What to Watch for When Appraising an Apartment in an Older Building?

Appraising an apartment in an older building requires extra considerations. Not only the apartment’s condition but also that of common areas and the HOA play a crucial role. Here’s what to focus on as an appraiser.

Building Condition

1. Deferred Maintenance:
   1. Examine the building’s exterior, including the roof, façade, and windows. Deferred maintenance can significantly reduce value.
   1. Check common areas like staircases and elevators for wear and tear.
2. Outdated Systems:
   1. Look for aging systems, such as electrical wiring, plumbing, or heating, which may require costly updates.

HOA Documentation

1. Maintenance Plan:
   1. Is there a long-term maintenance plan in place? A lack of one could indicate a poorly functioning HOA.
2. Financial Reserves:
   1. Assess whether the HOA has sufficient funds to cover major expenses.
3. Minutes and Rules:
   1. Review meeting minutes and house rules for signs of disputes or maintenance issues.

Specific Considerations

1. Historic Status:
   1. If the building has historic status, renovations may be restricted.
2. Neighborhood:
   1. Evaluate the surrounding area and available amenities. Location heavily influences an apartment’s value.

Practical Tips

• Inform buyers or sellers about how an older building impacts maintenance costs.
• Recommend additional inspections, such as structural surveys, if needed.