20 Questions (and Answers!) Every Condo Buyer Should Ask
By Jim Britt, Principal Broker
Windermere Real Estate
Condominiums offer great freedom to home owners. I wrote these 20 questions and answers as part of co-hosting the Real Estate Hour program on KPAM radio in Portland. As principal broker for Windermere, I co-represented a condo project in Northwest Portland from the ground up and was there through the sale of the final unit (of 60 units) In the process, I met more than 2,000 condo buyers and sellers. This experience has helped me serve clients interested in condominium living, whether their focus is entry-level condos and conversions, to penthouse units in some of Portland’s finest condominium buildings.
Further, I own vacation condominiums in other states where condo laws vary slightly and leasehold condos are common. I never claim to know everything about every condo, but let me tell you, if you ask and get answers for the following 20 questions, along with the advice of a good real estate agent, you will be able to:
· Make an educated assessment of a condominium;
· Avoid common pitfalls that may arise from this type of real estate and;
· Find a home that meets your budget and lifestyle.
1. What is a condo-alternative property?
That’s a point I bring up with anyone looking to buy his or her first condo. Often times an easy-care home or town house, for various reasons, might meet the condo “need.” The same is true for homes on tiny lots or in dense, urban locales.
2. What do you actually own with a condominium?
Condos generally have a separate deeded title to “airspace” or the living area within the exterior or common walls of the actual unit. Some condos come with a separate deeded parking and/or storage space.
3. Do all condominiums come with a parking space?
No. Most do of course, but if you are looking for an urban condominium where parking is at a premium, always ask if there is available parking AND ask to see the actual space. Sometimes nearby parking is available for lease, but carefully consider whether that space will always be available. The best scenario for a condo building is that EVERY unit has parking. Limited or additional (guest) parking can affect the value of every condominium unit in the building. On the flip side, lack of parking may mean a more affordable price.
4. What was the first condominium in Portland?
Real estate circles suggest that the American Plaza, Lincoln, Grant and Madison Towers on Southwest First Avenue near I-405 were the first condos. They were originally built as apartments and quickly converted to condominiums in stages.
5. What is the best way to find the condominium that I want?
Get yourself a buyer’s agent who is familiar with condominiums. A buyer’s agent can guide and represent you through the labyrinth of condo information so you can compare one unit from another like apples and oranges. If you have a good agent who shows you every condo currently available in your price range, together you be able to find the one that is the best value. A good agent also will be on the lookout for the newest listings and hopefully get you in BEFORE the Internet and Sunday open house ads appear. Don’t be surprised if your buyer’s agent asks you to sign an agency agreement form.
Most condo buyers do not want to do any improvements or fix things. If you are trying to stretch your condo-buying dollar, consider a condo “fixer.” Most fixers require cosmetic improvements such as paint, carpet, fixtures and appliances, which all can be done later. It is a good way to build equity and get a condo for a lower price. Also, many older condo “fixers” tend to be larger than newer ones.
6. What are HOA (Home Owners Association) dues?
When you live in a condominium, you pay home owner’s association dues, generally to cover cash reserves for future maintenance, interior and exterior upkeep of common areas, insurance for the building (not your personal property), water, hot water, common areas, sewer, garbage, management, various amenities and cable TV. The HOA fee for the condo of your choice is an important consideration. The amount of the fee and what it covers can vary greatly from condo to condo.
7. How do I find a condominium with a view?
Quality of any view is in the eye of the beholder, but all else being equal, count on a condo with a great view to cost significantly more. Remember that any condo with a view, the owner owns the VIEWPOINT and not the view! Some views are more secure than others, and occasionally zoning of surrounding properties can be verified by contacting the listing agent. It’s best to verify the zoning status with appropriate city or county jurisdictions. Realize, however, that zoning always is subject to change.
8. What is a PUD (Planned Unit Development)?
PUDs came along prior to Oregon Condominium law. These typically involve common-wall units and “plexes.” You own the unit, with shared ownership in the common-walls. You also own the land the unit sits on, which may include a small backyard and designated parking (separately deeded or not). There is shared, equal ownership of the common elements. Often these were built like garden apartments. With a PUD, your streets, sidewalks and front lawns are common elements maintained by an association. Title companies consider PUDs like homes even though they feature many qualities often associated with condominium living.
9. What is a town home / town house?
Town homes offer many benefits of condominium-style living, however they are entirely separate deeded properties, together with the land upon which they sit. You have shared ownership in the common walls. There are usually association and maintenance fees and Conditions, Covenants and Restrictions. Ask about reserves for the big-ticket maintenance items such as roofing, exterior paint and decks.
10. What are CC&Rs?
Conditions, Covenants and Restrictions. Shortly after writing an offer on a condominium property you should get a copy of the condominium’s CC&Rs, along with written minutes from the past three association meetings. You generally have at least five business days to review this information and ask questions. Ideally you’ll receive the phone number of the association president so you can address concerns. Sellers generally only offer CC&Rs for review AFTER an accepted offer is written and received.
