Before treating low dues as a selling point, find out how the community pays for the work ahead.

Good evening, NREB readers.

As always, we’re here to keep real estate professionals informed while cutting out the fluff. Let’s get right into it.

Imagine a buyer comparing two similarly priced condos. One has a $300 monthly association fee. The other charges $450.

That is $1,800 a year in apparent savings. It deserves attention, especially when the buyer is watching every recurring expense.

But the comparison is incomplete until someone asks what each payment covers and how each association is preparing for major repairs.

A lower fee might reflect fewer amenities, simpler maintenance needs, or efficient management. It might also reflect an association collecting too little for work that still has to happen.

You cannot tell which from the listing’s monthly-dues field.

Condo dues can support everyday operations, shared maintenance, insurance, utilities, amenities, and money set aside for future repairs. The mix varies by community.

That makes a straight dollar comparison surprisingly easy to get wrong. If one association includes water and another bills it separately, the difference in dues is not the same as the difference in household cost.

The same question applies to maintenance responsibilities. Who pays for the roof, windows, balconies, or exterior repairs? Check the governing documents rather than assuming every condo community handles them alike.

Low dues are useful information. They are not a complete ownership budget.

Before describing a fee as unusually affordable, establish what the owner receives for it and what remains their responsibility.

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An association’s operating budget pays for ongoing expenses. Its reserves help prepare for major repair and replacement work over time.

The Community Associations Institute describes a reserve study as an analysis of shared components and their future repair and replacement costs. It gives the association a basis for planning how to fund that work.

For a buyer, “the association has money in reserves” is only the beginning of the answer. The amount means more alongside the work it is expected to cover, the timing, and the planned contributions.

A roof nearing replacement and a recently replaced roof create different demands on the same reserve balance.

NAR’s condo-ownership guide recommends asking both whether there is a recent reserve study and whether the association is following its recommendations. Those are two different questions. Having a study does not establish that its funding plan is being carried out.

There is a meaningful difference between these statements:

One does not establish the others.

Ask for available written information about approved assessments, proposed projects, and how the association plans to pay for them. A project under discussion is not an approved bill, so describe its status accurately. But a buyer should not discover after closing that an expensive repair was already being discussed before the purchase.

Likewise, an assessment is not automatically proof that a community is poorly run. Find out what it funds, what prompted it, and whether the work and funding plan have been properly evaluated.

“Insurance included” does not mean the association’s policy covers everything inside the buyer’s unit.

NAR’s condominium-insurance guide explains that coverage is typically divided between the association’s master policy and the owner’s individual policy. The boundary can differ, including responsibility for interior finishes and improvements.

Have the buyer’s insurance professional review that fit, including deductibles and any loss-assessment coverage. That coverage may help with certain covered assessments; it is not a promise to pay every bill the association sends.

For a condo your client is seriously considering, move the document request forward. Ask for the current budget, financial statements, latest available reserve study, assessment information, and relevant maintenance and insurance documents. If a next-year budget or fee change is available, include it in the discussion.

Track the applicable document-review and contract deadlines with your broker or attorney. Get the lender involved early on project eligibility, and direct technical questions to the appropriate insurance, legal, or building professional.

Your role is to help the client identify the unanswered questions and get reliable answers. You do not need to certify the building’s condition or forecast every future expense.

The $300 fee in our example could still be the better deal. The $450 fee could be funding services and future work that the other community charges for separately or has yet to fund.

Find out what sits behind the number before making the number the selling point.

Sources

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