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Real Estate Q&A: Houses vs. Condos

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Real Estate Agent with Keller Williams - Hollywood Hills 01409501

The following is a reprint of my column that appeared in Frontiers In L.A. magazine on August 4th, 2010

I’ve been approved for a purchase of up to $700,000. I’m torn between purchasing a condo or a house. One of the main things that I find attractive about condo living is the lack of upkeep as compared to a house, which I’m worried will always need something done to it. Also, though I like the idea of living in a house, in this neck of the woods I think I can get a nicer condo than I could a house. What, in your opinion, are the pros and cons of each? —Lance, Santa Monica

Great question, and one that I’m often asked by buyers who are either first timers, or who have just relocated and aren’t yet that familiar with the area. Once I start to break it down for them, it usually becomes pretty clear to them which route is best for their needs. At its core, a condo is community living. You are becoming a co-investor with every other owner in your building, and a member of a homeowners association. With that comes a set of rules and restrictions to live by, as well as monthly fees that keep the building maintained and tended to.

These rules are intended for the betterment of life for all the tenants of the complex, and many are meant to maintain the value and integrity of the complex as a whole. There may be restrictions on pets, such as a weight limit or number you can have. There may be rules about leasing your unit out should you ever decide to move and rent it out.

On the plus side though, with a condo, there is far less maintenance than with a single-family home. For starters, there’s no yard. That alone is worth the price of the HOA for many buyers. When anything goes wrong with the building, it’s typically the HOA’s responsibility to get the repair done. Condos are very common choices for empty nesters looking to downsize, as well as people who desire the amenities that a condo building offers (security, pool, gym, etc.) that they may not be able to afford in a house of their own. For many condo owners, the sense of community that comes with condo living is appealing as well.

For those drawn more to single-family dwellings, there’s more freedom. Want to paint your front door purple or fly a skeleton flag outside your door? No problem. It’s your property and you can do what you want (within the law, of course). You won’t ever have the person above you clomping around on their hardwood floors keeping you up at night. Obviously with a house, you are a land owner, as opposed to owning the insides of your four walls with a condo.

I am considering putting my home up for sale in the next few months. I don’t have to sell it, but I wouldn’t mind selling it and beginning the process of downsizing. I spoke with a couple agents in my area about listing it at a certain price. Both felt that price was too high, and that it would be a big mistake to list that high. It seems to me that I should be able to list at my price and see what happens. If no one bites, then I’ll consider a reduction. Why is that such a bad idea? —Stacey, Studio City

Let me start by saying this—it is a bad idea. Buyers are very savvy these days. They have tons of websites and information sources with which they can follow the market and see what houses are selling for in a certain area. And believe me, they do. Trust me. No one is overpaying for real estate right now. 

There are so many ways this can be detrimental to your process, and even result in your netting less than if you’d priced correctly. If you really screw up your marketing plan, you can even potentially drag down property values in your neighborhood. There is a sweet spot that is really important to try to nail when pricing your home. Overprice it and you risk it sitting on the market for months and months. And every week that it sits there, it is going to ultimately sell for less than the week before. You have a very clear window (usually about 2-3 weeks) to really capitalize on the excitement and energy that comes with a new listing. That is your time to get the most eyeballs on your home, and try to generate the most interest possible.

There is a real art to pricing a home properly, and a good agent will be able to show you recent solds in the area, as well as what your current competition is. It’s critical that you price accordingly if you are a real seller.

The last thing you want is for your listing to become “stale.” It raises red flags within the real estate and buyer community about the house. “What’s wrong with it?” “Why has it not sold?” “If no one else wants it, I probably don’t either!” Even if by some fluke you do get something close to that price you’ve had in your head for a while, you also have to take into account the possibility that the home might not appraise at that price (meaning the buyer’s lender decides it’s not worth what they agreed to pay for it).  In summary, if you do want to sell, price it right.

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