I just wrote a contract on a condo that I really LOVE, but now I am wondering what I need to look out for between now and settlement, since I hear so many horror stories about buying condos? Thank you, Beverly B.
Dear Nervous Bev,
I get this question all the time, but usually before someone makes an offer. My pre-offer speech includes warning buyers about the condo complex as a whole, as well as the particular unit, itself. As for the unit- that is where the home inspection comes in. Have it inspected by a Certified Inspector.(American Society of Home Inspectors, ASHI, is the only one I know that has a certification process). He won’t look at the condo through the rose-colored glasses that you are wearing. He will see the nuts and bolts. If the furnace is old and needs replacing, he will note it. If the windows are single pane and leaking, that will be noted, too. If he see what he thinks is asbestos around the furnace, he will also note that, and recommend further evaluation. He will not be blinded by the emotions that you are currently caught up in. Or, he may find that it is in perfect and impeccable shape, and needs nothing, although that is quite rare.
As for the complex itself, there are a number of things you want to know. First of all, the deal is contingent on you getting a current copy of the Condo Documents, where replacement reserves, pending law suites, architectural violations of the unit, and facts pertinent to the complex will be addressed. In Virginia, once you have received the Docs, you will have three days to accept, or reject, the whole deal, and get your earnest money deposit back. Sellers dislike this rule, since you may not like the color of the binder that you get it in, and you could kill the deal because of that. No reason needs to be given to cancel the deal based on the docs. You just have to be within the time frames in the contract.
Once you get the docs, there will be a ton of info to go over, so I suggest you call the management company that is listed in there and review your concerns about replacement reserves like: are they adequate? any special assessments coming up?, any pending lawsuits, etc? Also, review the Docs with your agent. If you have any doubts whatsoever about any facts or figures, PLEASE get the answers before the three day review session is over. When you call the management company, make sure you check on the ratio of owners to investors in the complex, and how many accounts are in default. Both numbers can affect you getting a mortgage, and/or re-selling it in the future. I also suggest calling your lender and making sure the complex is on the FHA approved condo sight. Even if you are not buying the condo using an FHA loan, I would make sure it is an FHA approved complex, which would make it easier for you to re-sell in the future. I would also check to see if it is VA (Veterans Administration) approved, although those loans are not used as much as FHA. So, sound like a lot to be nervous about? Not really. Yes, you do have to do your homework but it is worthwhile knowing that you are buying into a financially and physically sound building and association. While you may be blinded by the emotions brought on by the granite and the killer views, the Condo Docs and the inspector will help you take a more objective approach to your large financial decision.Good luck, Beverly! I hope all the inspections and scrutiny pay off in the end, and the place turns out even better than you thought it would!
Sincerely, Doug Frank (now with Prudential PenFed Realty, and no longer Prudential Carruthers Realtors, since Pentagon Federal Credit Union purchased Prudential Carruthers Realtors at the end of 2011!)