Buying a condo in 10 steps

A condo is different from a single-family house or townhouse. Condo owners purchase an ownership in the common areas of a community — the roads, exteriors of a building, parking spaces and amenities such as swimming pools. They pay a monthly fee set by a homeowners association.

Consider what you want in a condo community. Can you live with the rules and regulations set by the association board? Are you willing to pay more in monthly dues for amenities? How can you know if there are any upcoming special assessments residents pay on top of their monthly dues for a project like resurfacing parking lots? Reviewing homeowners association documents and monthly meeting minutes can give you this information.

You may want to hire a real estate agent with experience helping clients buy condos. They can help you find condo communities that meet your needs and help you negotiate an offer. They also can sit down and explain the documents that you’ll review from the homeowners association and they will help put together an offer.

Here's what you need to know:

1. Assess your finances

If you plan to pay all cash for your condo, you don't need a mortgage. Buyers who can do this can avoid monthly payments, including the interest on a loan which adds up over time.

Otherwise, you'll need to seek a lender who would evaluate your financial readiness to purchase a property.

If you need a mortgage, gather your paystubs for the last six months and your past two tax returns. Sit down with last month’s bills and credit card statements to find out how much you spend a month on specific items — rent, car loans, groceries, credit card payments. Lenders use this information to calculate your debt-to-income ratio. It's your monthly debt payments divided by your pre-tax income. A mortgage calculator can also give you an idea of what you can afford.

Lenders review your loan repayment history for signs that you pay your bills on a regular basis. Credit card bureaus rate your ability using a 350 to 850 point scale, the higher the better. You can order a free copy online from each of the three major bureaus — Experian, TransUnion and Equifax. When you order a copy of your report, make sure to scan it for any errors or updates that need to be made.

Any assets beyond what's in bank accounts are also valuable for lenders. Do you have any investments you could sell and use to buy a property?

Information on the condo community you're moving into also is valuable. Unlike a single-family home, you are financially responsible for the upkeep of common areas. Lenders check the community's physical condition to consider how likely your monthly homeowners association fees will rise to pay for repairs. They also want to know about the association for its history, financial health and whether it has an adequate surplus known as a reserve fund to pay for emergency repairs and expenses.

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2. Get prequalified or preapproved for a loan

Lenders can give you a good, though not perfect, assessment of your finances. This is known as getting pre-qualified for a loan.

Prequalifying is an informal, nonbinding review of your financial documents. You get a rough estimate of how much home you can afford. It's a great step for someone who wants to explore obtaining a mortgage. But a pre-qualification is not as useful as a pre-approval. A lender doesn’t verify your assets and liabilities.

A pre-approval involves a more thorough review of your financials. It’s more accurate and can shorten the time it takes to get a final decision on a mortgage application. But it takes longer than a pre-qualification. Also, because the lender is pulling your credit, it could lower your credit score.

Lenders typically review income, assets and credit for a pre-approval, using pay stubs, W-2s and tax returns for the last two years. They also consider recent bank and investment statements and a credit report. Self-employed workers have monthly incomes that vary because they are not on a salary. Obtaining pre-approval for self-employed workers typically requires more extensive documentation and a more thorough financial review than for traditional W-2 employees.

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3. Hire an agent

There are thousands of real estate agents. Choose one who has considerable experience helping clients with condos. They know the differences between buying a condo and a single-family home or townhouse (there are many more HOA documents to read for a condo, many with confusing terms).

Start with the Homes.com agent directory. Agents list their biography, past and current real estate listings and contact information. Another source can be friends and family who recently worked with a real estate agent or company. Residents in the condo community where you want to live can also give references.

Interview at least three agents and ask condo-specific questions like, How do you approach a condo purchase versus a single-family home or townhouse? Check with your state's licensing board, real estate commission and National Association of Realtors affiliate for any disciplinary actions against them. Ask what they will charge.

Buyers can negotiate with an agent about payment. In the past, sellers regularly paid the agent's commission. But that changed with a federal lawsuit settled in 2024. Because of the lawsuit, you can bargain over the size of the commission. The settlement still gives the seller the option to pay the commission.

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4. Tour, evaluate amenities, investigate HOA

Now it’s time to hit the road. Start by drawing up a list of what you want and don’t want and what you must have in a condo unit. One, two or three bedrooms? A workout facility for residents? Close to work? Resale value? If you drive an electric car, then you probably want to see if any condo communities have hookups to charge your auto overnight.

Find units for sale by checking out the database of property listings on Homes.com. It can filter your search to a specific city, neighborhood or ZIP code. The database includes information on what it’s like to live in that neighborhood, giving you information on the school your child would attend, whether it’s in a flood zone and even how far it is from shops, restaurants and movie theaters.

When you tour a condo, check out the community’s amenities. What is the pool like? Would you use the workout facilities? Does the community put delivered Amazon packages in a secure facility? Also, look at the condition of the community. Once you buy a condo, you will be assessed a monthly fee for maintenance and upkeep.

Decide if a unit's location in a building is important. Location matters for different people. Some choose a unit that is higher up because they like the view. Others want to be on the ground floor or near it because it's more convenient.

