How to Buy a Luxury Condominium

Written by  //  October 5, 2012  //  Other Home Issues  //  Comments Off on How to Buy a Luxury Condominium

Not every American aspires to own a house, a free-standing structure that requires much time, commitment and money to maintain. While home ownership may still be a desirable goal, some people prefer to leave the home care to others, especially the care of the grounds. Condo living continues to rise as an important option for many people from newlyweds to empty nesters as well as for singles and young families. Besides a different and more clustered housing arrangement, condos come with a home owner association or HOA, offering amenities and fees that set condos apart from houses.

Condo Considerations

1. Time. If you are looking at living in a place for two or three years before moving on a condo may not be right for you. Instead, an apartment might be the best choice enabling you to easily move on when the time is right. You may be suited for condo ownership if you plan to stay put for at least five years, giving you time to recoup your investment and to enjoy HOA amenities. Don’t rule out short-term ownership if you buy in a hot market and expect it to remain hot for several years.

2. Amenities. Even among luxury condos, the amenities can vary sharply from one place to the next. Two places can have the same square footage and offer the high ceilings, big windows, modern kitchens and open floor plan that you desire. The differences often come in the amenities or the perks and services that condo owners prize. These include door service, exercise and entertainment facilities, covered parking, extra storage and comprehensive security. If you don’t plan to make use of these amenities, then you probably don’t want to pay more for these extras.

3. Market. Whether you’re looking for a condo in West Hollywood, in Soho or somewhere between, local markets can vary. This means you will want to understand what condos are available in your area and the types of buildings that comprise these units. Are you looking at a sky rise, a converted apartment building or side by side units similar to a townhouse?

4. Realtor. Once you determine where you want to live, you can begin working with a real estate agent to find condos to your liking. Work with an agent that understands the local market and has successfully closed a number of condo transactions. Ask for references and contact her past clients to find out if they were satisfied with her service. Some referrers will be only too happy to tell all, although you can usually expect that most will be quite pleased with her service, otherwise she would not refer them. Still, reference checks can reveal much if you ask good questions and listen carefully.

5. Mortgage. Just as you begin the condo shopping process, you can contact a mortgage broker and get qualified for a loan. This qualification can prove immensely helpful, especially if you are ready to make a deal. A condo seller will be more motivated to strike a deal if he knows that you are already mortgage ready. Shop for a mortgage and get approved as soon as possible.

6. Homes. Evaluate each home for the living area, the common area and the condition of the building. You may be satisfied with the home that you will call your very own, but the common area — something that you will pay for — may not live up to your expectations. If the building is especially old, know that repairs are an ongoing concern. Your HOA fees will include upkeep. The HOA board should be well managed and have ample funds on hand to keep up the structure.

7. HOA. Speaking about the HOA, you’ll want to meet with the HOA board or at least one or two members before you make an offer for your condo. Some boards have final say whether you will be admitted as an owner or not, while others take a more hands-off approach and simply want to know that you have the financial resources to buy your place and pay your monthly fees. You can ask the HOA for copies of its meeting minutes, something that can reveal what problems are present and if there is general harmony among neighbors.

8. Management. We’re still on the HOA issue because it looms large in the condo buying decision. You not only are responsible for paying your mortgage and property taxes, but your HOA fees can add hundreds of dollars each month to your expenses. You need to know exactly what that fee covers and understand by how much it increase each year. Management should answer your questions and reveal to you its financial planning, its rate increases, potential challenges and other issues.

9. Members. Clearly, a condo’s members can be the best people to find out whether residents are satisfied with where they live or not. Your real estate agent and HOA management may not be especially helpful here, but that doesn’t mean you cannot approach residents directly yourself by going door to door. Many residents will be quite forthcoming and can tell you the pluses and minuses about the complex. You can find out what rules there are in place such as the amount or type of furniture allowed on the veranda, the personal decorations you can display on your front door and the hours of the pool, the theater room or the safety of the underground garage. There is always at least one resident willing to tell all!

10. Offer. Once you have gauged whether a particular condo is right for you and are satisfied that all of your questions have been answered and your concerns addressed, you are ready to make your offer. With your offer you will want to build in several contingencies including a pending mortgage approval if you still need to get one. You will also want to ensure that your unit and the building itself meets inspector approval and that you have had sufficient chance to read the association’s documents and bylaws.

Your attorney may need extra time to review your contract and your accountant should look at the HOA’s financials. Both professionals can help you avoid a money pit, informing you of potential problems before you make a purchase. If your offer is accepted, then work toward making your closing happen. Typically, your condo will close 60 to 90 days after your offer was made, perhaps sooner if your paperwork is in order and the current owner is ready to move.

Condo Thoughts
Quite frankly, a condo purchase must be something that you believe is absolutely right for you. Some people love the convenience of such a housing arrangment, but soon realize that a condo is simply an apartment — with ownership, of course. Understanding your local market is very important too and can save you from making the wrong purchase or paying too much for your unit.

Sources
Mortgage News Daily: Buying A Condo: Make Sure You Cover All Contingencies — http://www.mortgagenewsdaily.com/12132004_Buying_A_Condo_2.asp
Truila: How To Make An Offer On A House or Condo — http://www.trulia.com/blog/KarinaAnillo/2012/05/how_to_make_an_offer_on_a_house_or_condo

Author Information
Jon Engle writes for the California Apartments Blog providing tips on apartment living, interior design and local reviews such as these Hollywood Homes located at The Residences at W Hollywood.

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