Along with the mystery behind what condo fees cover, many homebuyers wonder how these fees affect unit prices. For example, do high condo fees go hand-in-hand with high condo prices? All else being equal, will a unit with a high condo fee have a lower purchase price than one with a low fee? We will attempt to answer these questions below.
“Condo fees are usually inversely related to condo prices,” Long & Foster’s Rachel Valentino told UrbanTurf. “In other words, the higher the condo fee, the lower the list price.”
Valentino noted that she sees this inverse relationship illustrated frequently in older buildings like the Watergate or many of the condo buildings near Massachusetts Avenue and Cathedral Avenue in Wesley Heights. She said that clients will frequently call her when they see a low-priced unit in a good building, but upon further inspection it is realized that the unit has an extraordinarily high condo or co-op fee.
Valentino acknowledges, though, that the link between condo fees and condo prices is complicated.
“You have to make sure you are comparing apples to apples because condo fees cover different things in different buildings,” she said. “If the condo fee is higher because it covers a number of costs and amenities, then the condo price won’t necessarily be lower.”
Realtor Lou Muscarella with Century 21 New Millennium says that it would be pretty difficult to find condo units in different buildings that are the same in every aspect, except for the condo fee. That said, in many cases, a condo with a higher fee could have a lower purchase price.
“A condo fee above $500 definitely takes away from the value of a property and becomes almost like an incurable defect along the lines of a location on a very busy street or a ground floor unit,” Muscarella explained. He said that condos with a high fee typically take longer to sell and anything which sits on the market for long will naturally require a price reduction before it will go under contract.
Muscarella and Valentino both said that appraisers may look at condo fees as part of their estimate of the property value, since the fees are part of any complete real estate listing. It would be expected that fees which are exceptionally higher or lower than the norm for a particular size and type of condo would have an impact on the appraised value. But if those high fees come with a swimming pool, secured parking, a fitness center and a gym, they are not likely to lower the appraised price.
This article originally published at http://dc.urbanturf.com/articles/blog/do_higher_condo_fees_mean_lower_listing_price/1802
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