Re: "arm's length"
From: Sharon Villines (
Date: Fri, 30 Jan 2009 09:48:15 -0800 (PST)

On Jan 30, 2009, at 10:46 AM, Janet Kelly wrote:

 our project is legally structured as a condominium, and banks don't
generally give conventional fixed rate mortgages to the first buyers in a
new condominium, since they can't resell them on the secondary market.

I'm not sure this is true in all markets. In the east and probably in all large urban markets, condominiums are common and not regarded as risky investments.

I remember living in upstate NY in the 1970s where condominiums were very odd ducks and no one could get financing at all. The developer ended up financing them. It may still this way in markets where single family homes or rental apartments are the standard.

We made an arrangement with the bank holding our
construction loan

Part of the bargain when we got our construction loan was that that bank would also do the mortgages.

The bank that gives the construction loan is the one who both knows most about the project AND has previously determined that it is viable. If they can also be given assurances that buyers will also mortgage through them, that also makes the deal more profitable for them.

You can't require people to finance through one bank but you can give assurances to the bank that they will be promoted to buyers as first choice. You can also make an effort to provide buyers with help that will make financing at this bank easier. Our bank, for example, came to at least one meeting to do a group information session and designated one person to handle all our loans. (They were actually very inefficient but the concept was good. Otherwise it could have been worse.)

Our bank sold all our loans within a year and we were all first buyers in a new condominium.

The second problem was with appraisers, who were completely flumoxed (sp. ?)
by the cohousing concept. {snip] Once you have convinced one
appraiser, you can use his or her name in talking to the next set of

Again, using the same bank helps here as well. The bank will want to approve the appraiser or will have preferred appraisers. If one appraiser can do all the units, it is easier. Even if you are a lot development model and will be financing and building at different times, try to deal with the bank and the appraiser as a group.

Don't mention cohousing. The bank could care less and thus the appraiser will care less. Use words they understand.

"Condominium with extensive clubhouse and party facilities. Includes children's playroom and outdoor playground, free laundry facilities, woodworking shop, television room, ping pong, and other amenities."

Read the ads in the newspaper to find the buzz words in your area. Almost all condominiums are adding common facilities -- party rooms, sun decks, exercise rooms, offices, etc. -- and they do increase price and speed sales even though they are much smaller than in cohousing in relation to the number of people in residence.

I haven't seen any with playgrounds and certainly not playrooms, but the bank should be impressed with this because it increases the number of potential buyers and speed of resale.

Sharon Villines
Takoma Village Cohousing,Washington DC

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