09.25.2020 | Buying A Home

Purchasing Your First Condo: 5 Things To Know

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Whether you’re looking for the perfect place to call home or a profitable investment, a condo may be the ideal option. While buying a unit could be one of the best decisions you ever make, it’s important to go into your search with your eyes wide open. That means knowing the pros, the cons, and what makes purchasing this unique property type different.

If you’re thinking of buying a condo, here are five things you should know beforehand…

1) A status certificate review is crucial

For every condo, there’s a status certificate—which you can obtain for a $100 fee. This critical document will provide a financial overview of the living space you’re thinking of buying. It contains information on everything from the condo corporation’s management to the fees you’ll pay for common elements to how much money is in the reserve fund (a sum that’s set aside for unexpected building-related repairs and expenses).

While you should know what’s in this packet, making sense of it will likely be challenging on your own—which is why it’s so important to have your lawyer review it.

2) New condos are different

From the purchase process to the timeline to the fees involved, there are some key differences you should know if you decide to buy a brand new (aka pre-construction) condo.

Significant pros associated with pre-construction include the ability to lock in a low interest rate, more time to save for a down payment (thanks to the unique deposit structure involved), and unit customization options.

On the flip side, new condos can mean extra costs (like HST) and delayed completion dates. Buyers should also know about interim occupancy—the period between when you can move into a unit, and when you officially own it.

What is it like buying a house in the current market? A few of our latest posts will help bring you up to speed:

3) You may not need an inspection

As part of their due diligence, buyers will often have the house they’re thinking of buying inspected. While you can go through this process with a resale condo, it won’t cover all the same things. For example, a building’s common elements typically won’t be included.

For this reason, many purchasers choose to rely on a thorough status certificate review instead. Of course, it’s all about what you’re comfortable with. If you want to bring in a professional to give your potential new home the once-over, you should.

When it comes to newly-built condos, a pre-delivery inspection (PDI) is automatically part of the deal. Your builder will walk you through the process, usually several weeks before you take possession.

4) You should know what your fees include

Most prospective condo buyers are aware that they’ll have to cover monthly maintenance fees if they purchase a unit. Unfortunately, many don’t know how they’re calculated.

The amount you pay will depend on a few different factors. These can include the size of your unit, the age of your building, and the amenities you’ll have access to. As a rule, your fees will go toward utilities, common elements (shared spaces like the elevator or exercise room), and the reserve fund. Make sure you know what you’re paying for—and remember to ask whether hearing and cooling are covered, as it isn’t always the case.

5) Management matters

It’s something many buyers don’t consider, but thinking about it could prevent some major headaches down the line. If you choose a building that’s well-managed, you’re less likely to be blindsided by special assessments and other unexpected costs. You’re also more likely to receive a solid return when you sell down the line.

By getting a sense of the financial health of a condo corporation, you can make a more informed decision about its management capabilities. From the building’s reserve fund to the board’s meeting minutes, there are a few different things to look at. Fortunately, a knowledgeable agent can help you understand what it all means!

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