THE PHILIPPINES, March 4, 2013 – Thinking of buying a condominium unit and making it your home? Nowadays, more and more families, particularly married couples and parents, are thinking of buying their own properties instead of renting. Owning a condo unit, in particular, is deemed a better and cheaper alternative to buying a house due to the apparently lower expense of the unit. But is it really wise to buy a condo unit? What should you expect in terms of payments, dues, and ownership responsibilities? How do you go about buying one?
The nature of condominiums
According to Investopedia, a condominium, also known as condo, is “a large property complex that is divided into individual units and sold.” Additionally, its “ownership usually includes a non-exclusive interest in certain ‘common properties’ controlled by the condominium management.”
Unlike apartments, which are also multi-unit housing structures but rented out, condo units can actually be owned by individuals while the rest of the common areas in the property, like recreation rooms, are co-owned with the rest of the unit owners. However, you can only have ownership of your selected unit. You often cannot be a co-owner of the land or property where the condo is built.
The main difference between condominiums and other common multi-unit housing is that condos are structured to look like buildings, whereas other kinds like row house or townhouse units are built adjacently with common walls separating one unit from the next one. Condos are space-savers because the property owner or developer just needs to build a higher building to have more units. The rest of the property may be used for vehicle parking and recreation spots.
Responsibilities of condominium unit ownership
Still keen on buying a condo unit? You need to understand the duties and responsibilities of owning one first. A lot of prospective buyers think that owning a condo unit is way cheaper than buying a ready-made house or securing their own property and building a house of their own. While it may be true in certain aspects, it’s not all that “cheap” as some perceive it to be. Aside from your monthly mortgage payments, you also need to pay monthly association dues, which are used for unit maintenance and homeowners association reserve fund.
You’re also expected to follow condominium management and homeowners association rules on things like pets, visitors, and payment due dates. Better find out about these policies immediately so you won’t get into trouble later. You may also be asked to participate actively in homeowners’ association activities and programs. This is a good chance for you to be immersed in the system and eventually form contacts that will help you with future residential concerns.
Tips on looking for the right condominium
So if you’re truly decided on buying a condo unit, start inspecting the place thoroughly. After all, you wouldn’t want to regret your purchase, right? You need to secure mortgage applications and other legal concerns too. Make sure you don’t skip any of the following:
Scout for possible condo unit options within your area.
The idea is to look for available condominium units in your vicinity first before you go out and look somewhere else. Some prospective condo owners get too excited about offers and ads regarding affordable condos from far places only to find out that there are better alternatives in their area. Compare the prices offered by different developers and see which ones suit your budget best. It is also a good idea to consult with a market or real estate specialist or advisor so you can request for a comprehensive market analysis of the property.
Check the different facilities, amenities, and features of the condominium.
Condos with dozens of perks may sound inviting at first but may not be that rewarding in the long run. Take note of facilities offered like pools, saunas, function rooms, parking spaces and other property amenities. Use of these facilities may add to your future expenses. Request an ocular (visual) inspection permit if required, and check the overall quality of the units and the building to the extent that this is possible. Talk with residents and learn about their personal living experiences and conditions.
Get in touch with the homeowners association officers or personnel.
It pays to establish good rapport early on with the homeowners’ association officers of the condo. After all, they are the ones who can help you address future residential concerns. Ask how much you need to pay for the monthly association dues. Aside from that, try to gauge or find out how big their reserve fund is. That’s key to limiting your exposure to major association dues surprises. Try to steer clear of condos that have small reserve funds and poorly maintained facilities because chances are, you’re going to be asked to shoulder possible future repair or maintenance expenses. And likely, you won’t be able to refuse.
Find out if you are qualified for a mortgage and start the paperwork.
Of course, you’re going to need a mortgage to buy a condominium unless you happen to have a huge amount of cash with you. Start by getting your credit report, figuring out the payment terms appropriate to you, and shopping for lenders. It is a good idea to hire or consult a mortgage broker to help you on this part. This will vary, however, depending on the country or locale where you’re transacting business.
Contact the seller or condominium management and strike a deal.
Once you’re truly decided with your chosen condominium property and mortgage plan, contact the seller or building management (depending on rules of the country, state, or locale) so you can strike up a purchase deal. After that, move on with securing the required documents for the purchase. In the U.S., either an attorney or a title company will generally be handling the details.
Documents to secure when buying a condominium
What kinds of documents do you need to secure when purchasing a condo and which can you expect to receive from the condominium management? Some of the most common documents you’ll need to fill out or provide are a purchase contract, a reservation agreement, and other additional papers. Some of these are easy to understand and to fill out while others may need to be explained or clarified by a lawyer. You will need to pass personal and financial forms and documents as well. For example in Michigan, once your purchase is deemed official, you will be given any or all of the following documents as stated in the condominium buyer’s handbook:
Purchase and escrow agreement
Condominium buyer’s handbook
There may be additional documents aside from the ones mentioned. Federal (HUD) documents are also required, although current rules on necessary forms are in flux. Make sure to read and understand all the data and information stated in these documents because they provide details of your different obligations and restrictions in becoming a condo unit owner. They can be your official references should you have complaints and concerns to raise in the future.
Make smart condo buying decisions
In the end, the trick is to make smart decisions when planning to buy and selecting a condominium unit. Right now, we can say that the real estate market is generally at its low point when it comes to supply of homes, apartments, and condominiums as reflected in the story compilation of Realtor.com. Some of the most sought-after and attractive places are showing a low inventory of real estate properties, and both investors, as well as prospective buyers are struggling to get the best business deals. So before you finally decide on investing your money in a condo unit, do your homework thoroughly. Your family and loved ones will thank you for it.
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