Pasadena Condo or Townhouse Buying Guide - Everything you ever wanted to know about buying a condominium.
Whether you are a first time buyer, an experienced pro or investor buying a Pasadena condo or townhouse can be a confusing and often a stressful process. It's an emotional experience filled with many decisions, most with financial repercussions. Finding the right condo, townhouse or loft is difficult enough; knowing what to offer, what and when to negotiate and how to make the deal work best for you, the buyer, is another story altogether.
As a real estate professional who has sold many Pasadena condos and placed countless buyers in the Pasadena homes of their dreams, I feel it is my responsibility to tell you that there is a lot you need to know before jumping into your condo purchase.
Your Needs and Wants...
It is important that you have a clear image of what you are looking for and that you transmit this clearly to your Realtor. First, make a list with your needs and wants. Understanding the difference between your needs and your desires will make your choices much easier to make. Your needs must be met, your desires may be sacrificed if they are not practical or within your price range.
Are you looking for a larger place for your growing family or are you looking for a larger place for entertaining? Where do you need that extra square footage? What will you sacrifice for it, if necessary? Are you downsizing? What are you willing to let go of? Don't let emotions cloud your judgement. Make certain that you get what you need from the new purchase; if some of your desires are fulfilled, all the better.
Be clear with your Realtor when explaining what you are looking for. What is most important to you?
- Newly Remodeled
- Newer Construction
- Specific Amenities like pool, spa, recreation room, gym, movie theater (yes... we have a condo complex in Pasadena with a movie theater!)
- Specific Location
- Square Footage
- Number of Bedrooms
- Number of Baths
- Parking Spaces/Garages/Guest Parking
- Side by side
- Pet Rules
- Community amenities
- Concierge Services
- Gated Security
- High Rise
- Location in the complex/top floor/corner unit/bottom floor
- Age of condo
- Proximity to
- Old Pasadena
- Golf courses
Often a condo purchase is more about buying into a neighborhood lifestyle (location). If lifestyle is at the top of your needs list, make certain that is clearly communicated to your Realtor. Do you entertain much? Make sure your complex has guest parking or there is ample parking in your new neighborhood.
Are You Ready to Start Shopping?
Unless you are an all cash buyer (be prepared with proof of funds), you will need to be pre-approved, preferably by a direct lender. This is a critical and the most important first step even if you have great credit.
When you find a condo that you want to make an offer on, you will need to submit your pre-approval with the offer to be taken seriously by the home seller.
It is foolish to begin to shop without a pre-approval. You might find your dream condo the first day out. You need to be in a position to write and submit your offer when you find the Pasadena condo that you want to purchase. Bank statements will need to be submitted along with your offer as proof of sufficient funds to consummate the transaction. Have them with you with the account number blacked out. To make it easier, my buyers leave a copy of the statements on file with me so that we are fully prepared and do not need to worry about getting them ready in time for offer submission.
Consider Your Future...
Where do you want to be 5 years from now? Are you planning on selling it and moving into a single family home. Do you think you will want to hold on to the condo and rent it out. Many Pasadena condos make great rentals and are perfect for investment. Or, are you planning on living in your condo or townhouse long term?
Always consider the future resale value of your condo purchase. I know, it's difficult when you find the perfect condo in a not so perfect location; or it has the 2 bedrooms and 2 baths that you wanted but only has 1 parking space in a parking impacted area.
Unless you live alone that missing 2nd parking space is certain to become a real problem while you are living in your new dream condo and will probably become the reason you will want to move on rather quickly. Will you be able to sell that condo easily without a 2nd parking space, or in an area that isn't in such high demand? Some areas appreciate quicker than others, if you can afford to purchase in an area with higher appreciation it would be a much smarter purchase.
Are you buying the smallest or least desirable condo in a highly desirable complex? When it is time to sell you may sit on the market for longer, sell for less, or not sell at all if other larger more desirable units are for sale at the same time. Buying the smallest, least desirable condo in a highly desirable complex and neighborhood isn't always a bad decision. If it provides you with the lifestyle that you are craving, at a price that you can afford, the condo will fulfill your needs. Just remain aware that it might take you longer to sell it when the time comes. In the meantime have a grand time enjoying the lifestyle you were looking for.
Remain Flexible and Alert...
