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RE Auction near me
Old 04-19-2008, 04:34 PM   #1
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RE Auction near me

A developer is selling out of a nearby condo project via auction. 20 units, half of which will be absolute. This wasa conversion rather than new construction. Any gotchas specific to conversions?
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Old 04-19-2008, 04:54 PM   #2
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I am in the mist of a conversion now. Varies state to state, but in NH the town does not need to approve the conversion. So it's simply a trip to the registry after roughly 6k in legal fees.

Catch is getting separate tax bills ... now the town needs to play fair. And they've been known to hold-out until the owners ask politely (via zoning board blessings). Nothing keeps the owner from selling without the towns blessing (problems - tax splits - are left to the condo association).

Not sure how other staes work.

As a side note, absolute auctions are alot of fun! Good to attend (even if only for grins).
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Old 04-19-2008, 07:18 PM   #3
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Conversion is already done; thes are individual units. This is a situation where the developer has sold 30 of 50 units, but probably is still into the bank for some amount of money. The conversion was done and on the market in the summer of 2007, so the loan is probably at or beyond maturity and the bank probably is secured at a 25% or so LTV and would be only too happy to foreclose. Stuff's not moving, so it is time to hold an auction, take the bank out, and chalk one up to being at the right place at the wrong time. I'd be hapy to slurp up some of the blood running in the street if there aren't too many fellow slurpers.

Incidentally, tryan, if you want a window into what is going on in the wonderful world of condo coversion and construction financing, watch what happens with CORS. Management is very plain-spoken and tells it like it is, so you get a real good idea of exactly how much pressure the developers are under.
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Old 04-20-2008, 08:04 AM   #4
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Be careful of the % of non occupied owners. I know that many lenders will not lend for projects that have too many renters. I am not sure of the current rules, but I imagine they are getting tighter

I would be worried that it would be hard to resell if prospective buyers could not get a loan from a standard mortgage company.
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Old 04-20-2008, 08:15 PM   #5
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we've had a number of conversions here convert back. not enough sold and so now the people who bought are stuck owning units in what they thought would be a condo building but is now essentially a rental building. also if not enough units sell and one rental guy (like the original developer, for instance) holds the bulk, that person controls the association. your condo building could be turn into short term rentals, or an hourly motel for all ya know.

concerning construction, i'd certainly assure firewall compliance between units, basement to roof.
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