Condominium ownership remains a sought-after form of home ownership for many buyers. There are many nuances to having this kind of home that you need to be familiar with when representing condo buyers.
One of the most important things to teach about condo ownership is that the buyer not only owns an individual unit but also has an undivided interest in the surrounding land, common areas and the homeowner’s association (HOA). The presence of an HOA places additional due diligence upon a buyer prior to closing a purchase. Having to review and approve the HOA financials and conditions, covenants and restrictions (CC&Rs) will be a buyer contingency.
A buyer needs to consider any visible deficiencies in the association maintenance practices. Ultimately, the cost to maintain the value falls upon the owners because of the shared liability.
The monthly HOA dues will typically cover exterior building and yard maintenance along with hazard insurance. The buyer’s lender will factor the monthly HOA dues into the buyer’s ability to qualify for a loan.
A lender will have to determine if the condo project was approved by Fannie Mae, Freddie Mac, the VA and FHA prior to proceeding with a loan. It would be a good idea to check this out with different developments before showings.
Condominiums do provide a less expensive alternative to homeownership but come with potential lending challenges. Please connect your clients to me so I can preapprove them for approved developments that fit their needs.