If you’re looking to buy a home along Colorado’s Front Range, you’re probably all too familiar with the low inventory and high costs in our real estate market. For many first-time home buyers, considering a condo or townhome opens up additional options. However, it’s important to know the differences between buying a single-family home and buying a condo or townhome.
A condo or townhome complex usually belongs to a Home Owners Association (HOA), which operates by collecting HOA dues from unit owners to pay for various items like insurance for the exterior of the complex and/or the interior of the units, gas, electricity, water, trash, recycling, common area maintenance, pools, tennis courts, snow removal, etc.
The difference between a condo and townhome
Owning a condo means you own the individual unit as well as an interest in the common areas. Owning a single-family townhome means you own the individual unit plus the land it’s on. One easy way to tell the difference is to look at the legal description of the unit. An example of a condo’s legal description is: Unit 1 Bldg G, plus the name of the condominium complex. An example of a single-family townhome’s legal description is: Lot 1 Block 2, plus the name of the townhome’s subdivision.
Ask these questions before you buy a condo or townhome
- Is the HOA well-managed and do many homeowners actively participate in the meetings? Obtain meeting minutes from recent HOA meetings and read through them.
- Is the HOA in good financial standing? Looking at the HOA’s records will show if it has sufficient financial reserves if it’s imposed any special assessments, and how frequently HOA dues have increased in the past.
- Are the HOA dues a good value? Learn what the HOA fees cover and determine whether you’ll actually use the amenities you’re paying for, like a pool or fitness center.
- Is the HOA overbearing or underbearing? Read the HOA covenants, look at how well-maintained the grounds and buildings are, and ask your soon-to-be neighbors for the inside scoop.
- Will the complex maintain its value? Look around—construction or development nearby could influence future resale value.
- How comfortable is the complex? Listen to see if you can hear road noise, dogs or neighbors when you’re in the unit. Keep in mind what time of day you’re visiting the unit. Scheduling a showing when neighbors are more likely to be at home can provide better insight into the unit’s environment. You could also stop by the complex in the evening or morning to see how busy and noisy it is around the area at different times of the day.
Bonus Tip: It’s useful to learn the percentage of owner-occupied units in the complex you are considering.
Interested in learning more?
Attend one of our free home-buying seminars or contact our mortgage team!