The price per square foot is a good rule of thumb when comparing several homes you may be previewing. Once you see a difference in the price per square foot – you need to determine WHY there is a difference and if the difference in the price per square foot is justified. But you always hear me talk about cost to own, not just the price you pay to buy a home, so we me need to look at HOA and Condo fees as well.
First; to the price per square foot:
When you look at square footage, be sure to look at the following:
1. The air-conditioned square footage.
2. The ratio of square footage that you own versus the square footage of the project.
3. The extras that the price per square foot does not take into consideration.
4. The upgrades within the unit.
1. The air-conditioned footage. This is simple. This calculation does not include the balconies, porches, or garage. When you are comparing buildings, make sure you compare price per square foot on similar size homes at the same levels and with similar views and age. It is a good idea to compare the mid-priced unit in one offering with the mid-priced unit in the other. Also keep in mind that if one home has one kitchen and two baths but has half the floor space as another home with the same type kitchen and two baths – the smaller unit is going to demand more money per square foot. Kitchens and baths are more expensive. Therefore, smaller units may have a lower price point, but be more expensive per square foot.
2. The ratio of square footage that you own versus the square footage of the entire project. It stands to reason that if there is a large number of square feet that the developer cannot sell, (Hallways, elevators, stairs, and amenities like boat ramps, tennis courts, exercise rooms, boat storage) the price that he must charge for SELLABLE space will be higher. A low ratio of sellable space to the space built makes for a more inefficient design.
3. The extras. Is there golf? Work out rooms? Gates? Water; Etc.
How much land does the community sit on? Is it tightly packed? If you compare one condo on the golf course with one on the river, you will not get a fair comparison.
4. The quality upgrades. The standard features are built to a certain level of finish. One standard might call for solid surface counter tops another might call for granite or quartz. Impact glass versus shutters. We call this the finishes. Make sure you compare counter tops, appliances, grade of windows, flooring, crown molding, closet build outs, and other built ins. Find out what the standard finish is before you compare.
Today I would like to spend more time on these quality upgrades of the construction, the site work and materials used and give you some things to look for beyond square footage price. I have seen too many projects today that have sacrificed quality in order to meet certain price points. Then the developer decorates a model in such a way that you spend more time looking at the high end furnishings rather than the home itself.
By the way, I think it is flat out wrong for a buyer settle for lower quality just to meet a price point. I would rather see you sacrifice size. Remember that quality endures. Quality is an investment that will pay dividends
What follows if a partial check list of items to CONSIDER when looking at a new home or condominium. To help you, have your agent make a checklist for you when comparing homes.
Driveway/Parking. Is there enough outside parking for guests?
Garage. Wide enough for cars? Extra Storage?
Setback. How far are you from your neighbor?
Drainage. If possible visit during a rain. Are there gutters on the roof?
Soffets. Are they wood, aluminum, or wire with stucco?
Roof. Tile or asphalt?
Doors and Windows. Impact or not? Shutters of not? Doorways covered from rain? Tinted? Screens? How easy to clean?
Lighting. Is it where you will need it?
Garbage receptacles. Are they hidden? Convenient?
Hose Bibs. Where you need them?
Location of Air Conditioning Compressor. (Consider noise and appearance).
Walkways. Width, type, landscaping.
Now let’s talk about monthly fees.
The monthly fees you pay are not a profit center for the HOA or Condo Association. The fees are for expenses actually incurred or more accurately, predicted to occur.
There are three categories of communities with varying levels of fees
1.Non amentitized community. Fees can be for common lighting and a unmanned gate, for example
2. Minimally amenitized. Generally an unattended pool and a few other features.
3. Resort like comminutes – with and without Golf.
Things that affect the fees
1. Size of the community. If the cost can be spread out over more homeowners the costs will be lower.
2. Age. Insurance costs are higher on older communities and maintenance and reserves for replacement of worn out assets may be high.
3. Poor management. Lack of sufficient reserves in the early years and poor oversite by the board (the owners) of the management
Some questions to ask:
1. Ask for the current and previous year’s budget and financial statement. Look for reserves.
2. What is included: Some homes, like a twin villa in Colonial Country Club, the roof and outside maintenance (yard and home) as well as insurance, are covered. In many communities this is not covered.
3. Is internet included, if not, is there a group price for it? Basic service can set you back $100/month individually.
4. Is water and sewer included?
5. Are the amenities attended – tennis pro, gym trainer, life guard, gate attendant, etc.
6. Restaurants? Is there a minimum charge per month for the restaurants?
7. Is there a transfer fee and or application fee? For golf member ship there is generally a transfer fee. There is almost always an application fee a $100 or more as well.
8. What are rental restrictions? (Most common is minimum 30 day stay for a maximum of three times per year).
9. What is pet policy for owners and what is it for renters?
10. Truck and motorcycle rules?
If I can help you, please ask. But remember, these fees charged monthly are generally very reasonable when you compare them to individual home ownership. If you were to add actual expenses as well as a budget for reserves for home ownership, you will be able to compare what the costs are for the extras that you don’t have in a single family home like a guard gate, community pool, etc.
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