Have You Outgrown Your Starter Home?For many Americans, buying their first home is their first taste of achieving part of the American Dream. There is a sense of pride that comes along with owning
10 Tips For Buying Your First Condo From Janet And Thomas
Buying a condo, which is short for condominium, is not the same as buying a single-family home. There are different considerations that need to be taken into account prior to purchasing! In many real estate markets, purchasing a condo can come at a much lower price than purchasing a single family residence.
A condo is typically a shared piece of property with individual owners of each “unit” or condo. In most cases, condominiums offer services such as, but not limited to, fitness centers, tennis courts, and pools. Many people purchase condos due to less maintenance and also the lifestyle of living in a condominium community.
When buying a condo, it’s important you know that every condominium community is different. It’s crucial to know each community will have their own community rules, association fees, management company, and amenities. Depending on the community, there may only be a handful of condo communities but there also could be hundreds, so do your research!
What tips do you need to know when buying your first condo? Here are 10 tips to use when buying your first condo!
Determine Whether a Condo is the “Right Fit”
It’s very important to ask yourself before buying your first condo, “Should I Buy a Condo?” As mentioned above, owning a condo is much different than owning a single family residence. Weighing the pro’s and con’s is a must!
One major difference between a condo and a single family residence is the proximity to your neighbors. It’s very possible you may have multiple neighbors condos attached to yours instead of your own, free-standing residence. Can you envision yourself living that close to your neighbors?
Another important consideration in determining whether a condo is the “right fit” or not, relates to the maintenance that is usually included in the association fees. If you enjoy cutting the grass and planting your own flowers, than likely a condo is not going to be the right fit. Most condo communities include the lawn maintenance, snow removal (if applicable), and exterior maintenance.
Hire a Real Estate Agent Who Has Experience Selling Condos
Selling a condo is much different than selling a single family, multi family, or vacant land! The purchase contract for a condo is not the same as it is for other types of residences. There are different contingencies than the common contingencies that are in a residential purchase and sale contract.
One main difference when purchasing a condo is that most communities will require a contract to be signed in addition to the typical sales contract prior to closing. The contract that a community will make you sign usually will state that you understand and agree to the association rules and regulations.
Due to these differences, it’s important you work with a real estate agent who has experience selling condos! A real estate agent who has experience selling condos, will know how to guide you through the process and ensure important documents are not overlooked.
Financing of a condo is not the same as a single family residence. Just like purchasing a single family home it’s critical to get pre-approved prior to looking at condos as well as determining whether it is the “right fit.” Obtaining financing can be tricky when it comes to purchasing a condo, as many lenders and loan products do not allow condo purchases.
Condos are very often purchased with cash due to the regulations of lenders and programs. If you’re planning on obtaining a FHA (Federal Housing Administration) Loan, the first step is to make sure the condo community is on their approved community list. Normally FHA requires that 80% of the units in the building are owner-occupied, so make sure the community is on their approved list, before falling in love with a property!
A buyer still can obtain a private mortgage for a condo purchase. This often comes at a much higher cost, as many private lenders will require a minimum of 20% down on a condo purchase. Purchasing a condo may not be the best fit if you do not have a substantial amount of money saved for a down payment.
Know What the Condo Includes
This may sound like a silly tip, but it’s important to know exactly what the condo includes. When purchasing your first condo, make sure you find out if the condo includes a reserved parking spot or additional storage! Does the condo community offer additional parking for your guests who visit you? Is the parking spot in a covered garage?
During a recent condo sale in Rochester, NY, the seller rented her parking spot out to one of her fellow community residents. Fortunately, there was no long-term agreement between the seller and their neighbor! It’s important you know that the parking spaces and/or additional storage areas are going to be available at the time of closing before you purchase the condo! The last thing you want to find out is you have no where to park your car a week prior to closing.
Know What the Association Fees Are
In most condo communities, there is a monthly, quarterly, bi-annual, or annual fee that is required by each resident. The association fees are used to cover common expenses such as insurance and maintenance.
