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How to Avoid These 3 Costly Condo Buyer Mistakes

It’s important to do your homework when you’re buying real estate. Learn how to avoid these 3 costly condo buyer mistakes by researching and working with a good agent.

1. Offering the Wrong Amount

Depending on the situation, buyers can offer too much on a condo, or too little and lose the sale. Some buyers pay too much because:

  • Buyer offers too much because they went off emotion. Buyers tend to pay too much when they fall in love with a condo and gets attached too quickly.
  • Buyer fails to notice important differences after using the wrong comps when deriving a price. Differences in layouts, views, and other details can make a big difference in price.
  • Buyer offers too much thinking there’s a competition

Some buyers will offer too little and regret it later. They might offer too little because:

  • Buyer uses the wrong comp when deriving a price, but the condo might really be worth the difference.
  • Buyer thinks they should always offer a certain amount below the list price.
  • Buyer makes an insultingly low offer and the seller might refuse to work with them again.

Make sure you do your homework and check with your agent before making an offer on the condo you want.

2. Not Learning What is Important to the Seller

You would think that the price is always the most important term when it comes to a sale, but that’s not always the case. Sometimes the seller might need a quick settlement. They might be moving or closing on a new home. Ask the seller, or have your agent ask. Having a good agent will be helpful because they’ll know the right questions to ask to help you with your sale.

3. Failing to Get Pre-Approved for Financing

Getting pre-approved will save you a lot of hassle in the future. If you aren’t pre-approved, it could hurt you when you go to make an offer. A lot of sellers won’t respond to offers that don’t come with a pre-approval letter. This will put you at a disadvantage if you are competing against other buyers.

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Renting vs. Buying Condominiums: What to Consider

Renting vs. Buying a Condominium

There are many factors to consider when it comes to renting or buying a condo. Finances are a major aspect to factor in, but thats only one piece of the puzzle. Consider these pros and cons if you’re struggling with the decision to rent or buy.

1. Calculate the Price-to-Rent Ratio

If you want to know the price-to-rent ratio, find a condo in your area for sale and a condo for rent. Be sure that they have similar features, such as the same number of bedrooms and comparable square footage.

As an example, lets say you find a condo selling for $200,000, and down the block you find a similar condo renting for $1,000 per month (or $12,000 per year.) Dividing $200,000 by $12,000 will give you a price-to-rent ratio of 16.7. If the ratio is higher than 20, the monthly costs of condo ownership will exceed the cost of renting a similar condo.

2. Determine Your Household Budget

An important financial aspect to consider when deciding to rent or buy your next condo is your income. If the purchase prices of the condos in your area are exceeding what you make in three years, then consider renting. If you’re intent on buying, then consider looking at other neighborhoods or locations.

3. Identify Your Needs

If you purchase a condo, being able to change the layout is an available option. But if you rent, you’re basically stuck with what you get. Owning a condo gives you the freedom to make more invasive changes to the interior. You can remodel more easily and expand where you need to. Most tenants who are renting or leasing, won’t be able to make any significant changes.

4. How Long Do You Plan to Stay?

Another major aspect to contemplate is how long you plan on staying in the area. Renting a condo gives you a lot more flexibility to relocate if needed. Some things to consider are if you’re planning on starting with a new job or starting a family. Buying a condo, you may be stuck with the purchase until the 30-year load is paid off or you can find a buyer.

5. The Responsibility of Maintenance

One major upside to renting is that if anything goes wrong, like the electricity malfunctioning or toilet backing up, you can call the condo association to come fix the problem. As a condo owner, you’ll be responsible for any mishaps.