Cohousing-L Mailing List: Re: Re: financial snooping

[Sharon Villines (sharon]

On May 1, 2006, at 9:16 AM, Mac Thomson wrote:

> We moved in in 2000 so we went through all of this about 7 or 8 years 
> ago so my memory may be a bit weak.  We got our construction loan 
> based on our project being completely presold to qualified buyers.  
> The bank that gave us our construction loan required proof of 
> prequalification from all of us future buyers.

We did the same thing and I think it is the best you can do. But you 
need to be sure the bank knows this is serious. Some mortgage brokers 
will give out papers on very little information.

> We also required cash payments from members as we approached 
> construction, which I think helped keep things "real".  Something like 
> $6000 when they became a member, 10% of eventual purchase 6 months 
> before construction, and maybe even 20% as we approached construction.

Doing this, I think depends on your circumstances and how assured you 
are of a construction date. Not everyone who is qualified to hold a 
mortgage has $6,000 sitting around that they can just hand you for some 
unspecified period of time. Most people, particularly the prized 
families, have all their money in their home and can't get it out until 
they are ready to sell so they can move into cohousing.

We had (as I remember) a $500 non-refundable membership fee that also 
secured our place in the selection queue, and then each unit put down 
approx 5% with the signing of contracts that were submitted to get the 
construction loan. That money was refundable and some people did back 
out but we were able to sell to other buyers. It did not affect our 
construction loan -- they could hardly take the money back when the 
hole was already dug!

But when the large sums were deposited, we had an approx construction 
date. It was delayed a few times but it wasn't like "Give us your 
$10,000 and we'll let you know when we have a house for you." We were 
also working with a developer who had cash and a reputation with the 
bank so the upfront cash requirements were less important than the 
signed contracts.

Sharon
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Sharon Villines
Takoma Village Cohousing, Washington DC
http://www.takomavillage.org