Is it a House or a Condo?

Homes You may not know it, but what we call a “house” in Austin has run into a semantics challenge. The photos to the left are of homes in a new neighborhood in which one of my buyers just purchased a new home. Look at the pictures. Do you see “houses” or “condos”?

These particular homes are officially condos, but they are also detached single family homes, or what we would normally call a “house”. If you drive through the neighborhood, you see houses, but if you want to own a home in the neighborhood, you’ll purchase a “condo” that looks like a house.

The semantics challenge becomes an issue in how a property is listed for sale in the MLS. Some Austin Realtors have been listing detached condos such as these as “houses” in the MLS, which is incorrect. The enforcement people at Austin Board of Realtors have been changing these listings from “house” to “condo” when they catch them, which has infuriated some Realtors.

Listing these properties as “condos” doesn’t seem right either because the homes are not what most buyers would call a condo. They are closer to a house than a condo in appearance and lifestyle. You have no common walls and you have your own fenced yard, trees, your own sprinkler system, a driveway and garage. You are responsible for all exterior siding maintenance and your own roof if it leaks or needs repair. That’s essentially just like owning a house.

But if you purchase a home and don’t own the lot it sits on but instead have fractional ownership of the entire development, and pay HOA fees to maintain the common areas and “roads” (uh, parking lot shaped like a road), then in fact you haven’t purchased a house as we legally and traditionally define one, you’ve purchased a condo.

What upsets Realtors though is that listing a house that is legally a condo in the condo section of MLS means that it won’t be exposed to nearly as many buyers as it would if it came up in “house” searches.

Most home buyers don’t want a condo, they want a house. Furthermore, if you’re my house buyer and you want to purchase a real house where you own the home and the lot it sits on, we don’t want your MLS search results being polluted with listings that in fact are not legally houses but are instead condo homes.

So what’s the answer?

Our Board of Realtors has split the condo category into two types of condos – attached and detached.

Here is the notice they sent us:

In response to subscriber request, ACTRIS has added two new subsets of the “Condo” section of MLXchange: “Condo Attached” and “Condo Detached.” These subsets accurately describe traditional condos and single-family stand alone structures legally zoned as condominiums. Properties that fall within the “Condo Detached” field will default to the “House” field in search results, but may be excluded from search results.

Did you understand that last sentence? Me neither. At present, out of 12,273 active residential listings in the Austin MLS, only 45 are listed as “Condo Detached”. All of the former “condo” listings were converted to “condo attached”, and it’s up to the listing agent to change any detached condos that were formerly properly listed as condo to “condo detached”. But I still see detached condos listed as “houses”, so the cleanup and recategorizing isn’t complete, mainly because not all of the detached condo homes have the words “condo” or “condominium” in the legal description, and the Board has been using legal description searches to find and change the renegade listings.

So what does all of this mean to you as a buyer? It means that if you would at least consider a detached condo in your home search, you need to let your agent know to include “condo detached” instead of just “houses”.

What are the downsides of a detached condo? Well, mainly the higher HOA fee. The one I just sold has a $75/mo. HOA fee. But that includes mowing, so if you would be paying for lawn service anyway, it’s not a bad deal. But it doesn’t included back yard mowing, so your mowing responsibility isn’t 100% eliminated.

The other downside might happen upon resale since the home cannot be listed as a house but instead must be listed as a condo, which means less exposure. If the use of detached condo is widely adopted, which it probably will be over time since more and more neighborhoods are built now as detached condos, then that downside will become less over time.

But even with these downsides, and after looking at traditional homes in the same area, my buyers determined that this detached condo community and the floorplan and price we were able to negotiate was the best solution for their needs.

Posted by Steve
8 years ago
Steve

Steve is a Real Estate Blogger, Husband and Dad, UT Austin Grad, Runner, Real Estate Broker and owner of Crossland Team and Crossland Real Estate in Austin TX.

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AC - 8 years ago

Where is this neighborhood? I like the design.

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anonymous - 8 years ago

Steve,
What’s the name of the development in the architectural renderings?

Thx.

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Michael @ The Stage Coach - 8 years ago

That’s a new one on me! Of course, being from up North, a Condo is generally a Multi-unit building, where at a minimum you would have some one above you or below you. A Townhouse, on the other hand, would be no one above you, or below you, but sharing a wall in some form. (Think of Row-houses by design.) Either way, you would pay into an HOA of some sort. And that does not even broach the CO-OP style homes, which I never really understood.

It sounds like the Home we purchased may be a Condo, as our streets are private and all of the homes in our sub-subdivision are responsible for the streets. But I am unsure of the ‘fractional ownership’ aspect. This would not be the first item the builder neglected to tell us, but that’s another story.

