After searching for a condo for months, you finally find the place that is exactly what you are looking for only to find out there is a $10,000 special assessment to be paid over the next two years…now what? First of all, you may consider looking for another condo and even if you have this one under contract, you can likely get out of the contract without being in default.
For the sake of argument, let’s assume that you have to have THIS condo and don’t want to search for another one. Your first and easiest option is going to be to make a fair offer on the property but, state that the seller will be responsible for paying the special assessment at closing. In a buyer’s market this tactic may work especially if the seller has some equity in the home and is not taking a loss. Your next option would be to determine how much you are willing to pay for the condo and subtract the $10,000 dollars from that number.
Now assuming you are getting a loan on the property, it is advantageous to have the seller pay the special assessment even if it means a higher purchase price. If you were to buy the condo for $400,000 and pay the assessment yourself, (assuming 20% down at 5% per year) you would have a monthly principal and interest payment of $1717.83 plus $5,000 a year in assessments for the next two years. On the other hand, if you paid $410,000 and had the seller pay the assessment your monthly principal and interest payment would go up to $1,760.77 ($42.97 more per month). When you consider the extra $42.97 a month, it will take 232 months (also known as a little over 19 years) before you have actually paid the $10,000 dollars. Accordingly, if you don’t plan to own the property for at least 19 years this will be the cheapest solution for you.
If you would like more advice on how to save money on your next real estate purchase or have questions about this information, please contact me anytime at the information below.
All the best,
Tyler MacGuire e-PRO®, SFR
Broker Associate
Omni Real Estate Company
Office: 970-468-2740
“Your Guide to Summit County Real Estate”
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