Buying A Condo? Review This Checklist
Are you considering purchasing a condominium anytime soon? Having just gone through the process myself, I thought it important to share this checklist with our readers. Disclaimer: This list comes from my personal experience as a consumer and is not a home inspection checklist. For more information like the list below, your real estate agent will be your best resource.
I must admit, I didn't know to ask all the following questions and am thankful I had a very sharp real estate professionals assisting me, Sylvia Baldwin and Donna Ready of Mountain Lake Properties in Grand Lake, Colorado. Both of whom found the answers to the questions below and walked me through the process.
- Is there an HOA (Homeowner's Association)?
- If so, is it managed professionally or self managed?
- What physical attributes is the HOA responsible for? What are your responsibilities?
- How much are the monthly dues?
- What is the current balance of capital reserve funding?
- Is there a funding schedule or projection of repairs? How many years out?
- Are there any pending or contemplated special assessments?
- What is the ratio of owners vs. renters?
- What is the HOA fee delinquency rate?
- Lastly, ask for a copy of the master insurance policy and review its coverage.
Getting answers to all these questions allowed us to make an educated and financially prudent decision about purchasing this mountain property. The condo unit we were interested in was a short sale, great price, fully furnished, very good condition, located close to shopping, and initially appeared to be a smart investment for the future.
After asking all the above questions, it was discovered a large percentage of units had previously been purchased by a single investor who was about to be foreclosed on. Also, many of the units were vacation homes, not primary residences, and a small percentage were rental units. Funding delinquency was at a high rate (35%) and the overall property was due for some major siding, asphalt, and concrete repairs. The prospect of a special assessment is entirely feasible if past dues are not brought current.
As it turned out, our lender also believed it was a high risk purchase and discouraged us from pursuing the property. Only time will tell, but I do believe we made the right decision at this time.
Doing a little homework and asking the right questions probably saved us a lot of grief in buying this condominium. Thanks again to Sylvia and Donna for the assist, and I hope I've helped you today by passing it along!