WHAT SHOULD I KNOW BEFORE I PURCHASE A CONDOMINIUM

Q: How can I recognize a condominium?

A: Residential condominiums may be freestanding, like houses - like the Patio Homes in Innisfree at Little Whale Cove, or attached to one another, like rowhomes. They can look like ranch homes, old factory buildings or high-rise structures with commercial businesses in their lower levels. Most lofts are condos.   A condominium is identified not by its appearance but by its legal description and, sometimes, a sign at the entrance.

Q: What is a condominium?

A: Condominiums are a form of real property ownership sanctioned under the Oregon Condominium Act. These statutes authorize a form of property ownership in which the homeowners association (HOA) holds title to the land or land lease, buildings, swimming pools, driveways and lawns.   Condominium associations operate according to their declarations (commonly known as CC&R's or Codes, Covenants and Restrictions), bylaws and, sometimes, additional rules and regulations.

Q: What should I know about homeowners association (HOA) fees and special assessments?

A: HOA fees are levied to obtain the income needed to pay for maintenance of buildings; landscaping costs; insurance on the buildings; and water, sewer and garbage costs.  They are typically paid monthly and average $219 per month in the Portland area. Most HOA fees are in the range of $100 to $300 per month. Fees are normally set by the HOA's board of directors and adjusted annually.  Occasionally, associations charge special assessments. If the association has a lot of deferred maintenance, a low monthly fee or inadequate reserve funds, a special assessment is more likely to be imposed.

Q: What should I know about condo pricing?

A: In new construction, the builder sets the asking price. In resales, owners and their Realtors price properties based on sale prices received for similar units, or comps.  Comps are easy to generate in a condominium complex because a property for sale often has an almost identical location and sometimes even an identical floor plans to previously sold properties. Even so, prices within a complex may vary from one unit to the next, due to differences in views, accessibility to amenities and quality of the interiors.

Q: What can you tell me about resale values?

A: The same forces that affect other housing prices affect condo prices. It may be true, however, that condo prices are more volatile than the prices of single-family homes.  Contrary to popular belief, condos have generally matched other properties in appreciation. In the early 1980s, condo prices fell dramatically when the Oregon economy was in a severe recession. Prices of single-family homes, meanwhile, declined moderately.  In the mid-1990s, I developed a condominium price index in which I tracked prices provided by 20 major Portland-area condominium associations. For a period of six years, my data showed condo prices were increasing about 12 percent annually, while Realtors Multiple Listing Service data showed that prices of all residences (including condos) increased about 9 percent a year.  While the rate of appreciation for condos and houses differed at different points in time, the two types of properties have appreciated by similar amounts during the 20-year period.  The fact that residential sales are currently brisk causes me to expect a more rapid appreciation of prices for both houses and condos as the recession subsides. Demographic trends -- including increasing numbers of empty-nesters and the popularity of downtown living -- bode well for condo values.

Q: What information should I have before buying a condominium?

A: Specific information about a condominium association is often difficult to obtain prior to making an offer.  Your Realtor should be able to gather information from the listing agent before writing your offer. You'll want to find out the association's rules about pets, parking, renting the property to another party and any restrictions on the age of residents. Beyond that, ask your Realtor to make your offer subject to your receiving -- and being satisfied with -- the association's declaration, bylaws, rules and regulations, financial reports and minutes of homeowners association meetings from the last six months.  The minutes should reveal discussions about problems, which may result in higher assessments or law suits. The financial reports give you information about the level of reserves (money in the bank) and the financial health of the association. Also, ask for the phone number of members of the board of directors and the management company. These people are usually candid about the well- being of the condominium association.

Ask The Expert reprinted from The Oregonian Newspaper, Portland, Oregon   

April 21, 2002  by  JOHN COOPER RE/MAX EQUITY GROUP

 INNISFREE PATIO HOME Condominiums