6 Valuable Steps You Need To Do Before Buying A Condo
6 Valuable Steps You Need To Do Before Buying A Condo
A Helpful Guide For Condo Buyers
At this point in your life, perhaps you are thinking about getting a place of your own, and a condo is sounding more and more ideal; but there are a few things to consider first. Before you decide to purchase a condo, there are a few issues that you need to address beforehand. For instance, be wary of red flags, like costly repairs and overly priced units.
You must meticulously study a few vital elements before signing your name on the dotted line to avoid entering into a deal that may not be good for you at all. Once you boost your knowledge about condos, you'll be able to make a better decision and become more alert about what makes a good or bad deal. Through this guide, you will gain some vital details that will help you in choosing the right condo for you.
1Evaluate Prospect Condo Developments
Before making a final decision, you need to check out a few condominium developments in the area where you wish to live and compare features, prices, and other factors that you deem important. Among the most crucial elements that you must evaluate are each condo association's total operating costs, the total reserved money of each group, each condo development's regulatory papers, as well as the fine print in every document that you will be required to sign. As you carefully examine these four areas, you will likely notice a few red flags, including price increases. In case you discover something that seems strange or unclear, clarify them to avoid misunderstandings.
2Keep An Eye Out For Sky-High Costs
Any condo development will need some funds for the general operational costs, like electrical, roof and plumbing repairs, or even water damage repairs; however, it's a huge red flag once you notice that the total cost is extremely high. To illustrate, if the condo association only allotted $5,000 for small plumbing repairs, and it ended up spending $25,000, then that's strange, and it may indicate a bigger problem. Perhaps it was just a rare occurrence, but this could also mean that the entire development is having issues, especially if the structure is quite old.
3Verify The Board Members' Qualifications
While scouring through an association's records and you notice a projection for a specific cause, such as roof repair or plumbing upgrade, check if the budget was followed or if the expenditure overly exceeded the amount as this is definitely a red flag. This is a likely indication that the board is incapable of making a realistic budget or that the building per se is in trouble even though it may look and function well. To illustrate, perhaps the exterior paint looks fine, but this can no longer stop water damage. You should do a little research about the members of the association, too, so that you can verify if they are suitable for their positions since they may just be volunteers who don't have any idea about how a building system works, which will likely have detrimental effects not only to the condominium itself but also to its residents.
4Review Condo Funds' Allocation
After carefully examining an association's operating costs, it's time to review the amount of the current funds. Each condo owner within the development will have to share the cost for repairs, maintenance, as well as replacements that need to be taken care of. It is a must for the board to be transparent about where the funds are going via detailed reports.
In most states, there are laws and specific requirements for such funds. For example, typical operating expenditures in condos include roof repairs, siding repairs, and paint jobs, while dry rot and termite damage are unique circumstances that are also not easily detected. However, if a condo association fails to take into consideration the less obvious issues that may crop up, reserves could fall short once these problems do present themselves.
5Read Carefully The Fine Print
Perhaps you received a letter that informed you that the condo needs to undergo some repair work soon. As mentioned, all condo owners divide the maintenance costs, and this means, in this case, that a special assessment is being conducted. With that said, the following assessments will likely be more expensive than usual.
In case you are confused about what this all means, don't hesitate to ask. You must always read the fine print because there may be key points that are not so obvious, particularly in the "comments" section of the paperwork that was given to you. Carefully go through such documents. In case it doesn't mention anything about a "reserve" or if the reserve was mentioned, yet it was stated that there is little to no funds, then be wary.
6Examine Association Documents
As you go through an association's governing documents, always compare and check what is determined by whom. Discuss things with a member, particularly if you are confused by something or if you need answers to certain questions. Remember that each association has a particular way of doing things; for example, some condo developments equally split the water cost depending on the number of residents, while others encourage each owner to have his own water meter. Other associations also assign each member specific responsibilities, like maintenance, door replacement, heater repair, air condition maintenance, and others.
Whatever the case may be, an association's documents must cover issues regarding assessments, maintenance, and uses. If you notice that such things are not addressed, it's a huge problem as this probably means that the details are lacking, or perhaps these are in another part of the document. This also means that you'll probably need a lawyer who can find such crucial information and clarify things for you.
Before you sign the dotted line and become a condo unit owner yourself, there are several factors that you need to take into account. Evaluate the rates, carefully go through the fine print, compare governing documents, do your own research about the condo association and its members, and discover who is responsible for certain jobs. This way, you'll have vital information that you need which can help you in making an informed decision regarding which condominium is the best choice.
Jackie Wing is an Alaska native, who enjoys snowboarding more than is probably socially acceptable. She lives in Anchorage with her two dogs Reese and Peanut, or as she likes to call them "Thing 1" and "Thing 2."