A condominium, commonly called a condo, is a form of property ownership in which an individual holds title to a specific unit within a larger building or development, while shared spaces such as hallways, amenities and exterior structures are collectively owned by all unit owners through a homeowners association (HOA).
In real estate transactions, condominiums introduce considerations beyond the unit itself. HOA financial health, reserve funds, pending special assessments and governing documents all factor into a buyer's due diligence and a lender's approval process. Many loan programs — including FHA and conventional financing — require the entire condominium project to meet specific eligibility criteria before a unit can be financed.
For appraisers, selecting comparable sales within the same complex or a similar project is essential to producing a credible value opinion. Buyers and sellers should understand that monthly HOA fees directly affect affordability calculations, influencing how much financing a borrower may qualify for.