Searching for a condo in Seattle? If you’ve been on the hunt, you may have come across a unique situation of a building being under assessment and having some major work done to it!
There are some pros and cons to buying a building that’s currently undergoing a big remodel, but first and foremost, you should be very interested in the TYPE of assessment that is happening.
The most expensive thing a building can have done is a new exterior… but it also happens to be the more valuable thing that can be done. Unfortunately, systems updates (like new electrical or plumbing) or interior updates (like new carpeting) just don’t add the same value to a building, because these are things that people assume a building has.
Now, onto the pros and cons of buying a building that’s currently under assessment:
You’ll have major savings when you buy… and major gains in the future.
Buying in a building with an assessment can save you big bucks. In fact, you’ll probably save 20%. (Buying a condo just as work is starting can get you the BEST deal!) And once the assessment is done, your home is not only going to gain back that value (20%!), but it’s going to get a 20% additional increase once the remodel is done and people see how gorgeous the new building looks. (Our current Capitol Hill condo listing definitely falls into this category!)
You get sweat equity you don’t have to sweat for.
In this scenario, your “sweat equity” = the inconvenience of living in a home that’s partially under construction. If it’s an exterior renovation, then get ready for your building to be wrapped (meaning your windows will be covered) and for contractors to be working 7am to 5 or 6pm, Monday through Friday. It’s not pleasant, but as a reward for waiting it out, you might make a few hundred thousand dollars when you go to sell! (And for a better idea as to how long the construction may last, larger building exterior typically take 9 months to a year to complete, and smaller buildings will only take about 6 months).
You might be inheriting the cost of the assessment.
This isn’t always the case, but watch out for any assessments that may be in the works or even a couple years out.
The building can be difficult to sell during the assessment.
For most people looking to buy a condo, this isn’t something you need to worry about unless you plan to sell soon, either right before or during the assessment. While the building is under assessment, it can be hard to sell units and oftentimes real estate agents will just stop showing it during that time.
Financing can be an issue.
If the assessment is to repair the building’s facade, financing can sometimes be an issue, but it IS still possible to finance it. You just need to check with your lender and get all of the details. However, if the buliding is suing the builder and that’s the reason why work is being done, then financing won’t be possible because it’s just too much of a risk. (This latter situation isn’t as common, but it can still happen).
We *just* had a must-see listing hit the market with this exact scenario! In the heart of Capitol Hill, this 2-bedroom, 2-bath condo is in the process of getting a complete exterior makeover. Currently it’s listed for $555,000, but when the exterior is all remodeled and looking like new, its worth will probably be closer to somewhere in the $800,000s.
Conveniently, the $90k per unit assessment has already been paid by the buyer, and since it’s a smaller building, the $1 million remodel is estimated to only take about 6 months.
Here’s the current “before” photo of this condo building:
And here are a couple of examples of the projected “after” photos:
You might be wondering… then why are they selling? Well, we advised this condo’s seller to wait out the assessment remodel, because unfortunately, they’re going to take a significant loss. But they needed to sell now (that’s how it goes sometimes!), so this only creates an amazing opportunity for someone who has always dreamed of living in Capitol Hill (and in one of the best locations, too!).