Your Realtor should be familiar with the inventory available in the neighborhood of your choice. They will most likely show you the best of what is available, based on your stated needs and desires, on your first and second trips out. If you do not find what you want, you should begin making adjustments in your search criteria quickly.
Continuing to search, in a specific area, after having seen the best of what is available within your price range is usually a downward spiral; either adjust your needs, desires or price range; or wait for new inventory to enter the market. Remember there are other buyers watching and waiting as well, you will have to move quickly.
Loose Lips Sink Ships...
While you are shopping you may run into a seller at home. As a buyer this may seem like a stellar opportunity to ask questions and garner information about the condo, the complex and the area. Often without realizing it, your simple conversation with the seller could cost you money at the negotiating table. Without realizing it you may be letting the seller, or the listing agent, know how badly you want the condo, or how much you love the condo or neighborhood.
Knowing how badly you want it may net you a different counter offer than you may have received had you not had that conversation. Sellers face the same problem, conversations with buyers or their agents often cost them money by way of a lower offer and tougher negotiation than they would have received. This is why Realtors always try to keep the buyer and seller apart until the deal is either closed or past any possible negotiation time frames; loan approval, removal of contingencies, appraisal, repair requests, etc... It's in your best interest! You should be confident that your Realtor is capable of negotiating your offer and will not reveal personal information that could adversely affect negotiations.
Condo prices are so affordable right now that many buyers are purchasing more condo than they need with a mindset towards their future growth and needs; marriage, children, home office, etc... Do you have future needs? Will they become an issue in the next 3 to 5 years? Perhaps you are a better candidate for a single family residence to anticipate these needs? Keep in mind that there is no guarantee that you will be able to sell at break even in 3 to 5 years. When you do sell you will need to recoup your purchase price plus the cost of sale. The cost of sale involves commission, your closing costs and any costs given to your buyer during negotiations; plan on approximately 9% appreciation to break even. That could take some time in today's market.
After Purchase Expenses...
Not all condos are in turnkey condition. Condo fixer-uppers can become expensive and the upgrades are all 'after purchase' money and can add up quickly.
- Air Conditioning
- Water Heater
- Wallpaper Removal
- Ceiling Scraping
Do you have the after purchase resources to accommodate these upgrades? Are you willing to pay market value, or near market value, then make an additional investment into the property? How long will it take you to recoup the additional investment? How will that affect your future life plan?
Many inexperienced investors are purchasing, doing a quick remodel, then attempting to sell (flip) to recover costs and make a profit. Often these inexperienced investors find they spent too much on the remodel and become stuck renting the unit out. Truly experienced investors have warehouses filled with cabinets, flooring, etc... which were purchased at wholesale, and have crews on salary trained to go in and do a professional, fast and inexpensive remodel, list the condo and still retain a decent profit margin. Flipping condos is not for the inexperienced investor.
Hire a professional inspector. Some home buyers think that inspections are not needed when purchasing a condo or townhome. They could not be more wrong. An inspection will not only set your mind at ease, but will point out potential issues with major systems like air conditioning & heating, plumbing, structural defects and more. An inspector will also point out items that may possible be nearing or are at the end of their useful life.
When you see a condo that you like, do not delay in making a purchase offer. Just like single family home sales, the Pasadena condo market is quite competitive. Chances are that if you like a condo, there will be another buyer that likes it as well.
If the property is new on the market and is highly desirable, you may find yourself in a multiple offer situation. Work with you real estate agent to write the best offer possible and decide if you are willing to negotiate further if you receive a multiple counter offer. Some people don't want to write offers if they even think there is going to be a multiple offer situation. However... you have to be in it to win it! Go ahead and write your offer, the worst that can happen is that you are overbid. Your Realtor will have called the listing agent (I hope) and may have some information that will help you decide how to best present an offer.
Going home to sleep on it or wanting to bring parents or friends to look at it before you make your decision to even write an offer will often put you out of the game. Write the offer, you'll have plenty of time to show your condo if your offer is accepted...good properties move fast. The contract will allow for a contingency period, usually between 10 to 17 days, which will allow you to back out of the escrow should this home be not right for you.
If you find a condo that you like, but something just doesn't feel right, it's probably not the right purchase for you. In this case, go home and think about it for a while. Yes... you might lose it, but that may be for the best if you had reservations in the first place. There will be more inventory on the market, something else will turn up.
Your Realtor is Your Advocate...
