what are all the many ways that buying a condo differs from buying a house? Is financing any different?

Asked by Holly Pietruszka, Brattleboro, VT Sun Aug 24, 2008

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Tue Jun 12, 2012
First of all they count the monthly condo association fee when they qualifying you. This means you have less available to mortgage. You don't own the land under your unit, but have ownership in the common land. You should consider the value difference without the land when comparing. The financing may depend on how new/old the unit/complex is. Most of the other issues are similar to a free standing home- appraisal, condition, taxes. Contact me for more at info@rjohnco.com or 800.627.248. former real estate broker, Rick John
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Pike Porter, Agent, Burlington, VT
Mon Aug 25, 2008
Hi Holly,
I agree with Jim and add a few other differences. A few, but by no means most, condos are harder to finance either b/c too many of the current condos in the development are not occupied by their owners and instead rented out, or b/c the condo association doesn't look financially stable to the lender.

You should think of the association fee as the maintence costs you would otherwise put into your house. The fee feels different b/c your paying it every month rather than putting a chunk of money down when you need a new roof for example. Many people find this forced savings helpful b/c they would don't probably won't save money to pay for exterior painting, landscaping, driveway upkeep, roofs, heating systems, water heaters, etc that will need maintence, repairs, and replacement over time.

Give Jim a call, they know Brattleboro very well and can discuss the particular condo associations or answer more specific questions you may have.
Web Reference:  http://www.startinghome.com
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Jim Bellville, Agent, Brattleboro, VT
Sun Aug 24, 2008

Condo buying isn't really so different from buying a house when it comes down to it. There are a few differences.

1. The seller is required to provide you a copy of the Condo documents and you will have an opportunity to review these documents. You should pay closed attention to this as these can dictate things like the color of the grass that you are allowed to grow or the number and type of outdoor decorations that you can have. It depends on the way it was set up in the beginning. You will also get a copy of the financials. See below for more information. This is called a Resale Certificate and it is required for the sale. Ask your attorney for more information on it.
2. There are several different types of Condos. You have your sereotypical multi-building, multi-unit with either flat or townhouse style units. You have standalone buildings with common areas and Association rules in a certain development. Or you have what amounts to an apartment building that has been split into separate units with common building and/or grounds maintenance.
3. In your typical Condo that you will find in the Brattleboro area, you are dealing with multi-building developments with multiple units in each. Each unit is owned and each owner is responsible to pay the Association Fees based on what the Homeowners' Association and maintenance company set in order to pay the required maintenance, taxes on the land, insurance and any other costs that may arise. Hint: A good Association will have a capital improvement plan in place for regular replacement of the roofing, siding, road maintenance, and repair/replacement of the amenities such as pool, tennis court, or basketball court. If there isn't one in place, you should be wary.
4. In the stereotypical condo, you only own from the sheetrock in. You do not own the roof or the siding or even the windows, so keep this in mind. If the roof is leaking, the Association has to be notified to get it fixed, however, you will need to make any interior repairs in most instances.
5. In some cases, you will be allowed to do some gardening or plantings outside, in some places not. It depends on the Association rules and how they are being enforced.
6. You will have a monthly Association Fee to cover anticipated expenses. If something catostraphic happens or if the Association finances are not in good shape, you may also have Special Assesments. This is basically an emergency fee to cover unanticipated expenses and/or budget shortfalls where there isn't a capital fund.

Financing for a Condo is different in a few ways as well.
1. The Association Fee can be a spoiler. This big chunk every month can push some potential homebuyers out of the running for their financing by skewing the ratios that the banks use to determine eligibility.
2. Some types of Condos, especially in the resort areas or with special amenities, are not eligible for conventional financing due to Fannie Mae and Freddie Mac starting to enforce their rules against "Condo-tels" thanks to the mortgage crisis. A condo in a development that has too high a ratio of renters to owners or if the Association owns too many of the units, will also fall under this category. This will require someone looking to buy a Condo that falls into this type to require either a cash purchase or private financing or a "portfolio" loan that is kept by the bank issuing it. Even those are getting harder to do. Your mortgage person can explain it better and whether or not any Condo you are looking to purchase falls into this hard to finance category.

As a function of the purchase, I always advocate that you get a structural inspection, no matter what the condition of the unit may appear to be. The money spent is well worth any issues that may be found. I also recommend that you go over the Condo documents with a fine tooth comb. You should know those really well before you get to the closing. It can dictate whether or not you can have the dog that you currently own or if you can use that new $2,000 Weber Grill you just bought.

I hope that helps get you started. If you have any more questions, I would be happy to sit down with you and try to answer them or at least point you to a person that will.

Good luck!
Web Reference:  http://www.JimVTRE.com
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