Buying a condo should not be like buying a house!
When will people realize that buying a condo should not be like buying a house?
During my morning scan of the social media sites, I came across an article about an app that a real estate brokerage was launching.
The app was “going to give information to purchasers because data and access to information drive the marketplace”. The problem came when I looked further down the article and saw the information that this app was going to provide:
- Median Price
- Total listings
- Median days on the market and
- Median price per square foot (among other bits of information).
I am not saying this information isn’t of some importance but these should not be the first questions you seek answers to if you are considering buying a condominium.
If you are considering buying a condominium, please read this following section several times:
The most important factors in buying a condo should not be availability, location or demand.
You are entering a partnership with several hundred other people who have a direct and very large impact on your fees, the value of your property and your living environment. Most condos are increasing in value as the market increases these days so you should look for stability, good management and even an enjoyable place to call home while your investment increases.
Here are several far more important questions that condo buyers should ask:
- How much did this condominium pay in legal fees last year? – High legal fees are a warning sign of a split community with either owners struggling to grasp power or Board members struggling to hang on to it.
- Have there been any requisitioned meetings to remove board members? – Another sure sign of disputes. If there has been one there may very well be more and not much gets accomplished when a community is fighting over who gets to make the decisions.
- How often has the property manager changed? – This is a sign that management and the Board have not developed a long range plan to guide their decisions. Very often when key players in the governance team change frequently that means that there is no defined direction or goals.
- How often have other key service providers like security and superintendent changed? – Frequent changes are a sign of change for change sake. That is an expensive business approach.
- Is the engineer who did the last reserve fund study doing the next reserve fund study? – This is often a sign of a Board that doesn’t like the impact of reserve contributions on the budget and wants someone to give them an answer they like better. Long term planning should include a reserve fund planner…
In the answers to these few questions you will find out how stable the leadership and the community are, if the Board is willing to accept advice from their professionals and deal with the realities facing the condominium or are they intent on changing service providers until they get the answers they want.
If the answers to these questions are in line, then you have a reasonable chance of being happy in your new home. Like financial commercials always say – “past performance is not indicative of future results” – but a condo community that has struggled in recent years is one that should be approached very cautiously.
