Factors to Consider when Purchasing a Condominium?

Answer 1

Over the past few years, the value of condominiums in many new and luxurious buildings across the country have declined considerably. This makes it a great time for someone looking to move into a condo to go ahead and purchase one. While it can be a great time to purchase a new condo, there are several things that a home buyer should do before closing on the purchase of their new home.

When purchasing a condominium, one of the first things that you should do is examine recent home sales. While the entire housing market has been unstable, condominium prices have fluctuated much more than other forms of housing. To ensure that you are making a wise investment, and not overpaying for the condo, you should see what typical sales prices have been in the building, and in neighboring buildings, over the past 6 months. If you notice that they have been lower than what you are being offered, then you may be overpaying for the condominium.

As you go through the due diligence process of purchasing the condominium, you also need to verify that the condominium's association is in good financial standing. Almost all condominiums are members of a larger association, which handles the maintenance and repairs of the property. Since so many condominium owners have defaulted on their mortgages and gone into foreclosure, many associations have less annual revenue than they did in the past. When reviewing the association's balance sheet and income statement, you may find that they are in debt. If the association is in debt, there is a good chance that some of the amenities will be cut or your payments will increase.

Similar to purchasing a single family home, you should also have the condominium inspected before you purchase it. While you need to have the inside of the unit you are purchasing inspected, you also need to have the rest of the property inspected as well. Be sure to have the inspector get a look at your building's roof, Plumbing, and electrical systems. If they find that these are in bad condition, you could be charged with a significant special assessment in the near future to cover these repairs.