Considering a condo in Northern Virginia for your next home? Consider the costs & risks before making an offer. There are obvious concerns (noise, pests & parking issues) and a few not so obvious.
1. Is the condo complex FHA (Federal Housing Administration) approved? If you are planning to obtain FHA financing then the development needs to be approved by FHA. You can check to see if a property is approved by visiting: https://entp.hud.gov/idapp/html/condlook.cfm FHA no longer allows "spot approval" and many condo associations allowed their FHA approval to drop. With FHA providing the lowest down payments available (except for the VA- Veteran Affair zero down loan) they are more in demand by 1st time home buyers. And since condos are usually less expensive, they are a prime choice for 1st timers. FHA approval does not only effect your ability to buy, but may also impact your ability to sell.
2. You will be provided the opportunity to review the condo re-sale package that includes the rules, regulations & the budget. READ THEM. This is where you can see the health & well being of the condo association. Buyers are sometimes surprised to find they can not run a business or have a pet once they move in.
3. With the bust of the real estate market, many condo associations were left with non-paying short sale occupants and defaulting foreclosure units. No budget was prepared for this type of financial blow. Most had reserves to offset this loss of income, but many did not. This may increase the condo fees or worse yet, result in a special assessment.
4. Beware of special assessments. During "Snowmageddon", tons of snow had to be removed from common element parking lots. Very few (if any) condo budgets had enough money in their snow removal budget to cover this expense which may have resulted in a special assessment for the entire community. A dear friend of mine bought a condo several years back and did his due diligence in reading the resale package and talking to the condo management. He was recently advised his condo association is assessing a special assessment for elevator upgrades & garage improvements to the amount of $8500 for his one bedroom unit. Larger units had larger condo fees imposed.
5. Research possible law suits. A older community in Alexandria was found to have asbestos in the ceiling of the buildings and was sued by a seller whose buyer walked after it was discovered. Law suits can impact monthly condo fees and even create a special assessment.
6. Default & investor ratios. A high default and investor ratio could impact your ability to get financing as well as your ability to sell.
This list is very limited and there may be case by case concerns with each condo complex. While condo living is easy (no exterior maintenance & a the ability to lock up and go), the risks may be hidden in the cracks of a 400 page resale delcaration package. Before you buy, discuss your concerns with your REALTOR, talk with the neighbors and interview the condo assocation management/board of directors.
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