Buyers Week: A Condo Fee Tutorial

• March 16, 2017
• 4 Comments

by UrbanTurf Staff

The start of spring is just a few days away, which means that the housing market will soon be in full swing. To get prospective homer buyers ready, UrbanTurf is running a series of articles over the next two days to help educate readers on the process.

From the offer to the down payment to the mortgage, we’ll touch on every facet of the home buying process and more. And if there is another topic that you want covered, just shoot us an email at .(JavaScript must be enabled to view this email address).

When searching for a condo or co-op, one of the first things buyers look at are the monthly fees. High fees can be a turn-off, but they can also be an indication that a building is in good financial health.

In addition to amenities, condo fees typically cover payments for a reserve fund (a fund for major building repairs or improvements), a master insurance policy, maintenance, trash removal and utilities like water. Older buildings and those that offer a number of services and amenities tend to have higher fees. Condo fees for smaller, self-managed buildings tend to be lower.

How much fees will rise over time is a difficult question to answer, as it is largely up to the building’s condo board. For example, there is a four-unit rowhouse conversion in Logan Circle where the condo fees have remained the same for the last five years. In contrast, there is a larger building in Woodley Park where the board mandates that the fees increase 5 percent annually.

In trying to determine whether or not your fees are justified, consider factors like the age of the building; an older building likely has to maintain more outdated features and systems, and could have a higher fee that a new building with energy-efficient features. Bigger buildings often come with more shared space and more involved features, so a higher condo fee may be justified. And of course, condos with doormen, yoga rooms, lounges outfitted with giant TVs, and extensive gyms are likely to have correspondingly high monthly fees.

Beyond the monthly fees, when you are looking at a condo it’s a good idea to spend some time investigating the building and its financial history. During the condo document review period, potential buyers should take a close look at the financial statements and budget of the condo, as well as attempt to find out when the last time big capital improvements, like roof replacement, were completed. Some real estate agents also suggest speaking with a current condo board member to determine exactly what is planned for the building in the near future, and if the reserves will cover the costs.

Related Buyer Week Articles:

* How Much Cash Do You Need to Buy a House?
* Interest Rates and Mortgage Points
* The Mortgage Pre-Approval Process
* The Escalation Clause
* How a $100 Mistake Can Sink Your Credit Score
* What is the Right of First Refusal?

This article originally published at https://dc.urbanturf.com/articles/blog/first-timer_primer_a_condo_fee_tutorial/6802

4 Comments

1. justin s said at 4:04 pm on Tuesday March 26, 2013:

   I was really hoping to see some examples of what “normal” fees are, and/or why condo fees in DC are astronomically higher than in many other parts of the country, that on paper, should cost more.

   For example, why are condo fees on oceanfront buildings in Miami that need hurricane insurance and have pools similar in price to mundane buildings in DC? (I once had a direct 1:1 comparison for this, but it was back in 2010. At the time, no one had an answer…)

1. Edison Wato said at 6:12 pm on Tuesday March 26, 2013:

   There really aren’t “normal” condo fees because as the writer pointed out you really have to research what is included in the condo fee.
   In my condo bldg, we have a staffed front desk and fee covers HOT water. For some older bldgs, heat may be covered if generated by steam.
   Also, my condo fee is based on the square footage of your unit. Penthouses pay more a month, those of us in studios, pay less.

1. Mike said at 9:28 am on Wednesday September 18, 2013:

   Monthly fees for co-ops also include property taxes based on the co-owner’s proportionate share of ownership.  Therefore, a monthly co-op fee will be slightly higher if you compared it to an identical, but condo, building.  It would be helpful if people would refer to these fees as monthly maintenance fees rather than the generic “condo fee.”

1. Trelane Patrick said at 3:45 pm on Wednesday March 19, 2014:

   People should also take into account that some condo fees are high because a majority of the unit owners in the buildings aren’t paying theirs and in order to make up the deficit in budget each month, the fees have been raised over the years.  This is common with a lot of the older buildings in the city.