Thinking about shopping without a Realtor? Think you will just write an offer through the listing agent? Think this will help get your low-ball offer accepted?
It will, if you find a crooked listing agent!
Do you want to be represented by a crooked agent? Oh wait a minute...they don't represent you...they represent the seller. They are just facilitating your deal. It's called dual agency or double ending. It's actually legal in California, but very few agents can or will handle it in a truly professional manner. It's not the best position for the buyer to be in and let's face it if the agent is crooked are you going to get full disclosure or are you going to find out you were duped by a neighbor after you move in? Having your own representation is more valuable than you realize.
And... in most instances the services of a buyer's real estate agent are free to you, the buyer!
Buying Bank Owned?
Banks are not subject to the same level of disclosure as actual home owners in a standard sale. Since the bank has not occupied the home, the bank really has no knowledge of the condition of the property. The government, recognizing their unfamiliarity with the property, has relieved them of providing most disclosures. You will have to do some extra investigating to discover the facts about your possible purchase. A good agent familiar with condo purchases can make a huge difference.
Found My Condo...Now What?
The first step to writing an offer is to decide on the purchase price. Your Realtor will prepare a Comparative Market Analysis and will show you which homes have sold in the area and in the particular complex that you are thinking of buying in. Together with your Realtor you will decide on the price and terms of your offer.
Terms like the length of escrow, the amount of down payment, contingency period are just as important as the price and can make a difference between you getting the offer accepted or not. Remember when you submit an offer the bank or seller will be looking at their net proceeds. So if you offer a solid price but ask for a lot of closing costs and other extras you could easily lose the deal to a better NET offer, even one that is less in price than yours. It's all about the NET!
If your Realtor is really sharp they will find out what the sellers motivation is. A motivated seller is more likely to negotiate than an unmotivated seller. In a down market it isn't really wise to sell unless you have to, so most sellers are motivated on one level or another, some more than most.
Reasons for selling that will create a very highly motivated seller:
- Job Loss
- Job Transfer/Relocation
- Lifestyle Change
- Home Business
Condos that have been sitting on the market for a long time, what I call my dusty deals™ , perhaps expired a few times and/or have reduced their price, sometimes several times, often have a worn down seller who is finally ready to negotiate. Vacant condos are expensive for owners to maintain. There is only so long anybody can or is willing to carry the mortgage, HOA fees, taxes and insurance without the rental income to offset the expense.
Home Owner Associations (HOA)
Many condo Associations are in financial difficulty especially in a bad economic environment. Once your offer is accepted, the escrow company will order a fresh copy of the CC&R's, financials, budget and meeting minutes and deliver them directly to you, the buyer, within the contingency period indicated on the purchase contract. Buyers should go over these documents very carefully to determine the financial stability of the association and whether it is prudent to move forward.
- How much are the monthly expenses?
- How much is in the reserve account?
- Is the insurance current? Is earthquake insurance included? Not all Pasadena condo complexes have earthquake insurance.
- Is there an increase in the HOA dues scheduled?
- Is there mention of any upcoming assessments?
- What do the meeting minutes say?
- Are there upcoming repairs scheduled?
- Is there enough money to cover the repairs or could it potentially lead to an assessment?
- Are the pet rules satisfactory?
- Have you read the Rules and Regulations?
Read the documents and ask questions until you are satisfied. If the documents are unsatisfactory, the buyer should cancel the escrow immediately.
Are you overwhelmed yet?
READ MORE: Pasadena Real Estate Guide
Sounds complicated doesn't it? It is! That is why you need the best representation. Call me at (626) 629-8439 or email me so that I can take the hassle and stress out of your condo purchase - Irina Netchaev, Your Pasadena Realtor.
PASADENA CONDOS FOR SALE:
- Pasadena Condos for Sale under $300,000
- Pasadena Condos for Sale $300,000 to $400,000
- Pasadena Condos for Sale $400,000 to $500,000
- Pasadena Condos for Sale $500,000 to $600,000
- Pasadena Condos for Sale $600,000 to $700,000
- Pasadena Condos for Sale $700,000 to $800,000
- Pasadena Condos for Sale $800,000 to $900,000
- Pasadena Condos for Sale $900,000 to $1,000,000
- Pasadena Condos for Sale $1,000,000 to $1,200,000
- Pasadena Condos for Sale $1,200,000 to $1,400,000
- Pasadena Condos for Sale over $1,400,000
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