WSJ Your Money Briefing - Why Condo Sellers’ Pain Can Be Buyers’ Gain

Episode Date: June 2, 2025

Condominium owners saddled with rising HOA fees and special assessments are having a hard time selling their properties. Wall Street Journal personal finance reporter Veronica Dagher and recent condo buyer Gordon Miller join host Callum Borchers to discuss how real estate hunters can find bargains.  Sign up for the WSJ's free Markets A.M. newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

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Buying real estate is hard. You can offer more than the list price and still get beat by someone willing to pay more. One type of property is ripe for a bargain, condominiums. They seem to be more willing to drop the price and negotiate. But opportunities for buyers could mean challenges for sellers. You probably can't expect a bidding war. You can expect buyers to take longer to make a decision on your condo and you certainly can expect them to ask a lot more questions than they did just a few years ago. Wall Street Journal personal finance reporter Veronica Dagger and proud new condo owner Gordon Miller will give us the lowdown on what it takes to close a deal. Stick around after the break.

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prices. Buyers are shying away from them because of rising homeowners association dues and special assessments for major projects. So who wants a condo? Gordon Miller for one. He recently purchased a four-bedroom unit north of Detroit. He also happens to be a mortgage broker. Who knows more than the average person about real estate? Gordon, why did a condo make sense for you? It's one of those things where as you get older, the upkeep of a home isn't something that you may take in the same fashion that you would say if you were in your 30s or 40s. So as we got older, we had moved down to North Carolina for a while, but we still left family back in the Detroit area.

So we made the decision to go ahead and buy something where we wouldn't have to worry about the upkeep. We wouldn't have to worry about snow removal. Having a house and not being in it for more than maybe 100 days a year was nothing that I was gonna consider really. What were your must haves when you were condo hunting? The area was key.

I wanted to be near roads that I knew I could go in and out of easily enough. The other factor involved is that we wanted to be a short distance from not only my daughter, but my mother-in-law's in assisted living about 10 minutes away from her as well. What did you not want in a condo association? The one thing that you've got to be aware of when you're dealing with a condo is to get very familiar with the association. What are they going to let you do? As an example, the condo

that we bought needed some work on the deck, but you can't just go ahead and do the work on the deck or do the deck in a fashion that you desire. You end up doing the deck in the manner that they tell you to do it. The other big problem nowadays is special assessments. You want to really get a handle on any special assessments that might be coming up. Insurance, you know, make sure that the condos are mortgageable. Fannie Mae and Freddie Mac have blacklisted some condo projects that don't have proper insurance in the event of an emergency.

When you're looking at a condo outside of the ease and as a friend of mine said, you're just lazy, you don't want to mow anymore, that's where the biggest surprises are going to come from. If there's a special assessment or if they raise the dues and that was one of the things that we were very keen to was making sure that the association dues monthly weren't prohibitive. Take us inside the deal making here, Gordon. The unit that you bought was originally listed at $649,000.

You got it for almost $100,000 less. How? So it started at $649,000. I saw it. I eliminated it because I thought the price was too high. It relisted. What's happening on the internet for folks to be aware of is that a brand new listing might not be a brand new listing. It's been relisted. So they may take it off the market for a month. But if you go back through Zillow as an example, you'll see the listing sold history. And I was able to identify real quick that that was indeed the unit that I had seen back about four months prior,

but that they seem to be more willing to drop the price and negotiate. And when you do a $60,000 drop to begin with, I thought that I might have luck going in with an offer around 550-ish. What are your expectations for this property as an investment, Gordon? I grew up learning that a house was an investment,

but you do have to look at it not in the tone of, is this just the house that I want? And a lot of people make that mistake where they might overbuild, or I've seen 8,000 square foot homes in the middle of a 2,000 square foot home neighborhood up here in Traverse City. A lot of people make that mistake And it's not easy to go look at new projects where you don't have the history of the association or the builder involved. And you may not have that same security that, you know, if we decide to sell in 10 years, then are we going to get our money back because they're going to be appreciation. And in our case, where you're in a prime location, it's got a great view,

