Lisa Byrd traded the maintenance responsibilities on her three-bedroom house for an 1,880-square-foot Enclave condo with conveniences she's willing to pay $290 a month for: the concierge, common areas and camaraderie. She figures it's a deal.
Condo fees are based on unit size: the more space you buy, the bigger your bill. And, of course, "the more amenities, the higher the price per square foot," says Scott Troxel, an agent with Keller Williams Realty. "But a lot of times, those amenities are why buyers go into a particular development."
Many buyers understand before they apply for a loan that a mortgage isn't their only monthly payment. But fees can work against buyers who are squeezing their budgets to purchase in a desired building.
"Lenders take those fees into account when they approve someone for a mortgage," Troxel says. "It's tough when the property a condo buyer wants is at their price limit, and the association fee can really push them out [of a deal]."
When a building faces major repairs and does not have the money in reserves to cover them, the association board votes on whether to enact an assessment. Basically, this is a bill for services, and the tab for individual owners can easily push five figures.
"You could have a pool with a crack in it, or wood siding on the exterior that is termite-infested," Anderson says. "Assessments can range from $1,000 to $15,000 for the year, per homeowner, depending on the degree and severity of the repair."
"People who have lived in the building for the lifetime of the development understand what it costs to maintain a structure," she says. "But for the new buyer who just bought within the year, and all of a sudden they are faced with an assessment, the cost is surprising."
It's also critical to find out how much a building has in its reserves. Usually, owners pay two months worth of fees upon move-in, and this money is invested in the reserves, which acts as a savings account for the condominium.
Older buildings are more likely to pull from their reserves to finance upkeep. And smaller developments bear a greater burden, dividing assessment sums by fewer units.
"Some people have owned homes in the past, and they are tired of dealing with landscaping and exterior maintenance," he says. This includes single professionals who travel and single parents who do not have time.
The purchaser must decide what is more cost-effective: paying a monthly condo fee or maintaining a house. Troxel figures the cost of maintaining the four-bedroom home he's owned for 15 years, including repairs, utilities and lawn care, easily equals most condo fees. Of course, buyers must decide whether they would take advantage of building amenities.
Ask for last year's association meeting minutes. They may indicate when repairs and maintenance issues were discussed and whether serious investments (and possible assessments) are looming.
This is cache, read story here
