Q: Is there a publication that covers all the things one would need to know when buying a condo? I have so many questions.
A: There are several books on condominium buying available at Amazon.com and local bookstores. There are many issues to consider in buying a condominium, so you may want to consult more than one book.
Here’s a look at some of the issues:
First, there’s a wide range of prices in the condo market for the same reasons that there is a wide range of prices in the single-family home market, namely: location, size and quality of construction. As in any type of real estate, location is the key determinate of value. A waterfront condo in Kirkland is much more desirable — and therefore much more expensive — than a condo overlooking a shopping center parking lot.
Size is also an important factor for the simple reason that a larger unit is worth more.
Finally, the quality of construction can vary greatly from one condo complex to another. Condos in top locations typically are of higher quality, but this is not always so. For example, condos that have been converted from old apartment buildings located on the waterfront may not be of the same quality as units built specifically as condos, but they can command a high sales price because of their excellent location.
As you might expect, the maintenance costs for the older units is typically higher than the maintenance cost for comparable units built in the last few years. But again, that is a generalization. A well-maintained old building can actually be less expensive to operate than a poorly maintained newer building because “deferred maintenance” can result in very expensive major repair work down the road.
Choosing a unit can be a matter of personal preference.
Many people like ground-floor condos because you don’t have to climb up steps to get to your front door. But other people prefer a top-floor unit because it typically offers a better view and you don’t have neighbors walking on your ceiling. Corner units are popular — and typically more expensive — because they have more windows and fewer shared walls. As an investment, I think you are better off buying a two-bedroom unit instead of a one-bedroom because it appeals to more buyers.
A two-bedroom can be purchased by a young family with a child, two roommates or a single person who needs a spare bedroom for an office, etc. With a one-bedroom unit, you are basically limited to a single person or a couple.
Homeowner’s associations are also an issue in making the selection.
They’re simply a group of the owners in a given complex. The association elects the members of a board that oversees the maintenance and grounds and enforces the rules, such as dealing with unruly neighbors. The board sets the annual maintenance budget and monthly dues that typically must be approved by a vote of the majority vote of the homeowners.
Dues typically increase once a year. They cover the maintenance and repair of the exterior of the building (the interior of the unit is the owner’s responsibility); water, sewer and garbage service; and insurance to cover damage to the building.
In large condo complexes, the board typically hires a professional management company to help develop the budget and to handle the actual maintenance and repair. In small condo projects, the owners may handle this task themselves. This may be a disadvantage because there are fewer owners among which to divide the costs, and they may lack the money to properly budget for major projects. It is critical that you thoroughly examine the budget and cash reserves of any condominium complex. You want to ensure that the association has set aside enough money to pay for things like a new roof or paint job. Otherwise, you could suddenly be hit with a special assessment of several thousand dollars.
Mail your real estate questions to Steve Tytler, The Herald, P.O. Box 930, Everett, WA 98206, or e-mail him at economy@heraldnet.com.
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