The Worst Condo Buying Mistakes Revealed!

Hey everyone, welcome back to the blog! If the idea of stepping out of your front door and being just a short walk away from everything the city has to offer sounds appealing, chances are you’ve thought about buying a condo. Condos are a fantastic option for those who want the benefits of homeownership, along with community amenities, but without the hassle of maintaining a yard or dealing with major home repairs. However, purchasing a condo is not the same as buying a single-family home. I’m going to share the top three mistakes buyers make when purchasing a condo—and how you can avoid them.

Mistake #1: Not Checking if the Condo is Warrantable or Non-Warrantable

One of the biggest mistakes I see buyers make is not determining whether the condo they’re interested in is warrantable or non-warrantable before making an offer. This is crucial because it can significantly impact your ability to secure financing. A warrantable condo meets the standards set by entities like Fannie Mae, Freddie Mac, FHA, or VA, making it easier to get a mortgage. These standards include requirements like the condo not being part of a timeshare, having at least half of the units owner-occupied, and contributing at least 10% of the annual budget to reserves.

If a condo doesn’t meet these criteria, it’s considered non-warrantable, and financing options become limited and often less favorable. You might have to pay in cash or find a rare lender willing to offer a loan with higher interest rates. To avoid this pitfall, make sure to inform your lender about the specific condo community you’re interested in so they can verify its warrantability. You can also check the U.S. Department of Housing and Urban Development’s website for a list of FHA-approved condos.

Mistake #2: Not Confirming the Condo’s Rental Policies

Another common mistake is buying a condo as an investment property without first ensuring that the community allows rentals. Unlike single-family homes, condos are governed by the rules of the community, which can have strict rental policies. For example, many condos in Kansas City do not allow short-term rentals like Airbnb, and some even restrict long-term rentals.

Before making an offer, ask your real estate agent to provide you with the community’s Declarations, Covenants, and Restrictions (CC&Rs). These documents outline the rules and regulations of the community, including rental policies, what amenities and services are covered by the HOA dues, and any restrictions on how you can use the unit. Reading through these documents before committing to a purchase can save you from unpleasant surprises later on.

Mistake #3: Overlooking the Financial Health of the Condo Association

The third mistake buyers often make is failing to assess the financial health of the condo association. It’s crucial to know how the association manages its finances, especially if something goes wrong with the building. You need to be aware of whether you’ll be responsible for any unexpected costs and how much the HOA has in reserves to cover major repairs or improvements.

Additionally, you should check if the current owner has any outstanding fees or assessments. If these aren’t reconciled before closing, you might end up responsible for them. To avoid this, secure a resale certificate, which is required by Missouri law. This certificate, signed by the HOA board, details common expenses, assessments, anticipated capital expenditures, and the association’s reserves. It provides a clear picture of the financial status of the association, helping you make an informed decision.

Final Thoughts

As you can see, buying a condo requires a bit more due diligence compared to purchasing a single-family home. That’s why having a trusted real estate agent by your side is crucial. We know the right questions to ask, the documents to request, and how to advocate for you throughout the process.

If you’re interested in exploring current condos for sale in the Kansas City metro area, reach out to us on our Contact Us page linked here so we can get you set up on an automated search! As always, if you’re looking to make a move in the Kansas City area, feel free to text or call me. Let us be your Kansas City real estate experts.