Preparing for Condo Life
Saturday, September 6, 2008
For many aspiring homeowners, buying a condominium is an affordable way to transition from being a renter and begin reaping the benefits of homeownership without a lot of the added costs involved in maintaining a house with a yard.
Condos also may come with perks many first-time home buyers might not be able to afford in their starter home, such as a swimming pool, a hot tub, tennis courts and security guards.
But the condo life also requires owners to give up some of the freedom they would enjoy if they owned their own detached home, all while paying maintenance fees on top of their mortgage payments.
And too often, experts say, condo buyers don't stop to consider exactly what they're getting into.
"The biggest single mistake that people tend to make is to think that buying a condo is just a less expensive way of buying a house and not really understanding that it's shared ownership, which is a lot different," said Robert Irwin, author of "Tips and Traps When Buying a Condo, Co-op, or Townhouse."
"They aren't going to be able to do a lot of the things they can freely do when they own their single-family detached house," Irwin said.
Still, there are steps buyers considering a condo purchase can take to ensure that they know what to expect
The first thing one should try to find out is how much one will have to pay in maintenance costs, or monthly homeowners association fees. You also want to know if there are any big special assessments on the horizon.
Special assessments are fees that condo associations sometimes decide to charge owners to pay for an unexpected cost, such as an emergency repair, litigation or even to help cover a shortfall in monthly dues in the event of multiple foreclosures.
Assuming that the maintenance is reasonable and there aren't any special assessments on the radar, you can delve deeper.
You may be happy with a building's looks, the size of the unit and the location. But a condo is real estate, just like a detached home. And just like a detached home, the value of a condo will rise or fall largely based on how comparable units sell.
Buildings with high proportions of unsold, empty units can send the wrong signal to buyers and can hurt comparable resale prices.