Condo Media - October 2017 - 25

ohn, who is thinking about buying a
condominium, asks his friend Lee for
advice. Lee replies: "I wouldn't do that.
I can't bring myself to throw away money
on condominium maintenance fees. You don't
know where the fees go. The only thing you know
is they keep going up."
We didn't actually overhear that conversation. But we have heard that
view expressed emphatically and often by people who already own condominiums, as well as by those who are considering buying them.
Many condo buyers don't understand the common interest ownership
concept, Scott Wolf, CMCA, AMS, PCAM, managing partner, Brigs, LLC,
AMO, says. "And they don't think through the implications of owning a condominium before they buy."
High on the list of concepts many condominium owners fail to grasp are
condominium finances: The costs of operating and maintaining a condominium community and the common area fees that must cover those costs.
The challenge for boards and managers is to penetrate the clouds surrounding association finances and help owners understand the cost and value of
the services they receive.
David Levy, CMCA, PCAM, president and co-owner of Sterling Services,
Inc., explains the value proposition of condominium ownership this way:
"There are three components of value," he says: "Cost, quality, and convenience." Using dinner as an analogy, he explains, "Cooking it yourself may
give you good quality and attractive pricing, but it isn't convenient and it
takes time. McDonald's is very convenient and has a very low price, but it
doesn't offer great quality. Legal Seafood offers great quality and convenience, but at a higher price." Condominium owners for whom cost is a
priority, he explains, will view fees differently than those who put a premium
on quality or convenience.
A BIG INFORMATION GAP
Levy's dinner analogy provides a helpful framework for deciding whether
a condominium or a detached single-family home is the best choice for an
individual purchaser. But it doesn't address the disconnect in the minds of
many owners between the condominium fees they pay and the costs associations incur. That information gap is wide and it distorts the understanding of
condominium ownership.
Here's the problem, or at least a significant part of it: The owner of a single-family house writes separate checks for all of his/her ownership costs:
Electricity, water, landscaping, snow removal-all of those costs are visible
and easily quantified. A condominium owner writes a single check for the
condominium fee, which covers the same services but in a bundle, making
the cost and value of individual services blurry at best, and invisible at worst.
Single-family owners understand that they will have to pay to repair or
replace roofs, heating systems, and other aging components over time. Condominium owners, who are happily shedding all those onerous single-family
maintenance tasks, sometimes assume that they are somehow shedding the
maintenance and repair costs as well. These misconceptions, among others,
explain why many condominium owners view the common area fee as an
extra expense that owners of single-family homes don't have to pay.
O
October
ctober 2017

Condo Media - October 2017

Table of Contents for the Digital Edition of Condo Media - October 2017