Buying a new property is an exciting time. Whether you’re a first-time home buyer or an experienced veteran, nearly everyone loves shopping. Buying a Condo is different; you’ve got a lot to look out for, whether you’re buying a new Condo or conversion. In the era of the internet, the information a buyer needs is out there. The question becomes – does a prospective buyer take it, or do they go into a six-figure real estate deal blindly? Here are the different types of prospective Condo buyers.
The Ignorant Buyer doesn’t understand anything about a Condo Association. They may have a tangential understanding of what a Condo Association does, but they have not thought through the impact it will have on their life and living. This leads them to be very confused initially when they are a Condo Association Owner. Some examples of this behavior include:
- Confusion over how Condo Assessments are increased and how budgets work.
- No understanding of Condo Association financials, such as reserves.
- No understanding of how a Special Assessment works.
- Frustration at “how many rules” the Association has or that the Association “can do that to me.”
An Average Buyer is the most common of the prospective Condo buyers. They understand that that there is a Condo Association that can control where they live and what they do. They understand how budgets work. Compared to an Ignorant Buyer, they generally understand that an Association is a form of government and has a substantial amount of power. They may do some research around the Association – learning about reserves and what Bylaws matter most. However, they will still lack a few key points of knowledge:
- They may understand what a Special Assessment is, but not the details. They may not have identified exactly how much can be assessed without a vote and be surprised if they get a bill.
- An Average Buyer may not be willing to walk away from a sale based on HOA/Condo disclosures. Many states do not provide this information until after a property is under contract. The Average Buyer may fall in love with the property and neglect to consider the impact of the Association. This comes back to haunt them in the form of a psychotic Board or a bad budget.
- They don’t consider themselves as someone who will get involved in the Association. They may view the Association as a necessary evil as opposed to something to participate in.
An Informed Condo Buyer understands exactly what they are getting into. They tend to be the rarest of prospective Condo buyers. They’ve either lived in a Condo Association before or have a smart real estate agent who has answered their questions. Some of their specific traits include:
- They will read everything relevant to a Condo Association – past meeting minutes, disclosures, and budgetary information.
- The Informed Buyer will not get seduced by the building or the unit they are buying, but instead make sure they have a good Board and not one that has broken bad. They will walk from the contract if they don’t like what they see.
- They plan to get involved at some level, whether as an involved owner or on a Committee.
Which One are You?
You might be reading this, thinking that no one on the planet is lame enough to be an Informed Buyer. You might be right. However, Informed Buyers end up being the happiest and most involved Owners in a Condo Association. Sure, you can roll the dice and not do your research. There are plenty of Condo Association horror stories that should give you pause as to why doing your homework is a worthwhile step in protecting your investment.