Wednesday, August 26, 2009

One more thing to add to my real estate knowledge

Because of my long and exhaustive search for a condo in my city, I have now been able to short list a few buildings that I like. Now if a listing pop up in those buildings, I know if I will like it or not based on the unit numbering. Like this one building, a listing came up for unit 220. From the number I know it's south facing, and a good layout. I called my agent the day after it came onto the market. We arranged to see it the next day. As we were on our way to see it when they received an offer.

Disappointing. But what can you do. Last night I got a call from my agent. The unit is back on the market. Happy Day! Right?

Not quite. The reason it's back on the market is because the building is not on the CMHC approved list. CMHC, is the Canadian Mortgage and Housing Corporation. It provides mortgage loan insurance to lenders with home buyers with a down payment of less than 20%. I guess this buyer had less than 20% down payment and couldn't get the mortgage because CMHC will not insure the lender for this building.

Alarm bells! What's wrong with the building? I did some searches and couldn't find a list of reasons why CMHC would not approve a building. Except two cases where the buildings has age restrictions (one is 18+, one is 50+), which according to the owners were not CMHC approved because it is against their mandate of helping families achieve home ownership. This building I'm interested in has an age restriction as well. If this is why, it's not as bad as something like "this building is totally not up to code". However, it will still affect resale value because you'd be cutting out a huge chunk of the market (e.g. people with children, people with less than 20% down payment etc.).

My agent is going to try to find out more information. So I guess all I can do is wait. Scary thing is if I had made the offer first on this place, I would never have known because I plan to put down 20%.