Don't get stuck with a tough-to-sell condo
If you're planning to buy a condominium, you're probably not going to stay in your new home very long.
More than half of all condo owners move out within six years of purchase, according to the National Association of Home Builders. Less than a third of single-family homeowners move within that same time.
So buying with an eye on resale potential is critical for anyone in the condo market.
Just because the condo meets your needs doesn't mean it will be easy to sell when the time comes, which is why you need to consider the location, layout and amenities that will appeal to a broad group of potential buyers.
These 9 smart moves will help you think through these issues so you can buy a unit that will sell quickly for a profit.
Smart move 1. Understand your product.
Condos are popular because they can provide:
- Affordable housing in otherwise unaffordable locations.
- A home with fewer maintenance demands.
- Convenient access to public transit, employment, entertainment and shopping.
You'll want to purchase a property in a high-demand location that appeals to the young and old and that is priced far below the single-family options in the area.
Meet all three of these characteristics, and you have a winning combination, says real estate broker Bruce Ailion of RE/MAX Greater Atlanta. You need at least one for a safe purchase.
But avoid buildings with tons of amenities and luxuries that drive up homeowners association fees. The high fee is a turn-off to people who don’t plan to use all of these features.
Smart move 2. Check out the number of bedrooms.
Look for higher bedroom counts, which are more valuable than total square footage.
Two bedrooms are better than one, but make sure that extra bedroom is legally considered a bedroom. A den or loft probably won't count.
In most parts of the country, a unit with at least two bedrooms will sell or rent more readily, although there is one big exception to this rule.
"If the unit is in a major metropolitan area, a studio or one-bedroom may be far more affordable and more attractive to a larger number of buyers," says Phoenix Realtor Dan Leboffe, director of agent development for ZipRealty.
Smart move 3. Know what a good layout looks like.
Certain layouts have more appeal, and therefore more value, than others.
For added privacy, in units with two or more bedrooms look for a split floor plan where the bedrooms don’t share walls.
But avoid awkward layouts that reduce usable space. For example, a long hallway can occupy a significant amount of a condo’s square footage.
Angled walls that create irregularly shaped rooms can make furniture placement difficult. And pillars and columns reduce usable square footage.
Interior bedrooms that don’t have windows also are unappealing.
Bathrooms are another key consideration. You want a unit with at least one-and-a-half to two baths, says Leboffe. Occupants want their guests to be able to use a separate bathroom.
And if that extra bathroom isn’t too close to the living or dining areas, guests will be more comfortable.
Smart move 4. Consider the unit’s location within the building.
There are locations within a condo building you need to avoid.
"Is (the unit) next to a noisy elevator or smelly trash room with a slamming door?" says Katie Wethman, a Keller Williams Realtor who is licensed in Maryland, Virginia and Washington, D.C. "These things could affect you while living there and also affect resale when it comes time to move."
And if the view outside your condo window is of another condo or the trash bins in the alley, your unit will be less valuable than a unit with an attractive view.
In general, you want your unit to be near — but not on top of — the building's amenities and parking.
“Some people think getting a unit overlooking the pool is ideal, until they actually live there and find it is much noisier than they expected,” Leboffe says. “But proximity to the pool adds value to your investment.”
Smart move 5. Know that different floors have different values.
In general, an end unit or a top-floor unit is more attractive. Fewer shared walls means less noise from neighboring units.
That being said, higher-floor units aren't always better, especially in a building without an elevator.
Property values in walk-up buildings may be lower for units on the second floor and above because access is more difficult for some people. Buildings with elevators open up higher floors for these residents.
However, elevators can mean higher condo association fees, since they cost more to maintain and repair than staircases.
Smart move 6. Don’t forget about geographic location.
Purchase where people want to be and avoid fringe areas, says Amy Tierce, regional vice president of Fairway Independent Mortgage in Needham, Mass.
Also be careful about buying in areas that are dense with condo developments, Leboffe says. Ideally, you want to be located closer to single-family residences or at least more upscale condos.
Look for buildings that are close to transportation, shopping and employment. These conveniences add value.
You'll also want to be near major highways and public transit lines and close to the central business district or major tourist attractions.
Smart move 7. Make sure the unit has guaranteed parking.
Pick a unit with ample parking. Ideally, it will have guaranteed parking, either in a parking lot outside the complex or in a garage.
Garages with cameras are especially appealing as they provide extra security.
"Approximately 60% of attached units are purchased by women, so safety is a factor," Ailion says.
Covered, secure parking is a definite advantage and not that common for attached units.
A unit without guaranteed parking may cost less up front, but it won’t seem like such a great deal if you can't sell quickly and for top dollar when you're ready to move.
Smart move 8. Know which in-unit amenities matter most.
Units that let in lots of natural light are more attractive, as are those with outdoor space, such as a patio or a balcony large enough for grilling and entertaining.
Also, look for units with abundant closet and storage space, a premium in condos.
In-unit washers and dryers are almost a necessity, says Jerry Grodesky, managing broker of Farm and Lake Houses Real Estate in central and southern Illinois.
Future buyers or renters will appreciate the convenience of not having to drag their laundry to a shared laundry room or wait for another resident to finish using the washing machine.
Four-legged occupants are another consideration.
"A ‘no pets’ policy can be good if you live there but limits who you can rent or sell to," Leboffe says.
Smart move 9. Check out the competition.
While the condo market won’t be the same when you buy as it will when you’re ready to sell or rent out your unit in a few years, it’s still a good idea to evaluate your competition before you buy.
Examine the amenities in the complex you’re considering buying into versus those in neighboring complexes, and how many complexes with similar amenities are within a one-mile radius, says Cindy Marlowe, a RE/MAX agent in Denver, Colo.
Also, look at how the cost of the amenities that come with the complex compares with those of neighboring complexes. Will your unit stand out in terms of what it offers for the price?
"If you are an early buyer in a very large condo complex or association where more building is planned, when you go to sell you could be competing with brand-new units just like yours," Tierce says. Those buyers will want the brand-new option, and your resale price may be affected.