12 Things You Should Know Before Buying a Condo
If you aren't so sure that the current leaders are acting in your best interest, Skiba suggests attending board meetings, serving on committees, or even seeking a seat on the condo board.
"There is usually a correlation between the level of homeowner involvement and the long-term success of a community," Skiba says. "Being a well-informed homeowner ultimately helps manage expectations."
Yes, you'll have to pay a monthly condo association fee on top of the selling price of your home, but paying this doesn't necessarily mean that you are done shoveling snow for the rest of your life. While typical condo associations provide services such as trash collection, snow removal, and maintenance of common areas, not all of them offer the same services.
Ask the condo association what your fees cover, how much it has in reserve to cover major projects, how many times it has levied "special assessments" on owners to cover emergency costs, and how often the reserve fund has been updated.
If the condo association does not have a reserve fund or that fund hasn't been updated, those are costs you'll have to bear later. Meanwhile, most mortgage lenders will shy away from associations that don't set aside at least 10 percent of their fees for reserves -- and may ask the condo board for a fidelity bond as a fallback option even if there is a reserve in place.
"Old buildings are old buildings," Skiba says. "A snappy, refurbished lobby does not necessarily mean that the heating system, elevators, and roof aren't due for expensive overhauls."
To secure a mortgage, Graham says 50 percent of properties in your condo association have to be either primary residences or second homes. If you're looking at your condo as an investment opportunity and want some rental income, you'll have to look into the condo association's balance of resident-owners to investors. Meanwhile, if you're allowed to rent out a condo, don't leave your condo association and renter in the dark about what each party expects of one another.
"It's essential that owners provide names and contact information for renters so the association can communicate with renters as they do owners," Skiba says. "Furthermore, it is imperative that owners inform renters about the nature of association living -- the need to follow rules, for example."
NAR suggests looking into all of the above, but says there are a handful of other questions that a potential condo buyer should ask before making a deal. How high is the turnover rate? Is there just one condo association, or several under one umbrella group? Is the condo currently being sued, and will the reserve be needed to pay legal fees? As Skiba notes, it's far too late to do anything about those questions once you actually own a condo.
"With all inherent advantages, community associations occasionally face complicated issues, none more common than the challenge of balancing the best interests of the community as a whole with the preferences of individual residents," Skiba says. "Issues often arise because of unrealistic expectations, misinformation, and misunderstanding."
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