and we're going to do our upgrades internally without the association knowing about it. We're going to fancy it up inside a little bit because they have no say in my inside of the home, so that helps. That was Gordon Miller, a mortgage broker in North Carolina and the new owner of a condominium in Michigan. Now let's get the seller's perspective on the condo market. Wall Street Journal personal finance reporter, Veronica Dagger, heard all about the struggle when she spoke with a bunch of them. Veronica, what's the number one frustration for condo sellers? It's a tough market for sellers because there are more homes on the market. They are taking longer to sell and probably the biggest frustration for them right now

is they're probably not going to get their asking price. Most condos are selling for lower than their list price and that is a frustration for folks these days. Where is it especially difficult to be a condo seller right now? Especially in the South. And that's also similar to the housing market. So if you're in a market like Texas or Florida, you can't expect to get the price your neighbor got just

a few years ago. You probably can't expect a bidding war. You can expect buyers to take longer to make a decision on your condo. And you certainly can expect them to ask a lot more questions than they did just a few years ago before they commit. Well, you mentioned Florida as one of the toughest spots. And of course, that's where we had that terrible,

deadly condo building collapse several years ago. Tell us a little bit about the ripple effect of that event, because I know a lot of homeowners associations responded by trying to catch up on any deferred maintenance they might have had. What has that done to the cost of ownership and then trying to sell? So after the surfside collapse, there has been more regulation and stricter codes that complexes essentially have to live up to and make sure that their building is up to par. So something as horrible as that doesn't happen again. As a result, existing owners and also new buyers are buying into these buildings where there's these things

called special assessments. Now, special assessments have always been around for condo owners, but there's just more of them now and many of them are more expensive than they were in the past because some of the repairs to things like foundations or other structural integrity issues the complexes are having to address are more significant. Essentially that assessment is divided amongst the owners of that condo complex. And so in addition to your regular mortgage and your other bills, you might have these special assessments on top of that.

And that can cost like tens of thousands of dollars. In certain cases, I've even heard hundreds of thousands of dollars depending on the state of the complex. And these are bills that are very difficult for some existing owners to sell. And that's why we're seeing, especially in places like Florida, people trying to unload their condos more so than in other states. But other condo complexes in other states are also having some of these assessments more frequently.

And it is basically putting a chilling effect on some of the sales within this condo market. So to get around it, are sellers having to eat the special assessments, saying to a prospective buyer, hey, I'm willing to pay this off before we make the deal? A lot of real estate agents I spoke to said that's a great idea. Just pay that upfront cost. Yes, it may feel like a really painful outlay, but that can help expedite your deal. If you're really serious about selling, that can be a way to stand out as a seller in this market and just move things along. Dave Korsunsky, MD, MPH, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO,

CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO, CFO interest in condos as a property style, or could some of it just be people being more careful about buying that second property

in a shaky economy right now? It could be a little bit of both. Condos, for some people, it's a second property. For some people, it's their primary residence. But in general, when you're looking at buying a condo, and this is important for sellers to understand, is that condo buyers in general right now will have a tougher time getting a mortgage

than, say, if you were buying a home. You spoke with a real estate agent in Massachusetts where I live who struggled to sell a condo with a monthly HOA of almost $2,000. Now I'm sure the amenities were top notch, Veronica, but are some of these buildings victims of their own luxuriousness here? Yes, certainly it could be. I mean, that is a beautiful building and they have incredible views and beautiful amenities and nice gym and a lot of these complexes do have all the bells and whistles. And of course you as the buyer are going to pay for that each month. The stress about rising HOA fees is that you don't have a whole lot of control.

You could get active on your board to try to make sure the money is being spent in a smart way and things aren't being wasted and there's no fraud or anything on your board to try to make sure the money is being spent in a smart way and things aren't being wasted and there's no fraud or anything like that. But largely HOA dues are something that can go up significantly and you just have to live with that. That's WSJA reporter, Veronica Dagger, and that's it for your money briefing. This episode was produced by Ariana Aspuru and Zoe Kolkin

with supervising producer Melanie Roy. I'm Calum Borschers for The Wall Street Journal. Thanks for listening.