Interested in purchasing a condominium?
The Lawhead Team would like to share a great article from Coldwell Banker about buying in a condominium complex. Here are 5 questions for condominium buyers.
The condominium market is heating up. According to the National Association of REALTORS®, condo sales across the country have climbed steadily since 2011. In the West, sales in June 2014 were up 7.1 percent year over year. Prices are up over last year, too, by 3.2 percent nationwide – and as much as 7.1 percent in the Midwest and 10.2 percent in the West. Here’s what you need to know before you buy a condo:
Pros:
- Affordable homeownership
- Access to amenities (e.g., swimming pool, gym)
- Low maintenance
Cons:
- Slower appreciation and more days on market
- Lack of privacy
- Monthly association fees and assessments
Ask the right questions
Finding the best condo match means doing some homework and getting good information.
1. What are the rules? All condo associations have them. Are they too stringent to live with comfortably? Or are they so relaxed that the community risks becoming run down?
2. What is covered? The association collects fees and carries an insurance policy. Does the association pay for a leaky roof or does the owner? Who is responsible to pay for repairs if a pipe bursts in the wall between units? Who covers the cost of building code upgrades? What additional insurance is necessary beyond the association’s policy?
3. What percentage of residents are renters? Renters might not give the same care to a property that the owner would, and a high percentage of renters in a condominium community might limit the types of loans available. On the other hand, an investor will want to know if renting is allowed. If so, does the owner find the tenants or the will the association do it?
4. Is the association on solid financial ground? The older the condominium, the more money the association should have set aside for maintenance and repairs. Read the association meeting minutes to find out if there are outstanding maintenance issues that could exceed cash reserves. How many owners are delinquent on fees? Does the association have any liens against it? Lawsuits pending?
5. Who’s the boss? Is there a professional management company or do the owners manage the condominium themselves?
What to tell clients: Condo ownership can offer advantages, but it can be a tricky transaction. Encourage clients to have a real-estate lawyer review the association’s bylaws and to speak with a Mortgage Advisor who understands the intricacies of loan requirements for the various types of condominium communities.
Read entire article about buying a condominium here.
Sources:
“5 tips for condo buyers,” by Adam Verwymeren, FoxNews.com “Condo shopping? Ask these 7 questions before you buy,” by SmartMoney “Pros & cons of buying a condo – is it worth it?,” by Heather Levin