Buying A Home
stormi glam
member
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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Questions to ask before buying a townhouse?
Looking into buying a townhouse, but dont really know what questions to ask...any suggestions?
Re: Questions to ask before buying a townhouse?
Ask about HOA dues! Are there association dues? If so, how much? monthly? And what does the dues include?
Do you have pets? Some townhouses have pet limitations...
Parking? Included? I have a friends that live downtown and parking is not included, however parking(garage) is standard in the suburbs.
I'm sure the others will have other good input as well...
Is it a zero lot line townhouse? ie, everyone takes care of their own area and there are no dues. (the best case I think)
Are there any common areas? Who takes care of it? What rules are in place for making changes? Ie, can you change the paint color? door?
Ask what sort of building materials were used between each unit. You will be asked this for fire rating purposes when you go for your homeowners insurance, but it's good to know for sound proofing as well.
This is what I was going to say as well.
Are you looking at existing or new construction?
How much have the HOA dues gone up per year historically? How much do they have in reserves, etc? What are their rental guidelines/requirements (what percentage of units can be leased out to renters)? What is the current vacancy rate in the community? What percentage of units are currently leased out? What are the crime stats? Are there any pending assessments?
The last two questions are good for any property you're looking to buy, not just THs.
All the above suggestions are good.
I own a condo (it's now a rental but I lived there for 3.5 years), and while that's slightly different than a TH, I would suggest:
- Read over the rules and regulations of the HOA very thoroughly. In my state, when you buy a property that has an HOA, they are required to give you a copy of the rules & regulations after a purchase agreement is signed, and if you don't like any of the rules for whatever reason, you can be released from the contract with no penalties (i.e. you get your earnest money back). Some HOAs have almost no rules, some have a lot of rules. My condo's HOA has quit a few rules, including several that I would not have considered without reading the rules: no dogs, limit of 1 cat, window coverings have to be a neutral color as seen from the exterior of the building, no remodeling without consent of the HOA board, can not use balconies for storage (only seasonal items like plants, patio furniture, etc. can be on balconies - not even bikes are allowed), no satellite dishes allowed, garage spaces can only be used to store vehicles, and so on. I was okay with all these rules, but other people might not like all the restrictions.
- Get the details on the finances of the HOA, especially if they're not new construction. How much do they have in reserves? One improvement/update like a new roof or new windows or repaving parking lots or whatever can set the HOA back tens of thousands of dollars or more. If they don't have funds in reserves, there will be an assessment to homeowners to cover those costs. I would also ask how they have funded improvements & updates in the past - have they had to assess homeowners for these things before? If so, they'll likely do it again.
- If it's new construction, find out what percentage of units are occupied/sold. If there are a lot of unsold units, be wary. In my area, there were a bunch of condos & town houses built a few years ago that are now sitting half empty because they can't sell the remaining units. In many cases, the HOAs budgeted dues based on full occupancy, and with so many unsold units, the people who live there ended up getting huge increases in HOA dues to cover the unoccupied units.
- If it's not new construction, see if you can find out if there have been foreclosures. If so, that's a sign that HOA dues could be increasing soon. Since the HOA is not collecting dues from the properties in foreclosure, they may have to raise dues for other homeowners to cover that missed income.
- Visit the TH several times, at different times of the day. See if you notice noise from the neighbors. This was a big deal to me, I did not want to hear my neighbors through my walls.
- Depending on what kind of mortgage you're looking to get, you might need to ask if the TH is approved for FHA financing. Not all are.
Mr. Sammy Dog
Lots of good information here. My 2 cents:
- Foreclosures in associations aren't necessarily a red flag. Many foreclosures result in no loss of funds for the association. What you should be looking at are delinquencies. Look at the association's financial statements. Compare their accounts receivable (should be on the balance sheet) to their budgeted association dues. If the accounts receivable is less than one month of budgeted association dues for the entire property that is indication that things are going pretty well for them. If the delinquent accounts are greater than two months of budgeted dues that is a sign that the dues are likely going up to make up for it.
- Low reserves aren't necessarily a red flag either. Are the reserves low because they just replaced all the roofs in the property? Association's should not stock pile money for no apparent reason, that would mean the owner's are paying too much. You should find out if the association has a replacement reserve plan/study for future repairs & if the funds they have and the dues are in line with it. Healthy association's are planning for the future. If they do not have a plan, or even worse if they do and aren't following it, you are taking a big risk that dues will increase substantially or that you'll have special assessments.
Good luck.