By Robert Irwin
While many home buyers will not hesitate to make an offer on a single family home, they will draw the line when it comes to buying a condo. Buying direct from a condo seller, to them, is off limits.
That's unfortunate because the traditional roles of condos and single family homes have reversed. In the past condos were always the last to appreciate in good times, the first to drop in price in bad times. However, in 2003 for the first time, the rate of appreciation for condos exceeded that for single family housing. And in many parts of the country, the difference, favoring condos has actually accelerated! No longer are condos the black sheep of residential real estate. Today they are the shining star.
There are many reasons. For one thing, in the past for the same number of square feet, condos tended to cost less. They had a lower per-square-foot price. Of course, this has changed in the last two years.
Then there are the amenities such as swimming pools, exercise rooms, recreation centers, even tennis courts and putting greens. And one variety of condo, a townhouse (which has no one living above or below) today typically boasts several stories of living space sometimes including lofts and game rooms.
When buying a condo you also buy into a home-owner's association (HOA). Depending on how well or how badly the HOA is run, life in a condo can be very pleasant, or rather miserable.
Checking out the HOA is an important part of purchasing a condo. Presumably when working with an agent, he or she will do it. In reality, however, either with or without an agent it's up to the buyer to conduct a "due diligence" inspection of the HOA. This includes demanding and receiving a copy of the bylaws and the CC&Rs (covenants, conditions and restrictions) that govern the association. You'll also want to talk with board members to determine if there are any lawsuits, pending or past, which could influence your ability to get financing and which might result in a serious fee increase.
Areas to pay special attention to include
Lawsuits (already mentioned)
Construction problems (leaking roof, cracked foundation which could result in a big assessment)
Overly severe restrictions on making changes to the property (resulting from an aggressive architectural committee)
High dues from mismanagement, failure to properly fund reserves, or payments for lawsuits
Complaints of noise or bad behavior against neighboring owners.
It's important to remember that buying a condo means buying into a different kind of lifestyle. It's sort of a cross between living in a rental apartment and owning your own home. Issues of privacy and security must be addressed. While modern condos are often quiet and relatively crime free, it's not the same as living separately in a single family home. If you're not sure, it may be a good idea to look before you leap - to rent a condo for 6 months or so and try out the lifestyle, before making a purchase commitment.
MAKING THE DECISION
Buying a condo requires doing some research. And if you're the one who's going to live there, it's incumbent upon you to do the checking. If problems exist, you'll want to discuss them with the seller and get an explanation, or even a price reduction. For serious issues you may need to consult with an attorney. But, all of this would be case even if you were working with an agent.
Robert Irwin is the most prolific real estate writer in America having produced over 100 published books in the field. His TIPS & TRAPS McGraw-Hill series has sold well over a million copies and his FOR SALE BY OWNER KIT and FIND IT, BUY IT, FIX IT and other books have been strong sellers for Dearborn. In addition Irwin writes a regular real estate column for The Wall Street Journal online and is introducing a new weekly column forOwners.com.
Irwin has sold his own property "by owner" and during over 30 years in the business has been a broker and consultant to lenders, agents, buyers and sellers.