Buying a Condominium
Buying a Condo:
Over the past few years, the condominium market has been increasing in value. For example, according to the National Association of Realtors there has been a continual climb in appreciation since 2000. But don't let the trend of increasing value make your decision, there are numerous factors to determine whether condominium life is for you. Keep in mind that in the last couple of years accross the country, not just Panama City Beach, the condo market has taken a drastic slow down. In some cases prices are now back to 2004 or earlier prices! Many people are deciding now to take a cautious look at the availability of the market.
What is a Condominium?
A condominium is, for all intents and purposes, nothing more than a box of air. Ownership usually includes the floor space up to the walls but not including them, henceforth, "box of air". Walls are considered part of the main construction and are usually considered communal property.
Along with the walls of the building, other areas are considered to be group owned. These areas usually include pools, activity rooms, exercise facilities, and parking garages. Most developments maintain these areas through funds collected through association fees (more on these later).
Covenants and Restrictions:
Condominium ownership does have a few restrictions that you must be aware of prior to purchasing your unit. Condominium owners association usually have a list of covenants and restrictions that each owner agrees to abide by in order to maintain the integrity of the development.
Some of these covenants and restrictions can include size of pets allowed, balcony or patio decorations and noise levels. Other things to consider may include remodeling projects, more than likely, they will require association approval.
Condominium Owners Association
What is the Condominium Owners Association? The Owners Association is usually a group of elected owners in the development that make decisions regarding the condominium development with the greater good in mind. They are also the enforcers of the covenants and restrictions of the development.
10 Questions to Ask Your Condo Board
Before you buy, contact the condo board with the following questions. In the process, you'll learn how responsive and organized its members are.
1. What percentage of units is owner-occupied? What percentage is tenant-occupied? Generally, the higher the percentage of owner-occupied units, the more marketable the units will be at resale.
2. What covenants, bylaws, and restrictions govern the property? What grandfather clauses are in place? You may find, for instance, that those who buy a property after a certain date can't rent out their units, but buyers who bought earlier can. Ask for a copy of the bylaws to determine if you can live within them. And have an attorney review property docs, including the master deed, for you.
3. How much does the association keep in reserve? How is that money being invested?
4. Are association assessments keeping pace with the annual rate of inflation? Smart boards raise assessments a certain percentage each year to build reserves to fund future repairs. To determine if the assessment is reasonable, compare the rate to others in the area.
5. What does and doesn't the assessment cover common area maintenance, recreational facilities, trash collection, snow removal?
6. What special assessments have been mandated in the past five years? How much was each owner responsible for? Some special assessments are unavoidable. But repeated, expensive assessments could be a red flag about the condition of the building or the board's fiscal policy.
7. How much turnover occurs in the building?
8. Is the project in litigation? If the builders or homeowners are involved in a lawsuit, reserves can be depleted quickly.
9. Is the developer reputable? Find out what other projects the developer has built and visit one if you can. Ask residents about their perceptions. Request an engineer's report for developments that have been reconverted from other uses to determine what shape the building is in. If the roof, windows, and bricks aren't in good repair, they become your problem once you buy.
10. Are multiple associations involved in the property? In very large developments, umbrella associations, as well as the smaller association into which you're buying, may require separate assessments.
Where Do I Go From Here?
First, start shopping! Find the condominium that is right for you. Browse through our FREE CONDO SEARCH, when you find a condominium that fits your needs and budget, contact me, and I will provide you with additional information and arrange a viewing of the property. You can also go to our Panama City Beach Florida Condominium Review to find out more about availability and features of the condos up and down the Emerald Coast.
*a portion of this article is reprinted from REALTOR Magazine Online by permission of the National Association of Realtors. Copyright 2005, All rights reserved.