When shopping for a condo or a townhouse in Chicago buyers are often confronted with comparing units that have assessments that are significantly different. So how do you make this comparison?
First, the simple part which almost everyone intuitively knows. Check to see if heating and/or air conditioning is included in both. If not, then estimate the value of this and subtract it from the assessments that include this. Now you have the equivalent cost of the assessments as if there were no heating and air conditioning.
Second, are there amenities included in one that are not included in the other – e.g. fitness center, pool, etc…? If so, you could impute the value of that amenity to you and subtract it from the assessments. Some people place no value on a doorman but it’s possible that a really good fitness center would allow you to cancel your $100/month health club membership.
The third piece is a bit more complicated and is really only practical for people familiar with reading financial statements. You have to figure out how much of the assessment is going towards operating expenses vs. building reserves. Let me explain. Suppose you have two identical buildings with identical expenses but different assessments. How could that be? Well, the building with the higher assessments has decided to build up their reserves. They’re really not spending the money but they are saving it for a rainy day (when the roof starts leaking). The other building will have to impose a special assessment, so, in the long run, the cost of living in the two buildings is exactly the same. Therefore, when comparing the two assessments you should subtract out that portion of assessment that is going towards building the reserves. If you don’t know how to determine this you could always ask your realtor (good luck with that one).
0 thoughts on “Comparing Assessments”
I think it is also fair to see if insurance is included in both and what they cover. Cost of a homeowner’s insurance (covers the building, walls, etc) will be much higher than a condo insurance (which only covers your belongings, but not the building itself as it is already covered in your assessment).