What to look out for when buying a condo
As a client was searching for a townhouse to buy, we stumbled upon what looked like a typical townhouse in Silver Spring, MD. As we started to look into the unit we discovered it was a condo.
Buying a condo is a little different than a single family home so I wanted to point out what to look out for when buying a condo. Here are questions to answer when considering a condo for your next purchase.
1. Is it the right fit?
It is different owning a condo as opposed to a single family home. In a lot of condos you are attached to your neighbors. Sometimes on all sides. If you are looking for privacy and distance from your neighbors, you may want to stay away from a condo. There are fees paid on a regular basis to live in a condo building. Before buying you should know what those fees get you. Who cuts the grass? Shovels snow? Cares for the grounds and common spaces?
2. Can you finance the condo?
If you are a cash buyer, this is of no concern to you. But if you can’t afford to cut a check and pay for the condo outright, you will most likely need to borrow money to buy the unit. Obtaining a loan may be challenging depending on your financing program. for instance, if you are obtaining financing through VA or FHA programs the condo building will have to be on their accepted and on the approved list of condo buildings. One of the major factors in acceptance is % of owner-occupied units in the building.
3. What comes with the unit?
Does the unit come with a designated parking spot (or two 👍🏾)? Do you have access to additional storage? Is their guest parking? Is the parking spot(s) in a garage or are they covered? These are questions you want answered when deciding if a condo is right for you.
4. What are the association fees?
Most condos association fees are paid monthly or quarterly. There are condo associations that collect these dues twice a year or even an annual payment. Usually they are more than happy to share this info with a potential buyer. Also, check to see if they have a significant amount of money in the reserve fund. This fund is to make sure if any capital expenditure (fancy word for expensive repair or replacement) is needed, they can pay for repairs or replacements without conducting a special assessment.
5. What do the association fees include?
They generally include insurance and maintenance but make sure you find out if their are any exclusions that apply. Most condo associations cover some of the following in the dues: Lawn maintenance, snow removal (if it applies), water, sewer, road maintenance, trash removal. Some condo’s also include heat, electric and internet in their dues. If there is a pool, fitness center, tennis court or clubhouse, your dues may pay for regular maintenance of these facilities as well.
6. What are the condo rules?
The condo association will be able to supply you with all the rules and regulations of the condo building. The association will enforce these rules and regulations to maintain the property value. Common rules to look for if they apply to you are: Are their restrictions on pets (size, breed, etc)? Are units allowed to be rented? are their quiet hours?
7. Are their any special assessments placed on the condo building?
A special assessment is a large fee collected on top of the association fees to pay for something expensive that is needed or benefits the whole condo community. Example: A crack in the foundation will cost $24K to fix in a 20 unit condo building. The condo association needs an additional $1200 on top of the association fee. They may give you the option to pay over a year’s time so they will charge you an additional $100 per month over a 12 month span to collect the entire $24K collectively from all the residence.
8. Who are the maintenance and management companies?
Do your research and find out who cleans the common areas. Ask the management company who takes care of this stuff. This is critical info because some condo buildings put that responsibility on the residence, and some will outsource this responsibility. If they hire an outside company, make sure you are looking at common areas when doing your homework. If the common areas look like trash when you tour the property, more than likely that is how it will look when you move in; or worse! Not taking care of the property is the fastest way to sink the value of your investment.
If you see a resident, stop them and ask about the service provided by the association. The management company should handle the day-to-day operations, enforce the rules and regulations, field any questions from the residents and handle condo finances. This is all critical to your way of living in the condo so make sure you ask and are satisfied with the condo association before you buy the unit.
