Purchasing a condo in today's lending market can be tricky. Its very important to get as many of the facts up front as possible.  FHA guidelines changed a few months ago and the condo approval process is much different than before.. 

Via Claudette Millette - Metrowest Mass Buyer Broker (The Buyers' Counsel):

CondominiumsBuying a Condominium Requires Doing Your Homework

 

Helping a client with the purchase of a townhouse recently has reminded me that a condominium purchase can actually be more involved than buying a single family home.  This is partially due to the fact that you need to be concerned, not only about the unit you are buying, but also with the strength and stability of the entire condominium complex. 

 

Before entering into the purchase of a condominium there are some important questions that need to be researched.  

  1. Monthly condominium fees - Depending on the complex, these can be significant and they figure into your overall monthly expense of home ownership. You will need to find out what the fees are and exactly what they include.  Fees typically go toward the maintenance of common areas, landscaping, snow removal and the master insurance.
  2. What is the percentage of renters vs. owner occupied units?  Being in an environment of rental properties can have a direct effect on resale value.  Additionally, depending on the type of financing you are seeking, your lender will want to know the owner-occupancy rate of the condominium complex.
  3. Bi-laws and covenants - These rules can govern how you can decorate your home, pet ownership and whether or not you can rent out your unit.  It is not atypical in a condominium to have to control your noise levels or show a certain color, usually white, of window treatment from your unit.
  4. What does the master insurance cover?  You will need to get a copy of the condominium's master insurance policy and examine it to see what your responsibility will be with regard to coverage.  Most condo owners have to insure their own personal belongings or everything within your unit's walls. This includes carpeting, flooring, appliances and your own fixtures.
  5. Check recent resale values at the complex - Have sales of units been keeping up with the rest of the condo market?  How have the "days on market" fared?
  6. What is the parking situation at the complex? When you have guests they will need a place to park. Most condominium complexes have some provision for guest parking.  How many spaces are there for your guests and where are they located?
  7. Have unit owners been delinquent in paying their condo fees?  If there is a large delinquency rate of owners paying their fees this is sign that the complex could be falling into financial trouble and this will not bode well for any future repairs, improvements or resale value.
  8. Are there any special assessments that are currently due?  When a condominium project has fallen short on their budget sometimes the onus for special repairs (new roofs, decks, common areas) must fall on the owners.  This will be in the form of a special assessment that needs to be paid either annually or monthly.  You really do not want this type of surprise.

In addition to the above, you will need to check out the management company and see whether or not it is professionally run.  This information should be provided by the listing broker or seller along with all of the condo documents as well as the financial statement and budget. All of this information should be carefully reviewed by your attorney.

Typically banks have a standard questionnaire that they require for all condominium purchases but if it is a cash deal you will need to come up with a list of your own and have the questions answered sufficiently by the owner or the management company prior to purchase.

For a more carefree lifestyle a condominium can offer some distinct advantages over single family living.  Just be sure to do your homework to ensure a happy and safe investment in your new home.

Copyright 2010 "Buying a Condominium Requires Doing Your Homework"

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Claudette Millette, Broker, Owner, The Buyers' Counsel - (508) 881-6230

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It is always advisable to consult with a knowledgeable lending professional when navigating today's turbulent mortgage and real estate marketplace.  I am committed, qualified and equipped to help you evaluate your options!

 

Also check out:

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FHA Financing Mortgage Program Overview/Updates

Georgia Dream Down Payment Assistance Program Overview/Updates

HomePath Financing Mortgage Program Overview/Updates

USDA Financing Mortgage Program Updates  

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Rodney Mason is a Sr Loan Officer located in Atlanta, GA.  He is also 203K Renovation Loan and HomePath REO Property Specialist.  He can be reached at (404) 591-2453.

Providing financing for cities across Georgia including: Acworth, Albany, Alpharetta, Athens, Atlanta, Augusta, Austell, Avondale Estates, Blairsville, Bloomingdale, Blue Ridge, Bogart, Brunswick, Buckhead, Buford, Canton, Carrollton, Cartersville, Chatsworth, Clayton, College Park, Columbus, Commerce, Conyers, Covington, Cumming, Dahlonega,  Dacula, Dalton, Dawsonville, Decatur, Doraville, Douglasville, Duluth, Dunwoody, East Point, Fayetteville, Flowery Branch, Gainesville, Greensboro, Hampton,  Hapeville, Hinesville, Hiram, Jackson, Jefferson, Jonesboro, Kennesaw, Lagrange, Lawrenceville, Lilburn, Lithia Springs, Macon, Madison, Metter, Morganton, Morrow, Newnan, Norcross, Oakwood, Peachtree City, Pooler, Richmond Hill, Riverdale, Rome, Roswell, Sandy Springs, Savannah, Scottdale, Statesboro, Stockbridge, Stone Mountain, St Marys, Sugar Hill, Suwanee, Thomasville, Thunderbolt, Tucker, Tybee Island, Valdosta, Waleska, Warner Robins, Waycross, Wilmington Island, Winder, Woodstock, and many more.


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5 Comments on Buying a Condominium Requires Doing Your Homework

JUN
24
2010
705,560 Points 56 Featured Posts Outside Blog Called Shot Master

these are some great tips, alot of buyers are not sure what a condominium is all about and what to watch out for or look at.
9:47am • #1
1 Featured Post Outside Blog Attended Rain Camp

Great checklist for condos!  I have direct experience with the ever changing guidelines (and new enforcement of old guidelines). It can stall or kill a deal.

Here in Manhattan we need to be particularly concerned with the percentage of commercial space (can't exceed 20% of the total project), and the number of sponsor-owned units in a building. However, Fannie Mae will consider rent-stabilized units as unmarketable; and will not include them in the calculation.

It's more important than ever to have a good relationship with a lender/mrotgage broker, so you can get the full picture before you get a client involved in a transaction that won't close.
9:55am • #2
957,773 Points 53 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Also, check out the deliquency rate.   If it is above 15%, lenders won't look at the loan.    I have run into problems with this!
10:44am • #3
JUN
27
2010
315,207 Points 2 Featured Posts Attended Rain Camp Called Shot Master

Scott....you are correct.  Many buyers don't understand what a condo really is.

Louis....I am sure NYC has its own challenges.

Joan...You are 100% correct.  Delinquency rates are an issue.  Should that be the only issue, we can sometimes get an exception.
3:27pm • #4
JUL
05
2010
524,894 Points 6 Featured Posts

This post should help a lot of interested buyers out there. I had a few who weren't too sure as to how to go about in buying a suitable condo. Had a lot of explaining to do. This should make our jobs a lot easier.
2:35pm • #5

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