The real estate market has been steadily growing for the past decade. The ever increasing demand for homes and the fewer construction activities have additionally driven up the prices of homes. Potential homebuyers are looking for a less pricey alternative to the big single-family house. As a result, nowadays people are investing more in condos. Although condo prices are also on the rise, they tend to appreciate at a slower rate than single-family homes. It is important to note that millennials have come to contribute as a significant share of this market as entry-level buyers. Affordability, therefore, remains a decisive factor in selecting a real estate property to buy. While a bigger proportion of the population prefers to own a home, they have considered buying a condo, as it is an affordable housing option. Then naturally comes the question of how to buy a condo.
The steps to how to buy a condo are outlined below. First, understand the definition, what benefits you will get, and how owning a condo aligns with your needs and goals. Second, learn of the ways of how to buy a condo that are discussed below.
What Is a Condo?
A condominium – or a condo for short – is a large complex that is divided and sold into individual housing units. You own a housing unit while also partially owning a common property known as common areas. In a condo, maintenance and care for the common areas are covered for. Condos certainly provide an attractive lifestyle choice for many – retirees or even youth looking for a seductive way of living. Some condo communities cater to retirees who choose this option because condos allow them to be able to socialize and take advantage of services that cater to them. Retirees and millennials are the most common owners of this housing option since owning and living in a condo frees them from some of the typical chores that accompany owning a house. Follow the steps below to learn how to buy a condo.
How to Buy a Condo? First, Qualify for a Loan
When thinking about how to buy a condo – or any other real estate property, the first thing you need is financing. If you need financing to be able to purchase a condo, looking into loans and possible lenders becomes the very first step. First, look at your credit score and find out whether or not you are eligible for a loan. You should also consider interest rates on mortgage, cash down payment, and debt-to-income ratio.
Going to a bank and assessing the eligibility of taking a loan that you can afford will help you establish a reasonable budget for your income level. We recommend that you seek out to more than one financial institution and inquire about the best interest rate that you can get. Once you are set on a financer, and get pre-qualified, you should begin to get a pre-approval. Getting a pre-approval will be appealing to property owners who have a condo for sale; the chance of selecting you over other potential buyers increases significantly.
Related: Invest in Condos or Single-Family Homes?
How to Buy a Condo? Second, Look for Condos
Getting loan pre-approved concludes the first step in the process of how to buy a condo. Then you can confidently venture into condominium search. First and foremost, look for a location that would accommodate your needs. You might want to consider locations or areas that are near shopping centers, fine dining, and/or exclusive retail stores, or even your job. Once you have selected the area where you want to buy a condo, it is time to consult with a realtor to help you with the property search and selection process. If you choose not to use the help of a real estate agent or real estate broker, expect then to do more research and analysis. Peruse real estate magazines, online listings, newspapers, and real estate websites.
Often times you will be lucky enough to attend an open house for the condos that you have shortlisted. It is highly encouraged that you go prepared for the open house and that you write all your observations on paper. Once you collect information on all of the shortlisted condos, you will be able to assess each and every one separately and conclude the best choice. Some of the concerns that you need to consider and inquire about include:
- Condo fees associated with the complex
- Upkeep and maintenance services and their prices
- Home Owner Associations (HOAs): If your condo is part of a HOA, then you need to find out what maintenance and what fees the owner should expect. Usually HOAs maintain common areas within the complex such as the landscape, the pool, the playground, and the fitness area.
TIP: Consider Hiring a Realtor
A realtor will certainly facilitate the process of how to buy a condo for you. A realtor will not only help you select a condo, he/she will be able to close on a deal for you with a good price. When selecting a real estate agent, it is important to look into previous clients as well as licenses and certifications held. Realtors tend to have received a certification specializing in different kinds of properties. Watch out for the different credentials and select a real estate agent or broker whose focus matches your goals. The three main certifications that you should be aware of are Certified Residential Specialist (CRS), Accredited Buyer’s Representative (ABR), and Senior Real Estate Specialist (SRES).
Related: Why Buying A Condo For Investment Might Be a Bad Idea
How to Buy a Condo? Third, Close on a Condo
When closing on a deal, make sure to bargain. Pick a price that is not too low and not too high. You don’t want the seller to disregard you for proposing a low price, neither overcharge you for bidding on a higher one. You can negotiate closing costs as part of your offer as well. If a seller is unwilling to lower the price, try to inquire about reductions in closing costs or processing fees. Once agreed on a price, both parties will sign to a contract for sale. A real estate lawyer will review the contract and approve it. When the contract for sale is signed and as you wait for the closing date, proceed with any related paperwork. Prepare your mortgage and get necessary closing fees and certifications in tact to further complete mortgage paperwork. When you finalize the sale, pay the other remaining closing fees. These include:
- Title work
- Escrow fees
- Condominium capital fees
- Survey fees
- Loan interest
- Filing fees
- Courier or mail fees
Related: 11 Costs First Time Real Estate Investors Should Consider
For more information on closing fees, go to Mashvisor.
Aforementioned are the steps that you shall take when wondering how to buy a condo. We have given you an overview of the tasks, and it is your responsibility to venture further. If you are a first time buyer, we encourage that you hire a realtor. A realtor will not only facilitate the process, but will also save you a lot of money while negotiating a good price for you.
If you are still wondering how to buy a condo, visit Mashvisor’s knowledge center and delve into the bits of the real estate world.