You are trying to decide between buying a condo and a house, so you may ask: Are condominiums treated differently than single-family homes?

In a word, yes. And here is why: With a condominium,
you actually own only your interior space. You are thus
dependent on the financial health and the moral responsibility
of the developer or homeowners' association to maintain
the exterior of your dwelling and to preserve your investment
value over time. Will the developer still be interested
in maintaining your property when you are ready to sell? Or
will he have gone on to develop newer subdivisions?
Generally, freestanding condo units retain their value better
than condos that are contained within a floor of a larger
building.

If you purchase a condominium, be sure that it meets all
Fannie Mae and Freddie Mac standards, such as the number
of units per building, the amount of space between buildings
and the number of developer-owned units. (Fannie Mae and
Freddie Mac are the source of most conforming, lower-
interest-rate mortgage loans.) If not, you may find it difficult
to resell and you may force the next buyer into a nonconforming
or sub-prime mortgage with a high interest rate.

To offset these additional costs to the buyer, you may then
need to lower the price of the condominium, resulting in less
profit for you.

Recently a condo developer in town fell into financial
straits (maybe from offering too many "unbelievable" deals).
Let's say at the same time you received a job offer for your
dream job, but it would require you to relocate to Phoenix.
You have the "cream puff" unit of the neighborhood. The
appraiser estimated its market value at $150,000. You'd be
able to take the proceeds from your sale and make a nice
down payment on a luxurious ranch in the desert. You can
already see yourself basking in the February sun!
But the developer has to raise money quickly, so he's
unloading his competing, twenty-four developer-owned
units at fire-sale prices-at fifty cents on the dollar. How
likely are you to get anything even close to the market value
you are expecting?

A quick note: With any transaction involving property
(and the investment of hundreds of thousands of dollars) it
may be worthwhile to retain the services of a real-estate attorney
(as a source of unbiased information). Better to be safe
than sorry later.

From the book: Kickback:Confessions of a Mortgage Salesman