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Best tips for buying a townhouse 

Best tips for buying a townhouse
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If you’re thinking about buying a townhouse, you’re in good company. Behind detached single-family homes, townhouses are the second most common home choice among buyers in the U.S., according to the National Association of Realtors (NAR). And they’re particularly popular among young buyers under 30.

While the process of buying a townhouse is not unlike that of a single-family home or condo, there are some differences you’ll need to be aware of when shopping. Whether you’re a first-time homebuyer, looking for a second home or interested in downsizing, here’s a guide to purchasing this type of residence.

What exactly is a townhouse?

Townhouses walk the line between detached single-family homes and condos, offering the best of both. Since they differ widely by size and structure from area to area, they’re difficult to define by appearance alone. Generally, however, townhouses are multilevel residences attached by a communal wall to another residence, or two. Some also have small yards or patios.

The Census Bureau’s definition of a townhouse provides more guidance, at least when it comes to what qualifies as a single-family home. In order for a townhouse to be classified as a single-family structure by the U.S. Census Bureau, it must have no units above or below, be separated by a ground-to-roof wall, maintain separate heating systems from its neighbors and have individual meters for public utilities.

Townhouses vs. condos: What’s the difference?

These two types of residences are similar, but not exactly the same. One of the main ways townhomes differ from condos is in the degree of ownership. Unlike a condo, townhome owners typically own both the interior of the home and the exterior land it sits on, including the yard (if there is one). Townhome owners may pay an HOA fee for things like care of common areas and trash pickup, like condo owners do, but not necessarily.

Townhouse pros and cons

Just like any other type of home, townhouses can come with both positive and negative aspects.


  • They are more affordable: Townhomes often cost less than single-family homes of a similar size in the same location. “Because of high land costs it is less expensive to build homes attached and hence lower cost for consumers,” says Lawrence Yun, NAR’s chief economist.
  • They offer greater ownership: Unlike condos, with a townhouse you generally have ownership over the exterior as well as the interior of the home. While an HOA may enforce certain aesthetic codes for the exterior, there’s generally more freedom to change appearances on the outside of the home than you would have with a condo.
  • They require little maintenance: Because they’re on smaller lots than freestanding homes, it’s typically easier to maintain the interior and exterior of a townhome. And you’re often not responsible for maintenance of the exterior of your home and shared grounds, says Sallie Cromwell Simmons, a broker for Zeitlin Sotheby’s International Realty in Nashville. “These are often taken care of with a monthly fee to a homeowner’s association,” she says.


  • HOAs: Townhomes often come with monthly HOA fees that cover the exterior and grounds maintenance and common elements like sidewalks, pools and lawn care. While that may be convenient for someone interested in a low maintenance home, this fee can be costly, depending on what it covers, says Cromwell Simmons. And the fee can change or increase over time. Plus, Cromwell Simmons adds, an HOA has rules and regulations that may restrict how you can use your property and in what ways it can be altered.
  • Lack of privacy: Because townhomes are typically attached units, there might not be as much privacy as you’d have with a single-family detached home. For example, says Cromwell Simmons, you might be able to hear your neighbors, or a leak from an adjoining property may seep into your home.
  • High price per square foot: According to the NAR, townhomes are the second most expensive type of housing per square foot behind condos in buildings with five or more units.

6 tips for buying a townhouse

1. Consider hiring a real estate agent

Real estate agents can act as a guide and advocate when purchasing a home. Your agent can advise you on the median price of townhomes in your area, as well as provide information on the local market, negotiate on your behalf and fill out all of the forms and disclosures necessary to successfully purchase a home.

It’s important to remember that agents get paid a commission for their work. Ask upfront about their commission charge so you know what to expect. Generally, however, the it’s the seller who pays the real estate commission, and it gets split between the seller’s and buyer’s agents.

2. Know the HOA fees and what they cover

Before settling on a townhome, take a close look at the homeowner’s association (if there is one), the fees it charges and what is covered. The HOA fees should be a consideration in the overall purchase, says Yun.

Cromwell Simmons advises reviewing the rules, regulations, current financial statements and all of the development’s HOA documents prior to buying. “A buyer can make their purchase contract contingent upon reviewing this information to the buyer’s satisfaction,” she says. That way there are no surprises when it comes to fees or restrictions for the property.

3. Prepare for a possible bidding war

Because townhomes are an increasingly common choice among first-time homebuyers, you might find yourself in a bidding war. If this happens, it’s best to determine the maximum you are willing to pay from the onset — and stick to that number. Yes, you may be outbid, but keep in mind that if there’s a real estate downturn, condo and townhouse prices tend to fall the fastest and the most compared with single-family homes.

“In the current environment of very low interest rates, the demand for starter homes has been exceptionally strong,” says Yun. “Therefore, be mindful of possible multiple bidding and better than usual price growth.”

4. Shop for the best mortgage rates

It’s important to compare mortgage rates with at least three different lenders. Getting a low rate can save you thousands of dollars over the life of a loan. Keep in mind that the most favorable rates go to those with the best credit and least debt as a percentage of their income.

5. Get preapproved for financing

You should always get preapproved for a mortgage before home shopping, says Kurt Johansson, senior loan officer for Shelter Lending Services.

Being preapproved offers a number of advantages. It gives you a better idea of what you can afford and can help you compete with other buyers. Plus, it can help you determine whether the HOA fees of a particular townhome will be too high. HOA fees are factored into the purchase price when qualifying for financing. So, a high HOA fee could knock you out of qualifying if you are buying at the top of your range, says Johansson.

6. Get a home inspection

Home inspections are just as important for townhomes as they are for detached single-family homes.

Make sure the inspection includes both the inside and outside, even if the HOA takes care of the exterior, says Cromwell Simmons. And if any problems are found on the exterior, make sure they addressed and repaired before going through with the sale. Often, she says, any exterior problems can be taken care of by the HOA. If not, the repairs are the seller’s responsibility.

Pay special attention to a townhome’s adjoining properties. If the upkeep on these is poor, it will reflect badly on your home when it comes time to sell it. In addition, your neighbors failing to maintain things like roofing and siding can damage your home, no matter how well you keep up with maintenance.

Who townhouse buying is best for

First-time homebuyers living in densely populated metro markets may find townhouses a very good and affordable option, says Yun.

They can also be a solid choice for anyone interested in a low-maintenance lifestyle and a lock-and-leave property, notes Cromwell Simmons.

Overall, if you don’t want the exterior maintenance that comes with homeownership, but you would still like the equity and wealth building aspects of owning a home, buying a townhouse is certainly worth consideration.

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Written by
Mitch Strohm
Contributing Writer
Mitch Strohm is a regular contributor for Bankrate. Based out of Nashville, Tennessee, he has been reporting on the finance space for more than 12 years. Since 2010, Mitch has written and edited articles for Bankrate on topics including mortgages, banking, credit cards, loans, home equity and personal finance. His work has also been seen on sites including Business Insider, Clark Howard, Yahoo Finance, Fox Business, and
Edited by
Senior real estate editor