Condo buying: The step-by-step guide

If you are thinking of buying a condo, but aren't sure how which steps to take first, we can help. Here are insights into the three phases of buying a condominium.

Research and planning phase (4 steps)

1. Begin your search online

It's natural to wonder what kinds of condos are for sale in your desired area, so take some time to research the cost, condition and amenities of condos in the city or neighborhood where you hope to reside.

2. Hire a real estate agent

Before you get too far into the process, it’s important to hire a REALTOR® who can help you navigate everything from budget, to location, to the nitty-gritty details of securing a loan. To get connected with a local condo specialist, reach out to Edina Realty or your preferred agent.

3. Get pre-approved

Together with your Realtor, you can work with a mortgage consultant to get pre-approved on a loan. The pre-approval process is important because it can help you confidently determine your budget and begin looking at condos in earnest. Pre-approved buyers may also be preferred by sellers, as a pre-approval indicates that a lender is more likely to approve the deal.

Your lender can walk you through the details of the type of loan you’ll secure. While some first-time buyers prefer FHA loans, not all condo complexes accept FHA financing. By understanding the type of loan you qualify for early on, you can keep your search narrowed down to condos that are within your reach.

4. Determine your criteria and wish list

Condos can be a great, flexible living option for buyers who want their own space but don’t want to take on all the maintenance that comes with a single-family home. But condos can also have strict regulations and guidelines for residents, so you’ll want to be sure to weigh the mechanics of each condo complex as you tour them.

Prior to touring condos in person, brainstorm some upfront questions that might help you narrow down your search.

• Does the building allow pets?
• Are there designated areas for smoking?
• Does the building have on-site security personnel, alarms, cameras or other safety features?
• What are the condo HOA fees and what do they cover?
• Will you be able to rent out the condo in the future?

Touring and selecting phase (4 steps)

5. Start scheduling showings

The real fun begins once you can start touring potential properties. Work with your Realtor to put together a list of condos you want to see in person, then weigh the pros and cons of the condo unit and the complex’s amenities as you walk through.

Be sure to pay close attention to the cost of the HOA fees for each condo unit you tour; you may find that some condo fees go toward amenities that you don’t really care about. You can save money by selecting a condo with amenities and services that fit your lifestyle and priorities.

6. Do your due diligence on condos you tour

While it’s important to respect the privacy of the current condo owner (that means no snooping in their dresser drawers), you should also do your due diligence as you tour the condo. That means double checking:

• Underneath rugs and behind furniture for potential damage or defects
• That appliances have been well-cared for
• The condition of built-ins or other fixtures
• That the light switches, ceiling fans and garbage disposal work
• For adequate water pressure

You may also wish to visit the condo at different times of the day or different days of the week. You’ll be able to get a feel for the community (and how busy the rooftop deck gets) by visiting on a Saturday afternoon or evening, but you may also want to see how bright the natural light is in the morning.

7. Make a strong offer

Once you’ve found the right property, it’s time to make an offer. Strategize with your agent to determine a competitive bid and any contingencies you want to include.

Inspecting and closing phase (5 steps)

8. Apply for the loan and get the condo appraised

Once your offer is accepted, you’ll officially apply for your home mortgage loan. You can work with your Realtor and mortgage consultant to file the paperwork and your lender will begin the approval process.

Getting a loan approved for a condo requires a slightly different process, as your lender will have to approve your application and the condo complex in which you hope to reside. Your Realtor and mortgage consultant can help you with the paperwork and process of this important step.

Another important step in the lender approval process is the appraisal. Your mortgage consultant will order an appraisal to ensure that the property has sufficient value to support the loan you are seeking. In this step, an appraiser will assess everything from the condo unit’s location and condition, to the general upkeep of the condo community, to the recent sold prices of similar condos nearby.

9. Get the condo inspected

It’s also advised that you hire a home inspector who can check to ensure the property is safe and free from major issues like structural damage and plumbing and electrical issues. While an appraiser is in charge of verifying the value of a condo, an inspector’s role is to educate the buyer on issues that may factor into the current and future condition and valuation of the property.

10. Review relevant documentation from the HOA

In both Minnesota and Wisconsin, the condo seller is obligated to disclose a number of documents to the buyer before closing.

These documents include:

• A map (also called a plat) that shows the exact location of your condo unit within the complex.
• The declaration, which is a legally binding document that encompasses the rules of the complex and its usage, as well as the collection and enforcement of HOA dues. Declarations are more difficult to change than a rule or regulation because they require a vote of the unit owners and often require the consent of two-thirds or more of the owners.
• The bylaws, which outline how the HOA is governed — including how many board members serve on the HOA and how they are elected.
• The rules and regulations, which cover the remaining rules that are not “set in stone” within the declaration, but are nevertheless enforced across the complex.

While your inspection will help you understand the condition of your individual unit, these documents will shed light into the “health” of the condo complex and the HOA that governs it.

As you review the documents, pay special attention to:

• The monthly condo fees that are charged by the HOA.
• The HOA’s current budget (which includes the number of delinquent HOA fee payments from condo unit owners).
• Projects the HOA is currently taking on and any projects they have approved for the future.
• The responsibilities that the HOA takes on, vs. the responsibilities of the individual condo owners.
• Any lawsuits the HOA is currently involved in.

It’s important to review this packet carefully, as you have only 10 days in Minnesota (or 5 business days in Wisconsin) to review it and revoke your purchase contract if you feel that the condo purchase is no longer the right fit.

11. Verify that the condo’s title can be transferred to you

It’s also important to verify that the condo seller is able to convey the condo unit free and clear of any title issues. Prior to closing, you’ll hire a title company to research the condo unit and its history of ownership, and to verify that the owner can deliver title to you free of any judgments, liens or other matters that may affect your full ownership rights.

Your lender will likely require that you purchase lender’s title insurance so their risk is minimized; most buyers purchase owner’s title insurance so they’re protected as well.

12. Attend your walk-through and closing

Once your loan is approved and the title research is complete, you’re ready for your final walk-through before the closing. Tour your condo unit one last time to ensure that nothing has been removed, replaced or damaged, then head to the closing where you’ll sign the final closing and loan documents and collect your keys.

Congrats! You’re a condo owner. Now, who’s helping you move in?

Key points and next steps

To buy a condo, you’ll have to go through three key phases:

• Planning and research: Hire your team, determine your criteria, desired location and budget. Get pre-approved for a mortgage loan.
• Touring and selecting: Go check out condos in person. Do your due diligence during tours, reach out for specific documents on condos you really like, then make an offer.
• Inspecting and closing: Complete the process by getting the condo appraised and inspected, loan approval, beginning the title closing process and attending the final walk-through. Once complete, attend (or electronically finalize) your closing.

Whew. That’s a lot of information, right? If you’re ready to get started on the path to condo ownership, but need an expert to guide your way, we can help. Reach out to Edina Realty or your agent to get started..

Additional resources to consider

11 questions every condo buyer should ask
Smaller size, big living: Is condo life right for me?
10 tips for buying your first condo
What happens at the closing table?