Any ways – if you were to tell me that the Home we were looking at was not technically a Home, but a Condo, I would say, “That’s Screwy. What else is going on here? Let’s move on…”

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M1EK - 8 years ago

They’re OK, better than many suburban homes, but the garage is still in front and on some still dominates the street-face.

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Steve - 8 years ago

The development is Independence in South Austin on Manchaca Rd. just south of Stassney.
http://independenceaustin.com/

According to the sales rep, my people were the first to receive the type of concessions we negotiated. He seemed slightly peeved about it, but I think was happy to sell another one nonetheless. So don’t go in without a good Realtor.

Michael, sounds like you bought a condo if the streets are private. Developers are doing this more and more because they can avoid the street and curb requirements of the city and squeeze more homes into the acreage available.

At Independence, if City of Austin would have put in the streets, the width of the roads would have been much wider, with curbs, and therefore the lots/yards smaller. They’re only 110 feet as-is. I think there are other issues involved, related to platting individual lots, but I’m not sure what they all are.

Steve

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Tim - 8 years ago

We were building a house there. But we decided against it due to the road size. We like to have people over and it looked like a potential parking nightmare. They’re really nice homes though.

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Steve - 8 years ago

Hi Tim,

Yes, entertaining large parties could be problematic, but there is additional parking spaces spread throughout. Nevertheless, some of the driveways are too short to park on without sticking out into the street and many people use their garages to store junk, so I imagine street parking in the neighborhood is a way of life that comes along with this type of community. But that’s commonplace in many inner city metros with row houses. It’s just not something we see or deal with a lot in Austin.

And it’s a far cry from River Place where no street parking is allowed and your car must be hidden inside the garage at night unless you have a guest permit for overnight visitors.

Steve

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Michael @ The Stage Coach - 8 years ago

Take it me from me – Parking is a Nightmare on these streets!

We have sidewalk on one side only. And Short driveways [and small front lawns] just like Steve mentions. Sure – we have the end of the cul de sac for over flow parking. But that’s where people who live at the end of the street park their cars, so they can have their drives free. (grumble!)

And no one parks at the overflow lot by the pool. That’s too inconvenient to walk an extra 50ft. (grumble! grumble!)

There’s no parking on the side with hydrants- opposite the sidewalk side, but that does not stop them from parking up and down both sides. And when that happens, you are unable to get in or out of your driveway! (grumble! grumble! grumble!)

And when the towing company tows cars that are illegally parked: the owners sue the HOA. Once the residents found out Williamson County Judges are not partial to personal property being hauled away in the middle of the night, no one follows the parking policy. My wife was president of the board when the judge decided against them in 2x cases. Oy! $1000’s in legal bills…

And don’t get me started on those with big trucks who stick out in the road…”I can’t pull in any further unless I put my garbage can in the garage,’ one guy told me… WTF?

One house is complaining that the FIVE cars/trucks that the THREE people in the family own can not possibly abide by the parking policy [they do not park in their garages either]. Why are they being disciminated against for owning FIVE vehicles?

Sorry… Deep Breaths… 1…2…3… Serenity Now…

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Michael Francis - 8 years ago

Steve,

Having dealt with these “mini” HOA’s we have seen some very poorly written HOA CC&R’s, so buyer beware! As the HOA gets older, who do you think is going to pay for the maintenance and eventual replacement of that “owned’ street? When you have a quantity of units / houses to help with costs, it’s not quite so painful. Extrapolate that to other common area items…..

Additionally, small HOA’s sometimes don’t want or can’t find an HOA management company to come along side them. As Mike noted, not having professional quidance is very problematic. Without a good property manager to help them, HOA’s don’t have any assistance in making decisions that can affect them emotionally and financially. If a judge awards a judgment against an HOA and the does not have the funds to pay it, the court can assess the judgment against the homeowners.

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shireen - 8 years ago

Wow, I wouldn’t do it where the street is privately owned! That is asking for a headache and some big assessments down the road. Sounds like now we know why the City requires a certain number of parking spaces with different zoning levels. The houses look nice but I want to own and not deal with the HOA hassles or the street issues.

Hope they all have D&O insurance!

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Tim - 8 years ago

I really don’t think that Independence has private roads (Amur Drive is a continuation of a pre-existing road). And they are really nice houses. The house we were building had room for two cars in the driveway so the parking doesn’t have to be a problem. Just be sure you keep your garage cleared out or get a lot that the house sits towards the back of so you have a long driveway.

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anonymous - 8 years ago

Not yet has anyone asked the obvious – how much (in $’s and/or %’s) did you save your buyers compared with what the builder was offering as incentives?

