Author Topic: Buying a short-sale condo -- any thoughts?  (Read 1296 times)


  • 5 O'Clock Shadow
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  • Location: Flyover Country
Buying a short-sale condo -- any thoughts?
« on: July 19, 2017, 10:21:08 AM »
Fellow Mustachians:

I made an offer on a short-sale condo for more than $50K below the last sale price two years ago.  The condo hits all of my must-haves -- two bed, two bath, very low HOA and taxes, separate living/dining/kitchen, recent renovation, and a place to store my bike.  It is also on the commuter rail line, so even though it is farther from the office, it would cut 20 minutes off of my commute.

To my honest surprise, the offer was accepted.  I am now in the contract review stage, and one big red flag has come up that make me wonder if I should walk away.  Specifically, the Condo Association has only $4,000 in reserves.  This is on an 8 unit building, which strikes me as deeply, absurdly low.  While I obviously like the low HOA fee, I would very strongly prefer those reserves to be at least 5 or 6 times that, and I worry about my ability to convince my fellow condo owners to up the HOA for a year or two to build up reserves.

I'm also annoyed that I am unable to find a lender that is willing to lend at published rates.  I have no debt, excellent credit (a smidge under 800 since the student loans were paid off), a 20% down payment, and a job that pays very well.  If I am not getting the advertised rate, then who the hell is?

Anyway, thoughts appreciated, as always.  Thanks folks.


  • Handlebar Stache
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  • Age: 26
Re: Buying a short-sale condo -- any thoughts?
« Reply #1 on: July 19, 2017, 12:12:40 PM »
$50k under asking is nice. I understand your concerns with a small HOA though and low reserves. It'd make me uncomfortable living there. Also, you should find out if there are any HOA liens on the property. If no one was paying them for 2 years, that could be a big bill (maybe that's why the HOA reserves are so low??)

What is your market like? Could you potentially flip or wholesale the property to turn a profit?


  • 5 O'Clock Shadow
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  • Posts: 16
Re: Buying a short-sale condo -- any thoughts?
« Reply #2 on: July 26, 2017, 03:47:51 PM »
It is my understanding that condos are riskier for banks, so they charge an 1/8% more on the interest rate.


  • Pencil Stache
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Re: Buying a short-sale condo -- any thoughts?
« Reply #3 on: August 04, 2017, 08:34:27 PM »
Is there a good reason why they took 50K less than last sale price? Has the property been on sale for a long time? Maybe it has something to do with the low cash in HOA reserve? Is there an upcoming expensive work than need to be done? I would talk to the other owner next door, and see what is going on.

Also mind sharing the price? 50K less for 200K condo is a lot more significant than 50K less for 1M property.