Price. Some
people love the idea of condo ownership, and others hate it. Some
who are not at all that thrilled with the idea may opt for it
for one simple reason - in many places it's a lot cheaper than
a single-family detached home. This will be a difficult fact for
you to accept if the only condos you are familiar with are developments
with names like Country Club Haven and Rockefeller Manor and have
Jags and BMWs parked in front of them. Statistically, however,
it's true. In some markets the average sales price of a condo
will be 40 to 50 percent less than the single-family detached
option.
Variety. Remember that the word condominium describes
a form of ownership, not a type of building. Although the apartment-style
condo is common, there are an infinite variety. They range from
a very modest apartment building that has been converted to lavish
single-level units built specifically as condos and clustered
around a golf course.
Quality of Construction. Several years ago, as
the condo concept became more accepted by homebuyers, a conversion
feeding frenzy occurred. Let's say you owned an apartment building
that with intensive management was barely returning a positive
cash flow for you. An astute developer shows you how to convert
the apartments to condos and sell them. The profit figures he
projects take your breath away. You're convinced and you convert.
So did a lot of other apartment house owners.
Consumer abuses occurred during the period, prompting many state
legislatures to enact very restrictive rules on condo conversions.
One of the biggest complaints had to do with quality of construction.
"Paper-thin walls" was a complaint often heard. A tenant
who pays $700 a month for an apartment might be slightly annoyed
by the presence of a noisy neighbor. A purchaser who pays $100,000
for that apartment as a condo would likely be more than somewhat
irritated by that same inconsiderate neighbor.
New construction, built specifically as condos, naturally gets
much better marks. For example, when we moved to our present location,
a local builder was just in the early stages of constructing a
condominium project. We purchased a condo for a relative when
it was in the foundation stage. Each individual unit had its own
interior walls, separated by an airspace as opposed to a common
wall. It was clear in all the planning and actual construction
that these units were designed as homes, not as apartments. Since
it was early in the construction process, my wife and mother-in-law
could work with the builder to customize the condo. It turned
out well for us, and the builder maintains that the nervous twitch
he developed had nothing to do with the experience.
Condominium Owners' Association: This is an association
of elected condo owners who control and manage the overall affairs
of the condo complex, including maintenance of the common areas,
such as the required periodic painting of the exterior as well
as such exotic functions as garbage pickup. Those things obviously
cost money, and they seem to cost more money each year. You will
be required to pay monthly dues to cover these expenses. By the
way, if you buy a condo, the amount of these fees will be considered
by the lender when qualifying you for the loan. Condo associations
have some rather formidable power. For example, miss one of those
dues payments and they can put you a lien on your property - and
in a worst-case situation, actually foreclose on it.
This Homebuyers Tip was excerpted from:
The Homebuyer's Survival Guide, by Kenneth W. Edwards, Real Estate
Education Company, 1994.
ISBN# 079310906X
