As a home buyer, it is easy to get caught up in the moment. Particularly true for first-time homebuyers. Everything may seem perfect, and you may fall in love with an apartment. The co-op or condo unit has all of the things that fulfill your needs and wants. It may have a lot of closet space, natural light, and other things you can check off your list. If the price fits your budget, this could seem like a dream come true.
There are reasons to hit the pause button, though. If you are purchasing a property in New York City, particularly a co-op or condo unit, there are other factors we advise a buyer to consider before making an offer.
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Strict boards of directors are generally found more in co-ops than condos. You should expect certain things, subletting limitations, also house rules that govern how you can conduct yourself and actions you must take (e.g., curbing late-night noise, carpeting a certain percentage of your unit, and behavior in common areas). If these seem too much, then co-op living might not work for you. You should try a condo, which typically has fewer and less restrictive rules.
Even co-op boards can go too far, however. For instance, some buildings allow the maintenance staff access to your apartment when you are not home, which you might not feel comfortable doing. Another area where you might feel the board is going overboard concerns security. We all want to feel safe, but specific measures can feel too restrictive. Then, there are simple cases where board members abuse their power. These are boards that impose overly restrictive or even silly rules (even when they can’t do so) and engage in nepotism (e.g., stacking the board with family members, giving contracts to friends/family, etc.).
Doing a little legwork ahead of the time on the board by checking the meeting minutes and online postings can save you a lot of headaches at a later date.
Poor building management
Some buildings can be poorly mismanaged. Often, the board outsources the day-to-day oversight to a management company. Your attorney will examine the financial statements as part of his/her due diligence, which should uncover any questionable financial situations. You also want to check the financial statements to see that the building is; financially well managed. It includes verifying how the reserve fund is, handled. Will the board impose a special assessment, or is there an adequate reserve fund? However, there are other ways a building can be poorly managed.
We have previously written about the signs to look for that the co-op you are interested in buying is poorly managed. These include examining the common areas to see if these are well kept and looking at the board minutes for shareholder complaints.
While we mentioned overzealous boards, management companies and boards can also fail to enforce their rules. Ideally, these are put in place for the betterment of all the building’s residents. Lax enforcement can lead to a situation where shareholders and condo owners are illegally subletting their apartments, for instance. The renters do not have the same level of incentives to maintain the building and unit as an owner/shareholder.
Other building considerations
While you may love your apartment, it is part of a larger building. We advise making sure you want to live there, too. Some things to consider include; the presence of an elevator or a walk-up, doorman, and the building’s age. You may like an older building’s charm, or you would rather live in a newer building that has more amenities, is more energy-efficient, and requires less upkeep. While looking at the amenities, think about how often you will use them. While certain items sound impressive, the reality is that you may end up paying for something that you hardly use.
Is it a large building with a lot of units? Or, a smaller one where you will routinely bump into neighbors?
There is not a right answer to any of these questions. It is a matter of personal preference. Nonetheless, these are considerations that you need to take into account before making an offer.
We will spare you the world’s oldest real estate axiom. Nonetheless, beyond looking at price appreciation when you are ready to sell, you should remember that you are moving into a community. How close is the building too public transportation? Is it a convenient commute to work? What are the activities to do around the neighborhood? Are there restaurants and shopping that you would like to frequent?
One final note on the location, you want to see that there are people that have common interests. For instance, if you are young with children, you should seek a building and neighborhood that has a portion of residents that match these commonalities.
No one wants to have bad neighbors, of course. Most people do not want to live next door to someone that plays loud music late at night or piles garbage outside his/her door. Prior investigating can save you from later headaches.
You can visit the apartment at different times. Feel free to introduce yourself without being intrusive. When speaking to people, listen to your instincts and the vibe you are receiving.
You can lean on your buyer’s agent to help with many of these factors. He/she is likely to have keen insight into a building and neighborhood.