicago condo buildings that they have deemed “unfinanceable” for various reasons. It is a good idea to find out upfront from your chosen lender which buildings these are so you don’t waste time looking at foreclosure condos in those properties.
What’s the owner/renter ratio?
You may have trouble getting financing on a foreclosure in a condo building with a high percentage of units being rented out. Owner occupation is considered lower risk and is more desirable to lenders than buildings with lots of renters. Again, this information should be available to you from the selling bank or the building’s condo association.
What’s the condition of the condo?
Foreclosure condos are sold in “as is” condition so you want to make sure you know what you’re buying before putting in an offer. Unlike traditional sales, the bank will not give concessions or provide credits to make repairs or fix up the unit. For that reason you should have a home inspector and/or contractor check out the condo and estimate how much extra you can expect to spend to get the place in good shape. Remember, foreclosures and short sales are oftentimes not in the best condition and may need a lot of work (read: time and money) to be livable again.