A recent survey finds that among those seriously considering buying a condominium nearly a quarter consider condo fees a key element in their decision. According to the study, participants think Condo Association fees “feel a lot like paying rent” -- sometimes causing buyers to switch focus toward properties for sale where they “won't have to pay the [high] monthly fees."
Psychologically, it’s understandable. The concept of paying $500 or more a month as a “fee” on top of a mortgage can indeed feel a lot like paying rent. But not all costs associated with owning property are readily apparent.
For example, most condo fees include maintenance for common elements like landscaping, snow removal, exterior maintenance – sometimes even repair and window cleaning. Higher-end condos such as those found here in Philadelphia may even include water, sewer, heat, parking, security, and even desirable amenities such as a club house, swimming & health club. If you are the single owner of a home, all those costs are yours alone. Do the math. Plus, and this is important to remember, you are choosing a lifestyle when you purchase a condo.
While condo fees usually increase every year at the rate of inflation, each condo board sets its own rates. While it might seem prudent to concentrate on condo properties for sale with only the lowest CA fees, cheapest is not always best.
Unrealistically low fees cause deferred maintenance down the road, and, especially when an older building is involved, the end of that road might be closer than anyone would wish. A well-maintained building, on the other hand, is far more likely to escape sudden costly upkeep emergencies. As a result, it is more likely to hold value, or even appreciate.
If you are looking at condo properties for sale, be sure to ask to review the history of the condo corporation, its maintenance reserve fund, and special assessments for anticipated repairs. The CA fee history will reveal much. Most states have condo association laws which allow the purchaser the opportunity to review the condo documents (often stated in the real estate sales contract) prior to the final settlement. Check with your attorney or REALTOR®.