While these used to sell for 15 to 20 percent less than the cost of
comparable space in detached homes, in 2004, the median sales price of
an existing condominium surpassed that of a single-family home for the
first time, according to the National Association of Realtors. This
trend held steady through 2005: The median sale price of a condo was
$213,600 in September, compared with a median price of $212,200 for a
single-family home, NAR reports. www.nar.com
We’re going to cover condos and co-ops, which are variations on the same theme. What's the difference between the two?
In a condo, each owner has absolute ownership of his own unit, which
may be an apartment or townhouse. Owners pay a monthly fee (usually
called homeowner’s fees) to maintain shared areas like the lobby, the
pool or the laundry room. The chief financial risk to a condo owner is
that the common charges can rise, or, in the event of a major problem
such as a roof repair or boiler replacement, the condo board can assess
additional fees to cover expensive repairs.
A co-op is a rarer animal found in some major metropolitan areas,
especially New York City. Essentially, a corporation runs the complex
where each owner is a shareholder. In other words, a co-op owner is a
partner in a building, rather than an outright owner of his or her
specific unit within that building. The monthly maintenance fees are
generally higher than those of a condo, but prices tend to be lower.
Their chief downside is that the co-op board usually has to approve new
owners and may discourage you from renting your unit if you move out
without selling.
Check out Five Things_Home Purchase for info on searching, agents,
mortgages, price negotiation etc. Here, we will deal with issues
specific to condos.
Thing No. 1 Birds of a feather flock together.
For the
sake of resale, look for a neighborhood that caters to the type of
buyer that is in the market for a condo. The condo buyer (smaller
families or younger buyers) often looks for more urban amenities.
Restaurants, gyms and the all-important espresso bar are usually
mission-critical to the lifestyle as well as a concentration of
employers that attract young, urban professionals like hospitals and
law firms. The condo buyer tends to be a little bit of a glam
junkie and is usually interested in a certain amount of urban flair and
luxury so, things like high-end, flashy appliances or bamboo floors
will be particularly attractive when you resell. These folks
usually go in for a certain amount of character so the “vanilla box”
isn’t going to garner as much excitement at resale time.
Thing No. 2 Get the right agent.
One who does a lot of
condo sales. They will be intimately familiar with contracts and
terms, be able to recommend a good attorney if one is needed to review
the contract and be familiar with the history of the properties and
associations that you are considering.
Thing No. 3 Look for complexes that have high ownership rates.
Find out what percentage of the residents actually own their units as
opposed to just renting them (many condo complexes include both). A
complex with lots of renters has fewer owners who care about the
upkeep, and it may be harder to get a loan on such a property.
Thing No. 4 Scrutinize the fees.
Find out how much the
common charge has changed over the last five years and whether there
have been major assessments during that time. Check on the group's
financial health and whether shareholders have recently been hit with
special assessments. Find out what the assessments cover and don't
cover (for example, maintenance of common areas and trash collection),
and see how these assessments compare with similar condo associations
in your area. The budget should have a reserve fund for major
expenditures. If not, you may be hit up with special assessments for
major repairs, which could really throw a monkey wrench into your plans
for a new Fall wardrobe. Maintenance fees will be broken out
differently depending on the market and on the specific nature of the
property but you should look at how they are broken out but allocations
should look something like this:
1. Utilities 40%
2. Shared Facilities / Recreation Centre 14%
3. Administration / Property Mgmt. 12%
4. Repair / Maintenance 10%
5. Reserve Fund 10%
6. Access Control / Security 10%
7. Site Personnel 4%
Thing No. 5 Get familiar with the lingo.
Tridel.com/condo/glossary If you’re still hankering for
more info on buying into association-governed community, you can
download a free brochure here: caisecure.net.
Thing No. 6 Get the inside scoop.
Ask to see the past year or
two of board meeting minutes, as well as the last two years' of budgets
and the current year's projected budget. Read the minutes to find out
whether there are any large-scale improvement projects that the
building is planning, and how much those might cost. (Not to mention
who hates whom.) You should also look for any signs that a special
assessment fee is might be in the works. Do these goons know what
they’re doing with the budget? Take a look at the line-item budget and
whether or not they have accurately projected annual maintenance costs.
Thing No. 7 Meet the neighbors.
You’re going to be
sharing walls, floors and ceilings -- There may be as little as 6 feet
between where your head is sleeping and the freak’s next door so, you’d
better figure out what kind of freak you’re freak is – smoker? Closet
headbanger? Chronic chanter? Or, the nice doctor in residency who’s
only home to study and sleep? This is not a case where you want
to keep your enemies close.