Thx.

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arz - 8 years ago

so what’s a townhouse?

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Sam Chapman - 8 years ago

Thanks to an agent in my Keller Williams office, the board now has given us the ability to search by condo attached or condo detatched. This way we can include these stand-alone condos in searches.

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Mike B - 8 years ago

Newmark already built a community like this in North Austin in Pioneer Crossing with these exact housing plans. The streets are small, the houses are close together, and the possibility of this becoming a “renter” neighborhood are high. I like the outside design of the houses, but some of the paint colors and finish out look like this neighborhood won’t be so great in 5-10 years.

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Mike B - 8 years ago

I also think it is interesting that the markup for this neighborhood vs the exact same floorplans offered in the Pioneer Crossing one looks like 60k-100k markup.

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Brett - 8 years ago

Well,

I almost bought a house at Independence about a year ago; they actually started building it, but I pulled out because Newmark did not deliver what they had promised.

First, when I bought the house, the neighborhood did not have all the neccesary permits. The salesperson (Rhonda) NEVER mentioned the community was a condo; Newmark built a similar neighborhood in north east austin (east of parmer and I-35, i think). Well, they did not have models homes in south austin and based the entire sale process on the previous neighborhood in north austin. I (and my realtor) thought I was buying a house, and after a couple of months, I got a surprise from Rhonda saying the city permits had finally been completed and the designation was for condos. She never said the true reason; the other salesperson told me that the decision was made to accomodate more houses. Rhonda, my salesperson, said the decision was simply made to speed up the process.

A big difference is the width of the streets, which are public up north. The roads are tinny in Independence; it literally looks like a mini-parking lot. In addition, the size of the front-yard is ridiculous; you house is right on the street, which is not the case in north austin, where the front yard is much larger. In addition, the spacing between the houses is very different; the houses are nicely spread up north, while they are almost next to each other down south.

In addition, they changed a lot of components during construction. For example, they changed the roof from a 30-year warranty to a 20-year warranty. I took a friend who is a contractor, and he looked at the size of the beams Newmark used for framing in South Austin, and he was surprised because they were smaller than he uses for construction. He was personally dissatisfied with the support provided by the cheaper frames.

Finally, Newmark kept pushing the date of completion; the house was originally meant to be finished in early september, but they kept making excuses regarding city permits, and the home was slowly pushed all the way to early january.

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Steve - 8 years ago

Most or all of these issues are things that I brought up and my buyers considered. In the end, for a 2000+ sqft home in the 78745 zip, close to everytwhere they want to be, plus clean and new, their choice holds up and makes sense when compared the the resale homes available that close in.

Investor sales are forbidden and the rules are clear and specific about that, so investors won’t be coming in until resales start happening. Even then, it’s not a purchase I would necessarily recommend for investors.

Finally, I recommend anyone buying in an HOA neighborhood like this to get involved early on in the HOA governance issues as the manner in which the HOA operates can impact property values. The developer isn’t involved at all in this HOA. It’s already set up with a professional management company.

Steve

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Brett - 8 years ago

I agree that it seems like a good opportunity in this zip code, but after seeing all the construction changes and the lack of quality of the final product, I was quiet dissapointed.

In addition, I remember the salesperson was clear about the fact that Newmark would handle the HOA until they leave the neighborhood.

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anonymous - 8 years ago

Steve-
Come on, don’t keep us waiting – how much did you help the buyers save (%-wise)? Potential buyers are more likely to purchase if they hear good deals are to be found. There’s been enough pushing of rising prices via montly MLS numbers, if you have evidence of falling prices, why not share it?

-Anon

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Steve - 8 years ago

Hi Britt: The HOA is not managed by the builder. The homes are of good quality for that price point and product. If you really want to feel disappointed in construction quality, go look at some of the production builder homes in the $400K and up range. It’s a huge step up in price but not much in the way the home is built compared to standard quality homes.

Anon: I’m not going to share specific sales price amounts or discounts on an ongoing deal where the location and builder are now public on this blog. The buyer is happy and we did better than I think they would have done without good council.

Steve

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Jay Ward - 8 years ago

Hey does anyone know if a condo community can legally make me put my garbage can in my garage, which I supposedly own?

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Steve - 8 years ago

Hi Jay,

Yes they can, if it’s written into the bylaws. Most HOAs just say that the can has to be out of view, which means you can also put it in your back yard.

Steve

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Tim - 8 years ago

And you’d be on shaky ground with the City of Austin also:

“Garbage carts must be returned to their storage area on private property by 10 p.m. on the designated collection day. They should be placed at the curb by 6:30 a.m. on the collection day, but not prior to 8 p.m. the evening before.”

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