Tag Archives: condos

The Difference Between An Apartment And A Condo

Condos and apartments in Blacksburg VA

This is NOT in Blacksburg

 

I was asked this week, while showing condos, “what’s the difference between an apartment and a condo?“.

Well, not much.

An apartment and a condo are really the same thing, with one difference – a condo is owned by an individual, and typically has a homeowners’ association that governs ownership of the entire complex, whereas an apartment is rented and not owned by any one individual. In the Blacksburg area, for instance, units at University Place are condos because they are owned by individual owners and for sale, while units at Terrace View are apartments because they’re only for rent.  Of course, condos can also be single-family, or townhouses, if the ownership structure is set up as a condominium.

Confused yet?

Will You Be A Legend?

The Legends of Blacksburg condos

 

High-end condos are coming back into the Blacksburg real estate market – is this a good thing?

Marketed by the fine folks at Coldwell Banker Townside, The Legends of Blacksburg is back.  Originally touted as game day condos, the project was scrapped after a host of issues, and it sat dead in the water.  Now it’s back up, and while the developer is touting these as year-round residences – and they could be – the tone of the advertising still says “game-day condos”.

I don’t have a problem with that, I’m just calling it as I see it.

Is there a market for these?  There was when they were first presented, and people put down significant reservation fees (which were refunded when the project fell apart).  Condos of all shapes and sizes have since struggled, and I wonder if this project will succeed this time around.  The builder has an excellent reputation; I just wonder what the market will bear …

Are you in the market for a game-day an upscale condo in Blacksburg? Is this a project you’d invest in?

Are Blacksburg Condos Certified by the FHA?

In an ongoing circus of head-scratching, it’s being reported across the state that many condo complexes are losing their Federal Housing Administration certification.  This, on top of the already difficult lending environment applied to condos.

Which is important in Blacksburg because we have a lot of condominium complexes, and when a complex is certified it means the FHA will loans to buyers in that complex.  However, if a complex isn’t certified then it makes it difficult near impossible to get a mortgage loan in the conventional mortgage market.

Essentially what happened was that condominiums have had some of the highest foreclosure rates nationwide, and when the FHA realized this, they decertified all condo complexes, requiring each to be recertified.  You can search Blacksburg condominiums using the HUD Tool, which shows that 15 complexes in the 24060 zip code have been recertified, but thirteen of those fifteen have had their certification expired, and only one has had their certification extended.  Yes, I’ve added emphasis to the previous statement.

Why does any of this matter?  Without FHA certification, you cannot purchase a Blacksburg condo using a conventional (i.e ANY) mortgage loan that will be sold on the secondary market.  It might be possible for a bank to take an in-house loan, called a shelf loan, but consider it highly unlikely.  As a buyer of a condo, do you want to take the time to find the right condo, apply for a loan and get six weeks through the process, only to find out days before closing that you can’t actually purchase the unit?  As a seller, do you want to accept an offer, take the condo off the market for several weeks and then find out the same thing?  Neither is a good situation, and your agent and lender need to know how to determine whether the complex you’re trying to get into is currently certified with the FHA.  And, compounding things further, the owner-occupancy rate must meet the lender’s guidelines, which means it’s even more important to consider using a local lender when purchasing a Blacksburg condo – they know the complexes and the market nuances, and armed with that knowledge can go to bat for you on your behalf when it comes to these ratios.

Long and short?  There are a lot of Blacksburg condominium complexes not currently certified with the FHA, and they’ll need to do so if they’re going to sell any more units in their complex.  As a buyer or seller, ask your agent whether your complex is in compliance.  You can see more, including requirements for FHA Approval of a Complex, here.

Valuing a Property With No Recent Sales Statistics

An agent in our office recently asked me how I would value a Blacksburg condo that’s in a complex called Clay Court.  Clay Court is in a nice, downtown location of Blacksburg, but it’s tough to value when we haven’t seen any public sales since 2007.  I’ve written about Blacksburg condos in the last year, but this complex is a little different.  It’s not a building with a lot of students (hardly any, in fact), the starting price points are above the median sales price of the market in Blacksburg, and there are relatively few (~ 30) units in the entire place.  It’s not surprising that we’ve seen very few sales since it was built, but it’s still tough to assign a value.

