A CondoGrade is a comparative rating of a condominium association’s financial well-being. Because the condominium association’s financial health will have a strong impact on your investment and your condo ownership experience, this is information that should be considered by both buyers and owners.
The CondoGrade takes key financial data related to the condominium association, applies our CondoGrade algorithm, and compares the result against other condominium associations in the CondoGrade inventory. There is no objective standard for a CondoGrade – all CondoGrades are dependent on what is available in the current inventory. Think of it as "grading on a curve."
The "CondoGrade Impact (CG Impact)" will tell you the additional value in your investment based on the CondoGrade. A high CondoGrade indicates added value for the property (positive CG Impact). A lower CondoGrade indicates reduced value for the owner (negative CG Impact). The CG Impact is dependent on the individual property so each unit in the same association may have a different CG Impact.
Buyers – The CondoGrade can help you to narrow down your choices, make an appropriate purchase offer (using the CG Impact), and identify properties that might pose financing problems. When a condo is mortgaged, the association must meet certain criteria to qualify, not just the buyer. Financial problems within the association could result in denied mortgages to the buyer.
Sellers/Owners – The CondoGrade can help you to decide if it is a good time to list or refinance, determine an appropriate listing price (Added Value), and identify and correct any problems within the condominium association proactively. This ensures that you get the maximum possible return on your investment and reduces the risk of a delayed or failed closing for your sale or refinance before you invest excessive time and effort.
A CondoGrade can change over time if the financial health of the association improves or deteriorates. CondoGrades also change as new data becomes available for comparable properties. CondoGrade Reports expire after 60 days, however we recommend getting an update every 30 days to ensure the most current information is reported.
Keep in mind that you will still need to complete your due diligence on the property (inspection, appraisal, attorney review) to determine if it is an appropriate choice for you. CondoGrade is just a good place to start if you are in the market for a condo unit.
There are two reasons why a CondoGrade may be low:
A low CondoGrade could mean:
If you are the buyer, request more information about the association and the property before you commit to a purchase.
If you are the seller, request an inspection of the association’s financial records. A professional audit may be in order, or the association may need help in organizing its financial records (such as creating a budget and preparing financial reports).
CondoGrade gathers data from public records, private sources and the associations themselves and uses our proprietary algorithm to calculate the CondoGrade and CG Impact. The data that is collected from the association includes information that is legally required to be disclosed to a prospective buyer in the sales process (in Illinois, specifically, this is called a 22.1 Disclosure).
CondoGrade encourages sellers and their associations to provide this information and get their CondoGrade early in the sales process (as soon as a property is listed) so that there will be no unpleasant surprises that may delay or prevent a sale. A low CondoGrade could mean that there are financial inadequacies in the association that may prevent a buyer from obtaining a mortgage.