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May 16, 2024

Five Things That Can Cut Your Condo’s Value

Noe Condo Building

We’re in the heart of the spring real estate season and condo sellers are finding that there’s more competition than there was earlier this year. It’s more important than ever to recognize that certain aspects of your property may hinder a sale and narrow its buyer pool. Here are my top five value-limiting aspects, based on what I’ve seen recently in the market.

1. Serious pet restrictions: It’s typical for HOAs to allow for one- to two pets. But if your HOA bans dogs and cats outright, you’re going to have a challenge. If you’re a pet-owning buyer who’s deciding which places to see at a weekend open house, make sure you or your agent call listing agents to clarify any pet restrictions.

2. Weird parking: A tiny or oddball parking space, difficult tandem arrangement (e.g., having to back two or more cars out onto a very busy street) are some of the situations buyers won’t like. If you’re comparing your condo to one that recently sold with an independent, standard space, make sure you adjust for the nature of your parking.

3. Very high HOA dues: Everyone has a budget, and excessively high monthly HOA dues can blow some buyers out of the water. When buyers are preapproved for a loan, they factor in a ceiling on HOA dues. If your condo’s monthly dues run north of $1,000 a month—and you don’t have many amenities—it may take longer to find the buyer.

4. High rental-to-owner ratio: Most buyers looking to owner occupy their condo are wary of buildings where more than a quarter of the units are rented. Many lenders won’t do 30-year fixed loans on buildings with excessive numbers of rentals.

5. HOA litigation: If the HOA is currently in litigation with the building developer over construction defects, it may take a bit of time to sell your condo. There are unfortunately a lot of unanswered questions in a defect situation, such as whether the owners may be in for a future special assessment. Few lenders will touch a building like this until the HOA resolves the litigation. Some may grant loans, but they’ll be adjustable-rate mortgages requiring larger down payments.)

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