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Differences in Condo Fees

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Murray Bloom

Junior Member
Joined
Aug 21, 2005
Professional Status
Certified Residential Appraiser
State
Maryland
How do you guys adjust differences in condo fees, if at all? I have a subject with $65/mo and comps with none and $200/mo. Is the difference too insignificant? Can it be adjusted like we capitalize ground rent; although, in this case, nothing actually changes hands except the fee?
 

Rufus

Junior Member
Joined
Apr 3, 2008
Professional Status
Licensed Appraiser
State
Indiana
How do you guys adjust differences in condo fees, if at all? I have a subject with $65/mo and comps with none and $200/mo. Is the difference too insignificant? Can it be adjusted like we capitalize ground rent; although, in this case, nothing actually changes hands except the fee?
Your differences will likely be in the amenities offered in each of the projects. So, no, do not adjust for differences in the fee but for differences in the projects.
 

Murray Bloom

Junior Member
Joined
Aug 21, 2005
Professional Status
Certified Residential Appraiser
State
Maryland
These are converted old urban townhouses, 2 units typical, with no outside (project) amenities.
 

timd354

Elite Member
Joined
Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
How do you guys adjust differences in condo fees, if at all? I have a subject with $65/mo and comps with none and $200/mo. Is the difference too insignificant? Can it be adjusted like we capitalize ground rent; although, in this case, nothing actually changes hands except the fee?

How can one of the condominium comparable sales have a condo fee of $0? That makes no sense at all......even for a small condo, there has to be common area cleaning and upkeep and reserves.
 

Brian Weaver

Senior Member
Joined
Apr 16, 2005
Professional Status
Gvmt Agency, FNMA, HUD, VA etc.
State
Illinois
Insignificant?
How is $2,400 in annual fees insignificant as compared to $780? What if the amenities were the same? That's almost 208% over the $65 per month complex.
 

Murray Bloom

Junior Member
Joined
Aug 21, 2005
Professional Status
Certified Residential Appraiser
State
Maryland
How can one of the condominium comparable sales have a condo fee of $0? That makes no sense at all......even for a small condo, there has to be common area cleaning and upkeep and reserves.
I'd think so, but as I must rely on MLS data, that's what I have. Common area may be no more than a five foot square foyer and a light bulb, but your point about reserves is well taken.
 

Murray Bloom

Junior Member
Joined
Aug 21, 2005
Professional Status
Certified Residential Appraiser
State
Maryland
Insignificant?
How is $2,400 in annual fees insignificant as compared to $780? What if the amenities were the same? That's almost 208% over the $65 per month complex.
Yeah Brian, that's why I asked. How would you adjust for the difference?
 

Vivian Bachner

Junior Member
Joined
Oct 6, 2006
Professional Status
Certified Residential Appraiser
State
New Jersey
How can one of the condominium comparable sales have a condo fee of $0? That makes no sense at all......even for a small condo, there has to be common area cleaning and upkeep and reserves.


I have appraised several condominiums in New Jersey with no budget. Usually the conversion of a 2-4 unit into condominiums and the owners "agree" to take care of the common areas. The challenge was to find out whether or not there was a market reaction to the lack of a budget :shrug:
 

Carnivore

Elite Member
Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
Yeah Brian, that's why I asked. How would you adjust for the difference?


Approach this like you would any other differences that you encounter between the subject and comparables in any assignment.

That number too me suggest there is something very significant going on.
 

sammiboii

Freshman Member
Joined
Sep 6, 2007
Professional Status
Certified Residential Appraiser
State
North Carolina
Are the communities truly comparable? If the community with higher fees has better amenities you may be able to see a difference in price. If everything is identical down the line (amenities, location, age, size, condition) then actually the community with the lower fees would be more desirable. Noone in their right mind would pay 208% more in dues to live in a community that is identical to your subject with less fees. If the fees are higher I would write in the location adjustment the name of the community and make adjustments accordingly, then in additional addendum explain EVERYTHING.
 
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