Your Condo $$ Reserves Info / The Nittty Gritty-  Value By Zip  /
Rolling The Dice when Buying Pre-Construction


                              
                                                       

For those of you who are new to these parts, this is my somewhat snarky  
bi-monthly newsletter. The content is serious-
the tone...not so much. Welcome.
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 With 1700 Pages to my website in total-
there is a sh*t load of condo info that will make your head
spin if you try to digest it all....

ON THE FRONT LINES OF THE CONDO MARKET FOR 25 YEARS

Mark Wade

Answering Condo Reserve Questions

No two condo associations are the same...much like snowflakes.


1) How much money does my condo association have in the kitty? 
  You really are not going to know the answer to that question until you purchase the condo and review the condo docs. The state of Pennsylvania allows for a five day review of condo docs for you to make an informed decision. Some buildings stockpile a boatload of $$ - and others simply just assess when needed. I usually find that the very small buildings and the very expensive / exclusive buildings in town don't keep that much $$ on hand- their way of making improvements is to simply assess owners when needed.

2) How much does Fannie Mae Require to go into reserves every month for the building to be "warrantable?"
Although there is no set amount (for the ability of buyers who want to buy in your building) probably a good idea to be setting 10-15% aside every month for capital improvements.


3) What are capital expenditures?
   Reserves for deferred maintenance (performed less frequently than yearly in order to maintain the asset's useful life) and capital expenditures (purchasing or replacing assets that have a useful life over one year) are required for certain building components unless the board votes annually to waive and/or reduce reserve funding.

4) WTF is a capital contribution??? 
   Buyer pays two months worth of condo fees to the ASSOCIATION- this does not go to the seller and this helps to build the kitty for future improvements. This contribution is now applicable for almost ALL condo sales in town.

5) How much should my association have in reserves?
     This really is a function of the board's goals and the current condition of the entire parcel including the roof, windows, elevators, etc. Most folks I speak with suggest 10% -15% of the TOTAL annual intake of condo fees to help build the kitty. A professional reserve study may be in order to best guide an association- call for details and I may be able to help with this. Maybe not :-)




Buying Pre-Construction From a Set of Plans...


 

  

Remember that 1960's board game "Mystery Date?"
Where you didn't know if you are going to get the dreamboat or the dud? Well, that is not unlike buying a new construction condominium from a set of plans....

Unless you have a crystal
ball or are perhaps from the future.
  
Some buyers win, some...not so much.
    Evidence of both scenarios have clearly played out in town over the past decade as buyers often purchased from developers' plans.
108 Arch St. clearly handed the brave buyers a lovely place to hang their hat as finishes, layout, scale, light, ceiling height, nearly every factor turned out to be top notch- not to mention the finish quality.
   There is an upside to buying from plans- and that generally is a developer's willingness to make alterations to his plans free of charge. Don't need that 3rd bedroom, but want a larger closet and bath? Done. Want to pick your finishes in the kitchen, flooring and tile options, etc? No problem. Altering a floor plan or finishes prior to the developer buying or completing the interior work usually can be negotiated at no charge to the buyer...so some flexibility/benefit can be achieved by buying new construction.
   But the same can't be said for many other condo buildings in town. Examples of poor workmanship, values that deflate rapidly, and buyers left holding the bag are not uncommon. Because truth be told, there are many instances where you really don't know what the hell you are buying. And getting the developer to finish the unit, should a significant punch list survive settlement, might be like pulling teeth.
  
There are winners and losers when buying pre-construction.
My advice?

 Get a good real estate lawyer from the get-go, and DO NOT settle until the condo is finished. Don't settle with a punch-list IF it can be avoided.  Some developers are true to their word...and honestly will service your condo post-sale. I think a few good examples of this would be my experiences with Pearl Properties,Toll Brothers and Rufo Properties. All were really great at post-settlement follow up.
Oh, and when the completion date is set for say June 1st...plan on moving in August 1st or so (in any given year). I'm just sayin'....the best laid plans can get held up in town and so many things are out of the control of a developer...so plan ahead.



Buy a condo from me or get out of my car - LOL

MarkNew
          


Mark Wade 
 
Berkshire Hathaway Home Services 
Fox & Roach

530 Walnut St. Suite 260
Philadelphia, Pa. 19106
215.627.6005
Mark@CenterCity.com 

 

 
I think the 2015 Condo Market is going to be 
a giant sh*t storm for buyers. There just isn't much to choose from...