Condominium Sales – What Buyers and Listing Agents Must Know to Be Successful

victor butschek
By Victor Butschek


Condominium sales have become very prominent over the years in the Phoenix area, but they present a set of circumstances that are unique. Are you “up” on the current requirements?

Basic Facts

  • A condominium, by definition, gives ownership of the interior space of the dwelling….described as “from paint to paint.” If you stand in a room in a condo, the owner owns the space from the interior paint on the walls and ceilings. What’s in the walls, the roof, the exterior of the building and the land belongs to the condo association; the owner has a pro-rata share of that.
  • Condominiums carry a master insurance policy, so the buyer typically needs to purchase a special policy to cover the interior to work in conjunction with the master policy.
  • The condo association works with a management group who oversees all items involved with maintenance of the property including transfer fees, monthly fees paid by the residents, any repairs or maintenance needed and all financial aspects of the association including budgeting and compliance reporting.

Types of Condominiums

Condo construction is normally designed from the ground up; however, there are also many “condo conversions” in the market. In the case of conversions, an enterprising developer hires an attorney to create a condo association and converts a property, such as an apartment complex or even a motel, into condominiums.

Condominium Associations

Not all condo associations are stable. Some associations have poor management and may actually be insolvent or nearly so and others may have a reputation for higher than normal losses for investors. Association instability is more common in Arizona compared to some other states, so condo sales here are looked at pretty closely. There is actually a list of “ineligible” properties that most lenders check.

A Lender and Sales Agent Checklist

Lenders have had some negative experiences with condominiums in general overtime and as a result developed a “check list” to determine if a condo meets the lenders specific qualifications. As a licensed real estate broker and a licensed mortgage loan officer, I have experienced both roles as they relate to condo sales. This is why I suggest all agents create a check list of their own before entering a condo transaction that includes the following:

Listing Agents

Is the property eligible for financing? This is determined by a “condo questionnaire” from the lender. Some are not eligible for FHA, some are not eligible for any financing at all. So before you enter the listing into MLS and check the boxes for financing available, get the questionnaire completed and checked by a knowledgeable lender. The important items to review are:

  • The percentage of units owned by investors
  • The percentage of occupanc
  • The budget and budget reserves
  • Whether the property is a true condo or a conversion
  • The master insurance policy details

Some investors may have other questions as well, but all investors will address the above five, at minimum. Fees are also a major category to include as part of the checklist.  What are the fees involved in the condo? This includes the monthly fees, transfer fees, any special assessment fees and the fees charged to complete the questionnaire. Some of these fees are substantial and should be covered in the original offer. Completing the questionnaire to begin with may well involve a fee paid up front – who is paying that fee?

Buyers Agents

Ensure the condo questionnaire and fees are completed as part of the inspection period if these items are not available up front. If the property is not eligible for financing and your buyer would like to pay cash as an alternative, find out what the policy for this type of arrangement is from your Designated Broker.  Most properties involve an exit strategy.  When that cash buyer wants to sell the property and is only able to sell based on a cash arrangement, some interesting questions may come up for you and your brokerage that you will want to be prepared to answer.

These ideas are the basics for both listing agent and buyer’s agent. Starting a transaction that cannot be completed just creates stress and unneeded expenses for all parties.  Avoid potential problems by reviewing your company policies in advance and have a discussion with your Designated Broker about condo sales. Staying “up” on the policies before taking a listing or writing the contract on a sale will assist everyone involved.


Victor is a Mortgage Loan Officer and is licensed in 41 states. He works for The Money Store. He can be reached at (602) 722-6443 or