The condo challenge
Sam Schneiderman, Broker-owner of Greater Boston Home Team discusses the biggest challenge that he feels condo buyers and owners face.
The lure of carefree condo living is enticing: buy a condo and someone else will take care of the maintenance, freeing condo owners to attend to their other priorities.
The reality of condo living is that someone else has to make sure that the property is cared for and the bills are being paid. The “someone” is the group of owners that run the condo association.
Those who buy units in professionally managed buildings (usually buildings with over four to six units) typically, but not always, have the advantage of buying into better run buildings than the smaller self-managed associations.
Even the best manager has to follow guidelines set by the condo association’s board and live within the budget that the board approves. In tough economic times, some professional managers are finding it challenging to get the funds needed to perform all required maintenance and keep a healthy reserve account.
When my team and I work with condo buyers, whether they are looking in a small or large building, the challenge that we often have is finding a good condominium unit in a well-maintained, well-run building that is financially sound.
If they have to make a compromise between the quality of the condominium unit and the quality of the condo association, I’d rather see my clients choose a unit that has issues that they can resolve as long as it is in a reasonably well-run association.
Here are my minimum criteria for a reasonably well-run condo association:
- an operating budget that is reviewed at least annually
- a budget line item for “reserves” in the budget
- a separate reserve account that has a balance no lower than the association’s insurance deductible
- signs that there is ongoing maintenance to keep the building stable and the grounds safe
While few condo associations are perfect, I estimate that about one-third of the condo associations that I’ve seen don’t meet the basic criteria above. That creates a challenge when a buyer has found the perfect condo in a not-so-perfect association. When that happens, I often find myself negotiating with the agent, seller and/or condo association to see if the association will correct issues of concern to my buyers.
It is amazing to me how many listing agents, sellers and/or other unit owners in the association refuse to do what they need to insure the marketability of the units in their associations. When that happens and my buyers pull out of the deal, the units often stay on the market for quite some time until the seller gives up, or the price is reduced low enough that it entices a buyer to overlook association challenges, which is never good long-term ownership strategy in my opinion.
What’s the worst condo building or association issue that you have heard of?
Did you walk away from poorly run associations or buy a good unit in a compromised association?
How did that work out for you?
