Purchasing a condo offers many benefits, including low maintenance and access to shared amenities. However, when you buy a condo, it may also come with added condo fees. Understanding what these fees are and what they cover is essential in deciding if condo life is right for you.
What Are Condo Fees?
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Condo fees are built-in costs that condo owners pay monthly in addition to their mortgage payments. Any person who owns a condo within a homeowners association is subject to condo fees. Condo fees make it easier for multiple-unit properties to maintain the building and value of individual units. Additionally, condo fees can improve the resale value of a condo by adding valuable amenities to the complex, like common rooms or a shared pool.
6 Things To Know About Condo Fees
If you’re considering buying a condo, you’ll want to understand what’s included in condo fees, how to budget for them, and what they typically include or exclude. Here are a few key things to know about condo fees:
1. What’s Included in Condo Fees
It’s helpful to know what’s included in condo fees so you know exactly where your money is going. Condo fees and inclusions vary, depending on where you live, but may include:
- Garbage removal.
- Water and sewer.
- Snow removal.
- Building insurance.
- Shared amenities.
- Heating and cooling.
- Elevator maintenance.
- Parking lot.
- Storage rooms.
- Community gym or pool.
Additionally, condo fees may include short-term or temporary costs, like money collected to replace the roof or renovate a common area. Generally, the condo association invites owners to vote on these special projects.
2. Condo Fees Are Not Usually Negotiable
In most cases, condo fees aren’t negotiable. The condo association typically meets yearly to determine upcoming projects and budgets. The cost of these projects is divided between the number of units, usually with everyone paying an equal share.
However, while you may not be able to negotiate condo fees, you can negotiate the price of the condo. If the condo fees are higher than you anticipate or lead to you exceeding your budget, consider offering a lower price. It’s also important to note that condo fees can reduce other monthly expenses, like repairs or landscaping.
3. The Cost of Condo Fees Vary
Condo fees may range in price between $50 to $1,000, depending on factors such as location, property size, number of units, and available amenities. In some areas or luxury markets, condo fees may be even more expensive. It’s important to note that condo fees are ongoing as long as you own a condo. You’ll still be responsible for paying condo fees even after you pay off your mortgage. Once you sell your condo, your fee obligations will transfer to the new owner.
4. You Can Budget for Condo Fees
Planning for condo fees is essential if you’re considering buying a condo. Always ask about required condo fees when shopping for a new condo. You can also ask for a copy of the annual budget, which gives you an idea of where the fees go. We also recommend asking about any special project fees within the last few years to understand how often they increase prices.
You’ll also want to inquire about any emergency reserves. A reserve is a fund that’s used to manage unexpected financial emergencies. Without one, the association may charge you additional fees unexpectedly for repairs. You can also review whether the association is currently completing routine maintenance, which can reduce the need for and use of emergency funds
5. A Homeowners Association Manages Condo Fees
A homeowners association (HOA) is in charge of managing condo fees. An HOA is an organization of members who regularly meet to vote on rules and fees. If you purchase a home within an HOA, you automatically become a member of the HOA. HOAs are organized using covenants, conditions, and restrictions, which guide property owners on homeownership. The HOA may also oversee building changes, including approved paint or building materials, ensuring the unit maintains a consistent design among all units.
6. Condo Fees Are Included in Your Mortgage Budget
The mortgage company typically considers any condo fees when calculating your expected mortgage and available home-buying budget. This means if you’re qualified for a mortgage up to $2,000 per month and condo fees are $500; they’ll only approve you for a mortgage up to $1,500 per month. Calculating HOA and condo fees in your budget is important when shopping for your new home.
Condo fees improve property and resale value by maintaining curb appeal and ensuring property updates of shared amenities. Understanding where your condo fees go can help you plan for and budget your condo purchase.