Buying a Condo? Asking Five Questions Makes All The Difference

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As the U.S. population continues a decades-long shift into urban areas, condos are increasingly becoming the "starter home" for a new generation of home buyers. They offer many advantages, but it's important to realize that condominiums are an entirely different form of ownership than a single family home. Understanding the differences and asking the right questions are the keys to buying into a financially healthy, well-run Home Owner's Association that fits your lifestyle.

As the U.S. population continues a decades-long shift into urban areas, condos are increasingly becoming the "starter home" for a new generation of home buyers. "Condos offer many advantages," notes Michael LaPeter, a licensed Broker and founder of http://www.sfcondosales.com, "but it's important to realize that condominiums are an entirely different form of ownership than a single family home." Understanding the differences and asking the right questions are the keys to buying into a financially healthy, well-run Home Owner's Association that fits your lifestyle.

1. Review what's included in the HOA (Home Owner's Association) dues.

Make sure you know what exactly is included. Are the level of amenities right for your needs, or will you be paying for benefits you don't need or missing out on those you do? Amenities such as a pool or fill time concierge may be nice, but they aren't free: the added costs end up in your monthly dues.

2. Understand what the insurance actually covers.

They may call it homeowner's insurance, but condo owners need it too. Most likely, the master building policy won't cover past your interior walls, meaning it's absolutely critical you purchase your own policy. Leave yourself time to shop around for the best rates before the property officially changes hands.

In addition, find out what's covered and in what amounts in the master building policy. In San Francisco, for example, some larger buildings include earthquake insurance ... a substantial difference since it can account for as much as 30 percent of the total dues.

3. Don't ignore that thick stack of condominium documents.

Check the financial reserves. Are they reasonable given the size and age of the building? Be cautious if they're low; if building repairs are needed that could mean a special assessment against your unit for thousands of dollars in the future. In larger buildings, replacing the roof or repainting/ repairing the exterior can run well into six figures.

Check the HOA meeting minutes. Are any major repairs currently under discussion? If so, has there been any mention of special assessments or increasing the monthly dues? Are there any past or developing issues you should take into account? Lawsuits involving Home Owner's Associations are not uncommon, and many lenders won't loan on properties involved in lawsuits because of the uncertainty.

Check the house rules. Most associations have pet restrictions, some so strict that they forbid dogs altogether while others restrict size, weight or breed. Make sure you find this out before you buy so you're not faced with the tough choice of selling your condo or your best friend.

4. Review comparable sales in the same building if possible.

Every building is unique, with different amenities, style, management and location. Larger condo buildings essentially become their own neighborhood, and comparing a 1 bedroom in a luxury doorman building to the live-work lofts next door can be dangerously misleading. Make sure you're comparing apples to apples.

When you're reviewing other sales in the building, don't just rely on the square footage or bedroom count of a recent sale in the building. Were the floor plan, views, upgrades, etc. comparable also? The price of a one bedroom in the same building can vary $100,000 or more depending on the view and floor.

5. Finally, don't forget to look at everything in person.

It sounds obvious, but you'd be surprised how many buyers never look at anything but the actual unit. Make sure you actually see the amenities, parking space and storage in person. A quick visit can avoid any confusion or disappointment later on. In addition, some sellers may be willing to offer a credit if the parking space is small or in a less than optimal location.

About Michael LaPeter:

Michael LaPeter holds real estate licenses in two states, including a Broker's license in California, and is a member of the National Association of Realtors. Michael specializes in condo sales in San Francisco, with several million dollars in successful transactions helping both buyers and sellers. Michael has been interviewed by the San Francisco Examiner as an area expert, and his writings have been featured in local blogs and online publications. Additional condominium articles and statistics can be found at http://www.sfcondosales.com.

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Michael LaPeter

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