When doing a valuation on a property, it’s like taking apples and oranges and trying to make them all apples (or oranges – take your pick).  Property A, our subject property, might have a heat pump, a new roof and hardwood floors, while Properties B & C (our comparable properties) might have electric baseboard heat and carpet.  What I want to do is determine, with relative certainty, how much value to add or subtract from Properties B & C in order to get them as close in features to Property A as possible.  If Property B is superior to Property A in a particular feature I subtract value from Property B’s sold price, and if Property C is inferior in a feature to Property A then I add value to Property C’s sold price.  There’s no standard multiplier for any one feature, and it’s an inexact “science”, but along with a number of other factors and projections it can help me ascertain (I just wanted to use that word) a competitive sales price for a property.

But honestly, I had no good idea how to value this one.  I suggested a blindfold and a dart board, but that seemed a little reckless – so I called Leslie Frantz.  As you might recall, Leslie sat down and discussed a changing marketplace, and she and I have spent a lot of time valuing properties together.  She’s been a trainer of sorts for me on this kind of thing, and so we asked her how she’d look at Clay Court given the fact that there’s only one property on the market there, and no sales in over two years.

Leslie said that in a situation like this, with very few comparable sales, as an appraiser she’d have to look at similar buildings.  In this case, Kent Square is a block away and also has condos for sale, but no recent sales.  If that’s the case – if a property just doesn’t have any sales to compare it to – her suggestion was to look at the active listings and see what they’re listed for, and how long they’ve been on the market because that’s the competition.  It’s not the best solution in the world since we’d love to have recent sales on which to base the adjustments, but in a case like this it’s all we had.

My thanks to Leslie for the help.  If you’d like to discuss valuations in more depth, or have one done on your home, email me and let’s talk.  And thanks to Bogdan Suditu for the photo.

Condos in Blacksburg A Mixed Bag

As reported in The Roanoke Times this weekend:2712510857_1b691b4e72

“The town of Blacksburg saw 30 condos sold during the first nine months of 2009, down from 49 during the same period of 2008, a reduction of 39 percent, according to figures real estate agent Jeremy Hart pulled from the Multiple Listing Service, a real estate database.

Hart said he would be cautious about recommending either of the stalled projects to clients.

‘There’s an oversupply [of condominiums in Blacksburg], financing is tough to get, and people are more carefully watching their money,’ Hart said.”

You can read the full article here.

I wrote about this last week, and talked about this particular issue of game day condos in Blacksburg back in January 2008.  And I hold firm – until financing guidelines for condominiums loosen up, and consumer confidence – and spending – increases, we’ll continue to see condos in Blacksburg sit on the market.  You just can’t manufacture buyers because you think they’re big fans, or think that because they have money they’ll spend it.

Buyers – if you want to purchase a condo in Blacksburg, for ANY purpose (to live in, to stay in part-time, or to invest in the student market), and you want to get conventional (15 or 30-year fixed) financing, you’ll need to:

And Sellers, if you have a Blacksburg condominium you want to sell, I’d suggest weighing the balance between having to sell and covering your mortgage payment and HOA fees with the rental market.  Swift sales in such a tumultuous financing environment are not going to be happening anytime soon, so if you don’t HAVE to sell, consider speaking with a qualified property manager – contact me for recommendations – until these products begin selling again, and expect that that time frame might be as long as 24 months away … or more.

Photo from Sean Dreilinger

Parents – Need Last Minute Housing For Students?

Desk Space
Virginia Tech parents, are you in a bind for housing this semester?  Tired of paying rent, and would like to move your child into a place that actually EARNS you money every year?

Whether your student is living on campus or off, most housing options have been decided at this point.  However, there are some folks out there that still need housing in the Blacksburg area immediately, or are just fed up with the rental options.  There ARE some options available, but we need to act quickly.

If you need:

  • a one or two bedroom place that's vacant and ready to go,
  • low HOA dues with no exterior maintenance so your child can study :) ,
  • a place close to public transportation,

then I've got some ideas

If you want:

we should talk

We need to act quickly though – contact me and we can get started!

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