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Buyer Tips
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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
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