It's important to review the condo documents. You'll want to see the association's bylaws, financial documents and rules and regulations. These can indicate the financial health of the association, any restrictions that you don't want to live with and upcoming special assessments on residents to pay for projects like resurfacing parking lots. Remember, you'd pay for all that.

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5. Make an offer

Writing an offer is one of the most intimidating parts of the condo purchase process. How much should you bid? Should you put any contingencies in your offer, such as a right to walk away if a home inspection turns up problems?

Your agent can help by doing a comparative market analysis of the condo. This compares its estimated market value with two or three other units in the community or area that recently sold. They also can help you strategize, calculating how much you should offer based on factors like how long the unit has been on the market.

You will consider factors other than the price to sweeten your offer. You can skip the condo inspection. Sellers like this because they don't have to haggle about what they will fix. But you'll be stuck with any repairs.

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6. Get a home inspection

Once the seller accepts your offer, you can decide whether to get a home inspector to walk through the unit and point out any problems.

Your agent can usually recommend several home inspectors that they have dealt with and trust. You should still do a background check to verify their qualifications and read their reviews. An inspection typically costs $200 to $500.

A home inspection of a condo typically involves only the interior of the unit and not the exterior. They won’t do an in-depth investigation of the outside areas, such as roof, condition of foundation, condition of amenities or the mechanicals outside the interior space. Buyers can ask the homeowners association for more details about the condition of the building.

Inspectors can review the homeowners association documents to learn the association's responsibilities concerning repairs, including the response time for repairs.

Completing the report takes a few days. If there are a lot of repairs or issues, you can walk away from the purchase as long as you put a contingency clause in your offer. You can choose to negotiate with the seller over what repairs they will make or how much cash they'll give you for them. If the seller is willing to fix the unit, make sure you get a re-inspection to confirm that they were done.

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7. Finalize your financing

Meanwhile, your lender is finalizing your loan application. They will do a deeper dive into your finances, checking and double-checking your job status, earnings, assets and credit history.

Your lender typically sends you a loan estimate form several days after starting final approval. It estimates your monthly payments, closing costs and other fees. The statement also tells you whether there is any penalty if you pay off your loan balance before the term ends.

The lender issues a final loan estimate, called a "closing disclosure form" when you’re about to close on the condo. It lists the final costs associated with buying the unit, such as taxes and insurance premiums.

You may need to update your financial records — the pay stubs from your employer, your banking statements and any tax forms you’ve filled out since preapproval/prequalify.

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8. Schedule appraiser

Lenders conduct an appraisal before finalizing your loan to make sure the unit is worth the asking price. If it’s less than the sales price, a lender won’t give you a loan unless someone makes up the difference.

The lender hires a professional appraiser to do the work. You'll pay for it, around $500. They check the interior of the unit you're buying, noting the square footage, number of bedrooms and bathrooms, condition of walls, the quality of materials and any upgrades.

Appraisers also check the homeowners association. The fact that you are financially responsible for the common areas of the community beyond the cost of your unit distinguishes a condo appraisal from a single-family home appraisal and must be accounted for.

Appraisers look for any litigation involving the condo community or its reserves. They also consider the restrictions on the use of the condo, such as renting it out, and if it looks like any future special assessments for maintenance and operating expenses need to be done. The management of an association has a lot of impact on appraised value.

Several things can happen if the appraisal is lower than the price. A buyer could exercise a contingency and walk away from the transaction. They also can negotiate for a lower price, pay the difference or ask the seller to pay.

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9. Close the sale

Your lender must provide you with a closing disclosure form at least three days before closing. This gives you time to ask the lender any last questions about the transaction. It also gives you time to review and compare the disclosure to the loan estimate you received from the lender shortly after your offer was accepted. Make sure none of the terms has changed.

Before the closing, you'll also want to review the condition of your condo. Make sure any required repair work was completed. Also, check for any flaws like chips and dings in walls. It's easier to find and fix these if the unit's empty. Make sure appliances work. Also, check for any signs of pests.

At the closing, you'll exchange money with the seller for a set of keys and the deed making you the official owner. You sign documents to enact the exchange. They outline the final details about your mortgage, including the loan terms, your projected monthly payments and your closing costs.

Be sure to bring a government-issued photo ID, such as a driver's license. You'll also need to bring a cashier's check or wire transfer for the down payment and closing costs, usually 2% to 7% of the purchase price.

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10. Move in

Start packing as early as you can, buy supplies ahead of time and use durable boxes and other packing supplies.

It’s a good idea to check with the homeowners association of the condo community prior to moving day. There may be rules or regulations on when you can move in. You may need reservations for a parking spot or service elevator. It’s a good opportunity to sign up for parking permits and any kind of identification card you need to use the community’s amenities.

Purchase items you’ll need the moment you move, such as toilet paper, soap, toothpaste and basic staples in the kitchen.

You should also measure your new space to make sure your belongings will fit in it. Take photos and draw a diagram of what could go where.

Remember to change your address at the post office. Also contact your telephone, cable, internet, water and electricity providers that you need to stop or transfer service.

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