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How to Avoid These 5 Costly Condo Buyer Mistakes

Having worked with hundreds of condo clients the past ten years (buyers and sellers), I've seen these five common mistakes buyers make too many times. Sometimes they are costly. Sometimes they result in the buyer missing their dream condo. Fortunately, all of these can be avoided. 

1. Offering the wrong amount

Notice I didn't say offer too much or too little because it all depends on the situation. Some buyers will pay too much because they:

  • Buy on emotion. When a buyer falls in love with a condo and 'has to have it', they tend to pay too much. 
  • Use the wrong comps when deriving a price and fail to notice important differences. In some buildings, a one floor difference can be the difference between staring into a building across the street or at one floor higher, a beautiful view of the monuments. 
  • Mis-read the competition when there isn't any. 

Some buyers will offer too little for some of the same reasons and regret it later because they:

  • Use the wrong comps. Sometimes that condo that seems identical to the last sale really is worth $25,000 more. 
  • Have this idea that you should always offer X percent below list price. No, sometimes the seller will misprice their condo too low.
  • Make a lowball offer that insults the seller so much that they simply won't deal with that buyer again.  

How do you know how much to offer? Do your homework and have your agent do a comparative market analysis before you write that offer. 


2. Not learning what is important to the seller

The most important term of the offer is not always the price. The seller might need a quick settlement because they are moving out of the country or they are closing on a new home and they need the money from the sale. Or they need a short rent back until their new home is ready. Or they are out of the area and can't be bothered with any home inspection repairs. How do you know? You ask or better yet, have your agent inquire. A good agent will know the right questions to ask and be able to interpret the answers. 


3. Failing to get pre-approved for financing. 

Not getting pre-approved can hurt you in several ways. If you start your condo search in a higher price bracket and visit a number of condos, you will be sorely disappointed when you have to look in a price range $100K less. Not being pre-approved can hurt you when you make an offer. Many sellers won't respond to an offer without a pre-approval letter and if you are competing against other buyers, you put yourself at a disadvantage. Getting pre-approved is easy. 


4. Not reading the condo docs

There is a reason why most states give condo buyers a review period of the condo docs in which they can void the contract - because there can be really important information in the documents that might cause you not to buy. Are the reserves sufficient? Are there special assessments being discussed in the board minutes? Can you live with the pet policy? 


5.  Not paying attention to the condo fee

The price of the condo is obviously important, but don't become so focused on that to the exclusion of the condo fee. I always help my client understand what their monthly payment - the sum of your mortgage payment (Principle + Interest) + Taxes + Insurance + Condo Fees. When they are trying to decide between several different condos, they are sometimes surprised to find they have a lower monthly payment in the higher priced condo they are considering. There are many factors that determine the condo fee, including, the age of the building, the amenities offered, the number of units in the building, how well run the building is and more. It is also important to look at whether any utilities are included in the fee. In most new buildings, the owner is responsible for all the utilities, even including water. In some older buildings, all utilities are included.