A well-run condo community will be happy to share their financial statements to a potential purchaser. It’s important to know when buying a condo that the community has a large amount of reserve funds in the event a major repair is required, such as a roof replacement. Ask the community how the association fees are divided and where they are distributed too.
Association fees can also impact whether a buyer can afford the condo or not. When approving a buyer, a lender is going to add the association fee into the monthly debts of the buyer. If a condo community has a very high monthly fee, it’s possible a buyer cannot afford it, due to the high fee!
Know What the Association Fees Include
How much the condo community association fees are is a very important piece of information to know when buying your first condo. Equally as important is knowing what the association fees include. As mentioned above, the fees generally include insurance and maintenance. Know exactly what the association fees include and what, if any exclusions apply.
In addition to the insurance and maintenance, association fees also commonly include lawn maintenance, snow removal (if applicable), landscaping, water, sewer services, road maintenance, and trash pickup. In some cases, the association fees can even include the heating and electric!
If a condo community has additional amenities such as pools, fitness centers, tennis courts, or a clubhouse, these are able to be kept up from a portion of the association fee. If these additional amenities are not something that interest you, than it is important to understand you are still paying for these amenities to be offered to other residents.
Review Association Rules
Seeing as most condos are in close proximity to one another, the communities association will have rules and regulations. Due to this, many associations will have lots of different rules and regulations, in order to “keep the peace” in the community! It’s important to understand that unlike a single family home, you cannot make your own rules and do whatever you want. In many cases, buyers don’t care to review the association rules and have their attorney review on their behalf instead.
Many communities will restrict the type of pets or if any pets are allowed period. The last thing you want to find out is your animal is not allowed in the community! Other common rules in many condo communities relate to whether a unit can be rented or not or whether there are quiet hours. If you have ever had to deal with a bad neighborin the past, you can understand why these rules are such an important part of a condo community!
Ask About Special Assessments
First it’s important to understand what a special assessment is. A special assessment is typically a large fee that is charged to cover a significant project within the community. An example of a significant project that would be considered a special assessment, is a structural repair to the condo.
Why is this an important tip for a first time condo buyer? If a special assessment is in the future plans, it’s possible that the association fees can raise for a specific period of time. For example, a condo with a monthly association fee of $400 could increase to $500 for a year to cover the expense of a roof replacement. Any planned special assessments should be provided to a potential purchaser with full disclosure.
Research Maintenance and Management Company
Knowing who maintains the property is extremely important! Who is in charge of cleaning the common areas? Is the work completed by an outside company or are the residents of the community encouraged to help with the upkeep? A condo community that is not well maintained can be very frustrating and can also effect the resale of the condo in the future!
Most condo communities have a management company. The management company is normally in charge of day-to-day operations. This can include enforcing the association rules and regulations, handling questions from residents, and handling the condos finances. When buying your first condo or tenth condo, if you have questions regarding the community rules, regulations, or fees, the management company is whom you should speak with. As you can see, the management company plays a vital part in whether a condo community is successful or not. If the management company is non-responsive or has a bad reputation, this is something that you should consider prior to purchasing!
Predict Your Future Plans
Predict the future? Foolish, I know! It’s impossible to know exactly what is going to occur in the future, but most people have a plan for their future. This should be no different when buying your first condo!
A condos value typically will not appreciate as much as a single family residence. This is why it’s important to have a good idea what your future plans are. If you plan on remaining in the condo for ten years, then the rate of appreciation is not as important if you plan on moving in a year or two. Just like knowing what the future will hold for you, it’s impossible to know what will happen to market values in the coming years.
The above 10 tips for buying your first condo are all equally important considerations to make prior to closing! Buying your first condo can be a very exciting time and can be a relatively smooth process! By following the above 10 tips you will be very happy and comfortable in your condo, should you decide to go that route.
What other tips would you suggest when buying a condo?
Reach Out to Us Anytime, Janet and Thomas / 855-Janet-Tom / www.JanetandTom.com
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Janet Hull and Thomas Bush are seasoned Realtors specializing in residential real estate for over 14 years. They joined forces in 2005 and have worked with some of the largest builders in Michigan. To....
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