Guide to Townhouses: 4 Tips for Buying a Townhome

A townhouse is an individually-owned, often multi-level dwelling that shares one or two exterior walls with neighboring real estate. Townhomes are typically single-family homes connected by shared walls with a row of similar homes, creating a distinct architectural character to a neighborhood street. Townhomes are often found in suburbs and urban areas where space is limited and may be built up to the zero-lot-line.

Townhomes can be a more affordable option than a detached single-family home, and there are many potential benefits to owning one—like privacy, independence, and a high probability of your asset appreciating in resale value. However, townhomes are typically operated like condominiums with a governing body like a homeowners association which charges monthly or annual fees that can be costly.

Townhomes and condos are common residences typically found in urban areas with limited space, and owners of both are responsible for property taxes. However, there are a number of ways in which the two types of residences differ, which include the following.

• Structure: The main difference between a condo and a townhouse is their structure. A condominium is a living space within a larger building or complex, similar to an apartment building. Condo buildings may be a few stories or high-rise buildings. A townhome is a single-occupancy type of home that is connected to other similar homes by joining exterior walls.
• Ownership: Townhouse owners own their entire lot including interiors and any yards connected to the property. Condo owners own their individual unit within the larger complex, but they do not own the complex. They also share the ownership of common areas such as hallways or outdoor spaces.
• HOA fees: A homeowner association (HOA) is a board elected to manage the standards and amenities of a shared property or neighborhood. Both condos and townhouses can have HOAs, but their services and fees are different. There are more shared spaces—like hallways, parking lots, outdoor spaces, and gyms—in condos, and often the annual or monthly HOA fees that condo owners pay are higher. Townhomes don't have as many shared spaces and usually have lower HOA fees that cover services like trash removal or landscaping.
• HOA rules: An HOA often has specific rules pertaining to pets, common area rules, and decorating restrictions. The HOA for a condominium—run by a condo association—will have stricter rules because everyone is living under one shared roof. Also, condo owners are not entitled to change their common spaces in any way. Townhome owners may have more freedom with landscaping or home renovations, but they are often required to maintain the neighborhood’s uniform exterior. For instance, they may be allowed to paint the outside of their house, but only a certain color.

If you’re a first-time homeowner or simply looking to downsize, there are many potential benefits to owning a townhouse. Here is an overview of some of the perks of townhouse living.

1. 1. More affordable than a single-family home: Townhouses are usually more affordable than free-standing homes while still offering homeowners the privacy and freedom of a single-family house.
2. 2. Low maintenance: Townhouses may have yards but they are usually limited to a small strip of land or a front porch, making the exterior upkeep lower than most single-family homes. Additionally, there is less communal space maintenance than a condo complex, meaning that the HOA fees will be lower.
3. 3. Shared amenities giving convenience and community: Some townhouse communities have shared amenities maintained by the HOA such as a swimming pool, tennis court, or clubhouse. For homeowners looking to build connections with neighbors, townhomes are a great option. Ask your real estate agent about the community amenities when looking at townhomes to get a sense of the added benefits of purchasing a townhome.

For those in the home buying market who are interested in townhouses, consider these tips.

1. 1. Work with a real estate agent. A real estate agent can help you negotiate the best price on your townhouse, scope out your desired area, and facilitate any paperwork related to your home purchase. They can also help you get a sense of how much comparable properties are selling for in your desired area and potentially save you from overpaying for your home.
2. 2. Know the HOA fees and CC&Rs. Ask your real estate agent whether there are any HOA fees attached to the property and what these fees cover. Most HOAs will have CC&Rs (covenants, conditions, and restrictions) which outline the general rules and regulations of living in the neighborhood.
3. 3. Get to know the neighborhood. Townhomes offer a greater degree of privacy than condos, but you will still be very close to your next-door neighbors. If peace and quiet are important to you, you might not want to move into a neighborhood with a lot of on-street noise or loud neighbors. Explore the area before you commit to a neighborhood to get the best sense of whether you can see yourself living there.
4. 4. Schedule a home inspection. Even if your townhome is governed by an HOA, consider conducting your own home inspection. Hire a third-party home inspector to check the home for any problems. This will also ensure that you don't overpay for your home.

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