A condominium can be an excellent first home purchase. Condos tend to be smaller and less expensive than a single-family home. Buying a condo can be a good way to start building equity in a home. So what do you need to know?
What is a condominium?
A condominium is a single privately owned unit within a building or community of units. Condo owners own what is inside the walls of their condo and share the maintenance of common elements like hallways, foyers and staircases, roofs, and rooftop decks. Every condo or unit owner is a member of the condo association. The association elects a board that is responsible for maintaining the financial and governing health of the condo association. Condominium owners are responsible for paying monthly condo fees which typically cover the cost of maintaining the shared common areas, roof, grounds and sometimes some or all of the utilities.
Every condominium purchaser is provided with a condo resale package for review. It is very important to review these documents to ensure the condo association is governed properly, has cash reserves and good communication with all the building residents. In Washington DC, for example, the condo document review period is 3 business days which means once the resale package has been delivered by the seller to the buyer, the next day is day one. Under the DC Condominium Act, every condo owner has certain rights and responsibilities.
Top 3 items to review in condo documents
- Review the financial status of the condo association including the operating budget, reserve funds and any legal actions against the association. Also, review any special assessments. This could be a costly project to replace elevators or the roof. A special assessment may raise the monthly condo fee or be an additional monthly cost. And finally, the condo association should have a master insurance policy for the building.
- Review the bylaws or the rules of the condo association. Pay close attention to the rules since you will need to abide by them. Some condominium associations do not allow pets. If you have a dog or cat, you won’t be able to agree to this rule and should not consider purchasing a condo in the building.
- Review the meeting minutes which are taken at monthly condo meetings. The meeting minutes show the topics of concern and the communication between the board members. You’ll want to review these minutes to better understand any current concerns or issues.
What to look for on your tour
When you are touring a condo building with your exclusive buyers agent, pay close attention to the exterior of the buildings. Are the balconies in good condition? Do the roofs look updated? Are the grounds well kept and free from debris?
When you are inside the building, examine the common areas, like the lobby. Is the space clean and updated? Are all the elevators in working order? Are hallways well lit? If there is a common laundry area, are all the machines in working order and updated?
Remember, you are making an investment and one day may put your condo on the market for sale. Take time to review the condo documents and inspect the interior and exterior closely so you are making an informed decision. How will future buyers view your investment? Looking for a different option? Detached homes offer lower purchase prices and more.
Be sure to choose an Exclusive Buyer Agent to help you find the perfect condo. Find an agent here.