What To Look For When Buying a Condo
December 27, 2021
Buying a condo is very different than buying a single family home. Condos have shared walls and are located within communities with their own set of rules. Condos can be a great investment for anyone who wants to downsize or who wants to take a step into home-ownership. However, condos aren’t for everyone. In this blog post, we go through what a condo is and the important things to consider before buying one.
What is a Condominium?
A condo or condominium is a solitary unit within a multi-unit structure, similar to an apartment. The difference between the two is that the condo is owned by the resident whereas an apartment is rented. Condos also typically provide access to the community’s gardens, swimming pools, parks, gymnasium, pet-walking spaces, and other amenities, with your neighbors.
Condominium owners are responsible for real estate taxes, electricity, the upkeep, and also adhering to the rules of the condominium association.
Condominium associations vary depending on the specific needs of each unit. Some associations have extra charges to cover common expenses like unexpected structure maintenance or condominium board-approved new features.
7 Condo Buying Tips For First-Timers
1. Consider Your Lifestyle Preference
Living in a condo could be the right option for you if you despise mowing the grass and trimming the hedges, or consider power cleaning your driveway, or if you don’t prefer spending $5,000 or more on a newer HVAC unit or roof because of your financial situation.
Condominiums are a great option to live in if you are fine with most parts of apartment life, except for the built-in upkeep. However, when living in a condo you will have to suppress your urge for a spacious backyard. If that’s the case, then a townhome or single-family house would be a better fit. Another disadvantage of living in a condominium is the fact that you are sharing walls, roofs, or floors with a neighbor, which can be undesirable to many.
2. Hire a Real Estate Agent Who Specializes in Condominiums
If you’re looking to buy a condo, real estate agents can be extremely helpful to you. Experienced real estate agents can make buying a condo smooth by using their expertise to guide buyers through the process. Negotiator Recognized Partners consist of some of the best real estate agents and you can easily find a local NRP here.
Local NRPs are familiar with the condos in your region and can address potential concerns like community financing troubles, structural issues inside the multi-unit building, and the association’s regulations you’ll need to follow.
4. Make a List of the Amenities You Want
Generally, a condo comes with a wide range of amenities such as swimming pools, parking, exercise facilities, and outside gardens, to name a few. Make sure to discuss the amenities you want with your real estate agent so that they can find a condo that’s right for you.
The type and amount of amenities a condo has can also affect the price. The cost of the amenities can be put into the total price of the condo or you may have to pay a monthly fee for the upkeep of each amenity included.
4. The Condominium Has To Be Approved By Mortgage Lenders
Getting a loan for a condo can actually be more difficult compared to other forms of real estate. On top of lenders looking at finances and credit score when judging applicants, lenders look at the condo assosiation as a factor as well.
Each condo is affiliated with a Homeowner’s Association or condominium community. Mortgage lenders not only look at finances when evaluating applicants, but they also investigate the association affiliated with the condo.
There are many options for loans when buying a condo, and the most common are FHA loans and traditional loans.
The Federal Housing Administration is a U.S. agency that provides mortgage insurance on FHA-approved loans from banks, credit unions, and other lending companies. FHA loans are for borrowers with lower income or credit scores.
You can only use FHA loans for FHA-approved condo projects and you can search for them here.
Conventional loans, on the other hand, are not backed by a government agency and are serviced by private mortgage lenders. There are strict qualifications to get a condo unit approved by the FHA and it’s even more strict when it comes to conventional loans.
When getting a loan, it is advisable to seek the advice of a knowledgeable loan specialist with condo experience to get the wise funding for your acquisition. It’s worth mentioning here that you may not be allowed to secure a standard mortgage if the unit is not FHA-approved.
5. Investigate The Property Management Company
The reputation of a property management company matters greatly when you plan to buy a condo. Poor management could lower the worth of the condo or increase your Homeowner Association costs. It’s important to figure out who is managing the condo community to make sure it’s properly maintained.
You can contact the property management firm directly with questions about how they manage resident concerns and neighborhood regulations. Or, you can investigate the firm’s reputation by learning about their past properties and resident’s experiences.
6. Examine The Association’s Rules
All condos have associations, which work to manage the facilities, amenities, and maintain the units. Before buying a condo, you should figure out what responsibilities are covered by the association, and what facilities you will have to maintain on your own. Services like snow clearing, lawn maintenance, and maintaining shared spaces are usually done by a Condo’s association along with…
- Common areas
- Noise and nuisances
- Recreational areas
- Garbage disposal
- Pets and animals
You should also try to understand how the condo association addresses concerns or grievances, such as how attentive they are on Saturdays and Sundays. For instance, are there any limitations on loud music? Are there any standards for renting shared areas in advance? Knowing these rules beforehand can assist you in determining whether or not the associations you’re considering is ideal for you.
7. Ask About Additional Condo Fees
As already highlighted, the condo association charges a certain fee for the overall maintenance of the community. Condo associations can also impose additional fees on residents, but only in certain special circumstances like to help support the condo unit or add renovations.
Although the process of charging additional fees typically involves a vote by the condo association board, the residents of the condo must be informed about the process before the final call is taken.
Condo associations with a good reputation try to prevent establishing additional fees by using effective financial planning. When investigating condo associations, make sure to investigate their past financial records to avoid any abrupt extra fees. You can request their records for up to 3 year and an attorney or an auditor can evaluate the records to verify that the association’s funds are in good standing.
Advice For Any Aspiring Condo Owners
Condo living is suited for individuals who don’t want to burden themselves with the stress of buying and maintaining an entire household. You can live in a community and have top-notch amenities, while enjoying the flexibility that comes with being a condo owner. However, it’s always important to consider your financial situation and housing needs before buying a condo. Tips mentioned in this blog post can be a great way to get started, but it’s even better to get tips for a seasoned real estate agent like an NRP.