What Are The Disadvantages of Condominium
Ownership?
For some homebuyers, condominiums are a godsend. They provide a means
of building equity without the hassles of yard work and other outdoor
maintenance projects, as well as many of the indoor chores and
financial responsibilities that single-family homeowners typically
face.
But condo ownership isn't for everyone. And before you sign on the
dotted line and enter into this agreement of communal ownership --
which is exactly what you're doing when you purchase a condominium --
you'll need to consider a few factors first. Not to burst your bubble,
of course, but life in a condo brings with it a few hassles with which
single-family homeowners feel grateful they don't have to contend.
For starters, as we alluded to last week in a related article,
condominium owners share common walls. How many common walls you share
depends upon whether you purchase a flat (meaning you have a neighbor
living either underneath you or above you, as well as on one or both
sides of your unit) or a town home (which you gives you the reassurance
that both upstairs and downstairs are yours -- although some
high-rise-style town homes are built in a manner in which residents may
still have neighbors living either above or below their own units).
Common walls are reminiscent of apartment life, which is something that
homebuyers often are anxious to flee when they've reached the life
stage at which a home purchase is attainable. If you have quiet and
considerate neighbors, common walls become a non-issue. But it's a game
of Russian roulette when you sign on the dotted line. You have no idea
how considerate those neighbors will be until you spend your first
night in that unit you're considering. And unfortunately, if your
neighbors are obnoxious, you have little recourse as a condominium
owner but to call the police.
Unlike apartment communities, in which renters may often pick up the
phone and call a leasing office or an on-call security staff to report
excessive noise, condominium owners have no such protection. They're
faced with the sticky dilemma of going downstairs, upstairs or next
door and democratically working out the problem neighbor to neighbor
(which, let's face it, isn't easy to muster up the courage to do --
particularly if you're new to the condominium community) or calling the
police. That's quite a way to introduce yourself to your new neighbors
if they determine who blew the whistle on their late-night revelries.
Aside from the common wall issue, you'll also need to consider that if
your local real estate market experiences a downturn, condominiums
usually are the first casualties in those sagging economic times.
Condominiums sometimes are pigeonholed into a "niche" market, and when
the real estate market slows to a trickle, the few transactions taking
place usually involve single-family homes. And of course, during slow
periods, asking prices for single-family homes drop, making it possible
for many aspiring homebuyers who previously thought a condominium was
the maximum they could afford to move up to a single-family home,
instead.
Then, of course, there's the entire issue of the condominium
association. Their effectiveness and cost varies greatly from property
to property. In a single-family home, you'll never be presented with a
sudden fee that you must pay for communal property repairs. Take the
case of a condo owner with whom I recently spoke, who told me her condo
association recently informed her that, in order to pay for roof
repairs to the entire complex -- her building included -- she and every
fellow condominium owner in her development would have to cough up $650
on the double. That was in addition to her $120 monthly condo
association fees -- and, of course, her mortgage.
A condominium association, in theory, is an excellent insurance policy
for the continued maintenance of your exterior property -- not to
mention a protection for keeping the property values high. On occasion,
however, these associations become quite political, governing
everything from the Christmas lights you string on your porch to
whether or not you can keep a 50-pound dog in your unit. This communal
lifestyle holds you accountable to a mini government of sorts. As an
owner, you may, of course, make your views heard during monthly
meetings, but there's no guarantee as to whether or not you'll be
successful and affect change.
If you're informed about all of your obligations as a condominium owner
before you sign the contract and are agreeable to them, you just may
have found yourself the home you've always wanted. As with every major
financial commitment, you'll have to weigh the pros and cons of the
agreement you're preparing to enter. Perhaps the most important thing
to remember as you make your decision is to take your time. Demand full
disclosure of condo association fees and exactly what they cover. Know
up front what your monthly expenses are expected to be; it can vary
considerably among different condominium developments. Shop around, and
get some perspective on how different properties approach their
residents. Ask your REALTOR® if he or she has sold units in this
development before, and what kind of feedback he/she has gotten from
his clients after they moved in. If your Realtor hasn't conducted a
transaction at this development, ask him/her to call fellow Realtors
and find out if they've sold units at the condominium complex you're
eyeing. First-hand reports are invaluable tools during your home search
process, and you'd be wise to take them to heart.