11. What is the most important question to ask about a condo and/or of its CC&Rs?
Are there any lawsuits, pending or settle on the building? Is there any dissatisfaction with the building’s workmanship or function? Ask this question BEFORE you spend very much time considering any condominium.
A lawsuit is obviously something to avoid, at least until settled. Often reviewing CC&R minutes from recent meetings can clarify issues. Sometimes an attractive sales price more than makes up for minor issues. Pending lawsuits are included in due diligence of title insurance and mortgage companies, and as such, should come up before closing of the sale. Still, to avoid unnecessary buyer costs of appraisal, inspection and disputes with a seller, ASK FIRST!
12. What is the most common dispute in a condominium?
In newer construction, exterior siding problems are a common concern. However, building material failures may be covered by class action lawsuits with a particular siding product or builder and as such, owners may receive help financing repairs. Other problems can involve windows, plumbing, drainage, electrical and lack of ventilation in common areas, like corridors. Frequently the only way a condo association can get a builder to make good on problems is to sue, but often the concerns are resolved within one year.
13. Once I own my condo can I make any changes to the unit I want?
Most remodeling rules fall under the criteria of the CC&Rs. Guidelines should be fairly and evenly applied in the interest of all owners, including you.
14. If a condo is new, what kind of decorator features should I expect?
One thing to remember about condos is that you are really buying a “shell.” Some of Portland’s most expensive condos sold originally with basic finishes and treatments, with the option to upgrade to premium finishes prior to construction. Older buildings in premium locations with views can have units with customizing work that runs into hundreds of thousands of dollars. Some new condos may be sold as “shells” with no drywall what so ever, and the purchaser finishes it out to their own specifications. As the condo market in Portland has evolved, developers may offer high grade finishes and even include decorator consultants to help buyers determine the best finishes to meet their needs.
15. Do most condos come with a fitness facility?
Sometimes. Most facilities are small by today’s standards. Some have swimming pools, hot tubs or spas. Newer buildings sometimes have a treadmill room, but most have yielded to the services offered by fitness chains. Some condos even include fitness chains as retail tenants in their buildings.
15. Do most condominiums allow pets?
Usually yes, but always ask. You must register your pet, however, and there are sometimes limitations to pet size or weight. You need to be a responsible pet owner and not allow your pet to cause noise or disturbance to other residents.
16. Do most condominiums come with a storage unit?
Yes and no. You need to ask about storage. New buildings are usually built with small storage “cages” or closets. Older buildings sometimes have entire basements where cooperative storage or individual storage is offered, along with a bicycle room. Some buildings allow for storage cabinets within the parking space. Some newly constructed buildings offer storage as an upgrade option prior to completion. But it’s often costly. Prices for such storage may cost thousands for storage space equivalent to the trunk of a car!
17. Why is the Pearl District so popular?
Excellent city planning. The unpopular urban growth boundary has blessed our city with strong neighborhoods that are either excellent or certainly on the upswing, with very little urban blight. The River District, which includes the Pearl and Old Town/Chinatown, all the way to the Willamette River to the Northwest industrial areas, has helped the city meet population density needs.
Living close to downtown appeals to Portlanders of all ages. Whether it’s convenience to work, parks, civic activities, restaurants and entertainment, a thriving close-in condo market sets the stage for a dynamic, in-city living experience unlike no other in the nation. Developers have tried to vary price points on the condo to encourage diversity, but the Pearl’s popularity and resales have escalated prices to the point of making them all luxury prices per square foot.
18. What if I can’t afford Pearl prices?
At the beginning, Pearl prices were about $300 per square foot, but now, you are often seeing prices as high as $500 per square foot or higher…unheard of not long ago. Even with these extraordinary prices, the demand is still quite high, especially in the more popular buildings. Other city condos, which were deflated in price not long ago, are starting to catch up, but there are still some terrific values in older buildings and complexes. Working with a skilled agent familiar with the broad range of condominium options can be instrumental in finding a condo that you can afford and meets your needs.
19. How do I determine if a condo or house is the best investment?
Talk to an accountant and discuss your budget. Don’t forget to consider the HOA dues. Talk to your family. Do you want to spend your time maintaining a property? Value is very often subjective to what fits your needs at the time. Residential property has generally, but not always, appreciated in value at a greater rate than condominiums, with the Pearl being the main exception to that rule. Busy professionals may appreciate condominiums for the freedom they offer in real estate ownership together with their career demands and goals. Consider the cost of HOA fees and count the number of years until your retirement. Once you calculate cost for the convenience it will help you decide if that’s where you want to invest your money.
® 2006 Jim Britt/Windermere
All information is deemed reliable, but it is not guaranteed and is subject to change without notice. Information is a guideline and not intended to replace the services of a Realtor. |
