Against a backdrop of rising new condominium prices, interest in used condominiums is increasing. While used condominiums can be more affordable, there are many points that should be checked before purchase. This article explains the purchase flow and three important checkpoints.
What does the purchase flow for a used condominium look like?
Buying a used condominium generally proceeds in three steps: "financial planning → property search → contract and handover." Let us review the key points to keep in mind at each stage.
Step 1: Create a financial plan
When purchasing a used condominium, you need a financial plan that includes not only the property price but also incidental costs (about 10% of the purchase price). Management fees and repair reserve funds will also arise every month, so you should estimate their impact on your household budget together with your mortgage repayments. A plan with sufficient margin is the first step in avoiding mistakes.
Step 2: Search for a property
Consider multiple options for the area, layout, and price range. The used condominium market moves quickly, and desirable properties often receive inquiries immediately after they are listed, so it is important to check listings every day and contact the real estate company right away about any property that interests you.
Step 3: Purchase application, loan screening, contract, and handover
Purchase applications are generally prioritized in the order that letters of intent to purchase are submitted. By proceeding with the preliminary loan screening at the same time as your application, you can move the later procedures forward more smoothly. At handover, both the seller and the buyer submit registration documents to the judicial scrivener.
Three points you should always check when buying a used condominium
1. Building age and price decline trends
Up to around 20 years after construction, prices tend to fall as the building gets older, but once a property is more than 20 years old, the pace of decline often becomes more gradual. If you are considering a future sale, it is important to include building age in your property selection criteria.
2. Management condition and long-term repair plan
Condominiums typically require major repairs once every 10 years. Be sure to check the status of the repair reserve fund, the details of the long-term repair plan, and the minutes of the owners' association. The cleanliness of common areas such as the entrance, garbage area, and mailboxes is also a simple indicator of the standard of management.
3. Remodeling and renovation plan
Renovated properties can offer equipment and interiors comparable to a new unit, which makes them cost-effective, but they also tend to be more expensive. In addition, if the seller is a real estate company, you should note that consumption tax may apply. Because the way you choose a property changes depending on whether you plan to renovate after purchase, you should build your renovation budget into your plan in advance.
Frequently Asked Questions (FAQ)
Q. Can I use the mortgage tax deduction when buying a used condominium?
A. You can use the mortgage tax deduction if requirements such as building age, floor area, and earthquake-resistance standards are met. As a general guideline, fire-resistant buildings must be 25 years old or less, and wooden buildings 20 years old or less, but even older properties may qualify if an earthquake-resistance certificate is available.
Q. How much are the incidental costs for a used condominium?
A. They are generally about 6% to 10% of the property price. The main items include brokerage fees, registration and license tax, judicial scrivener fees, fire insurance premiums, and fixed asset tax settlement amounts.
Q. Should I always check the owners' association meeting minutes?
A. If possible, we strongly recommend it. They contain important information such as the history of repair work, whether there have been resident disputes, and the financial condition of the association. However, the owners' association is not legally required to disclose them, so there are cases where they are not made available.
Q. Which is better value: a renovated used condominium or an unrenovated property?
A. If the design and equipment suit your preferences, a renovated property may offer better value. If you have specific preferences, however, buying an unrenovated property at a lower price and renovating it yourself may provide a higher level of satisfaction in some cases.
