Condo Shopping In A Down Market

Condo Shopping In A Down Market

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condo

I had good laugh recently when I came across an article written by a real estate agent who insisted that condos are a “great buy” and that they hold their value in a down market. Tell that to the thousands of Florida condominium owners who can’t get rid of their properties without taking a major loss!

True, in some markets condominium sales are still strong, particularly in downtown markets that are poised for explosive growth. Our nearby capital city, Raleigh, is one area that comes to mind. In Raleigh, new buildings are going up or being converted and the condos are selling at a brisk pace.

For many other areas of the country, it is truly a buyer’s market. Overbuilding, a tight economy, mortgage problems, and hesitant consumers are some of the reasons why condos aren’t selling. Or, if they are, they’re selling at a deep discount.

If you are in a position to buy a condo right now, you could come across a good find. However, even in similar desirable neighborhoods there are some things you should know before choosing a particular condo:

The HOA — An HOA or Home Owner’s Association consists of a group of people who also live in the same condo development and are responsible for overseeing its care. Each HOA has a rule book which you should be familiar with before buying. For example, you may enjoy growing tomatoes on your balcony, but the HOA could forbid this practice. After paying $320,000 for a two-bedroom, two-bath unit with a great view, is this something that you can accept?

Fees — You’ll be paying a monthly fee to the HOA for keeping common areas in order, removing trash, shoveling snow, etc. This fee can add $80 to more than $500 to your expenses each month. You may get “a deal” when buying your condo, but that excellent buy can evaporate once you figure in association fees.

Property Taxes — Thinking that property taxes can’t possibly be all that high, many condo owners are stunned to learn just how expensive their taxes are and how easily they can move up when the city raises taxes.

Insurance — Your HOA fee will cover some of the insurance costs for the building, but you’ll be responsible for insuring your unit and everything in it. Talk with your insurance agent in advance to learn how much you can expect to pay for homeowner’s insurance.

Once all of the related expenses have been determined, you are in a better position to negotiate price. If the market is slow, then you have additional leverage to ask the seller to lower his price. Compare recent sale prices with the unit you are considering to come up with a fair offer.

Finally, there isn’t anything better than a top location to determine if your condo is worth buying. Check out the neighborhood, walk around the condo building, and hang out in the unit you are interested in buying to get a feeling for noise levels, lighting, the ambiance, and more.

With the market in your favor you can choose to be selective and take your time: unloading an unwanted condo can be difficult to do, especially in a tough market.

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