If you’re out of a job, nervous you might lose one or have simply decided enough is enough, ditching that big McMansion and downsizing to a condo might be a good idea. Prices are low, inventory is high and you might sleep better at night knowing you have a smaller mortgage payment.
If, that is, you can even sell that big house of yours. According to the U.S. Commerce Department, new homes sales dropped by 3.6% in September, indicating that weakness is the watchword in the housing market.
A silver lining could be an extension of the $8,000 new homebuyers tax credit beyond Dec.1. With the 2010 Congressional elections only a year away, politicians will do whatever it takes to get the housing market back into the black.
But if you want to sell now, or have enough cash saved up to trade up from a rental to a condo, you’ll want to tread cautiously.
Let’s do just that with these tips on finding the best deal, then making your condo happen with a minimal amount of migraines:
Location, location, location. When you start shopping for condos, note how the complex is laid out. Some have units side-by-side, and some have first, second or third floors. If you hate climbing stairs, then avoid the third floor. Similarly, if you like as much privacy as you can get, aim for a corner model, where you’ll only have one direct neighbor. Just be prepared to spend up to 10% more for a corner unit, or up to 10% more for a first-floor condo.
What’s the “livability” factor? Condos are usually run by condo associations, which sometimes have more rules and regulations than the Internal Revenue Service. Can you have pets? What about a hot tub? How much will you have to pay for landscaping and lawn-cutting? Know the answers to these questions before you sign on the dotted line.
What do maintenance fees cover? Living in a condo complex usually means paying monthly maintenance, or “association” fees. As long as fees are reasonable, that’s a good thing. The money might go to a much-needed security guard, to a clean swimming pool or to landscaping and exterior building repairs. Just know the price you have to pay, and what that price covers.
Looking to rent? Know the bylaws. If you bought the condo with the intention to rent it out, know what the lease and sublease rules are in the condo association’s bylaws. Rental rules can be all over-the-board, depending on which condo you choose. So make sure to check the bylaws to see where you and any potential tenants stand.
Don’t wait for signing day to show the condo association your paperwork. As you might have guessed already, dealing with condo associations can be a migraine all its own. To avoid that, make sure your buyer’s paperwork is in the hands of the condo association well before you sign the mortgage papers. If you wait too long, and the association has a problem, that may gum up the works.
Downsizing into a condo is just another trend in the new normal. Just know what you’re getting into before make your big move.
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