As housing markets continue to soar and frequent travelers move toward a “lock-and-go” lifestyle, condos are becoming increasingly popular for buyers, even in cities that are less densely populated. But it is important to note that a condo purchase is not like just any home purchase.
Whereas homes are contained units, condos are just one unit in a whole. Closer living quarters with neighbors and shared amenities create the potential for issues you never considered. As such, when purchasing a condo, your concerns will differ slightly from those of a detached homebuyer. It is important to think of any real estate acquisition as an investment. When buying into a condo building you are not just buying the unit; you are buying into a community. The questions below deal with the health and wealth of the buyer and the building.
1. How is my financing affected?
If you’ve been pre-approved at the bank, don’t forget to ask your banker how your approval may be affected by the fact that you’ll be purchasing a condo. Lenders will factor in condo fees when determining how much they can approve you for. Though you may have been approved for a higher amount for a detached home, your purchasing power may change when you move toward condo living. Ask your lender beforehand to avoid a stressful situation during offer phase or beyond.
2. How close is this unit to amenities and noise?
There are several ways your condo lifestyle may be affected by neighbors and their building usage. When looking at a unit, inspect both inside the hallway and outside the windows to determine how noisy and smelly your life in this particular condo would be.
Let’s say the unit is on the third floor and backs onto an alley where restaurants (or your condo) disposes of its trash. This may mean early morning garbage truck noises. Perhaps instead your condo overlooks train tracks. Beware train whistles and track noises. Alternatively, if the condo is situated next to the elevator, you may have to listen to the constant whirring of mechanics or the sounds of neighbors chatting as they wait for the lift to arrive. Similarly, if you’re in a high-traffic part of the hallway, you may overhear conversations and other general noise.
3. What will my view be?
Imagine you’re looking at a fabulous condo that boasts skyline views in downtown Toronto. But what’s next door to you? A parking lot? Guess what — that view might not be yours in a few years. Asking your real estate agent to look into the ownership of adjacent, non-developed properties will help you keep away buyer’s regret down the road. If you’re investing in a view, you want to ensure it remains. In cities, this is not easily done. One way to avoid future development disappointment is to look for buildings near others that have already been built. Another is to choose buildings that overlook areas that cannot be built on, like parkland or bodies of water.
City planning departments can give you an idea of what building permits have been applied for and accepted. Much of this information is available online. To be sure, just because the permit doesn’t yet exist doesn’t mean you’re safe from the potential of development. It simply means that you may be protected for the next few years.
4. Are there any things that will have to be redone in the building?
If you’re looking at a new condo — or one that is only a few years old — do not assume that everything is in good working order. Sometimes problems related to shoddy construction, poor planning or faulty materials can show as early as a few years into the building’s life.
When condos have major structural issues or changes in the building, it shows up on their status certificate. Typically, the buyer’s lawyer reviews the status certificate after the buyer has put in and had an offer accepted, and then subsequently requested and paid for the status certificate through the building’s condo board. Though it is advisable to find out if there are special assessments in the building prior to putting an offer in (meaning that major changes will be needed to be made using the condo’s reserve fund), you will also learn about these through the status certificate. Things like renovations to condo amenities, replacement of windows or roofing, and changes to suite doors to conform to fire codes will be reported here. This will reflect on how the building’s budget will change. Condo owners are required to pay their share of updates and maintenance to the building. This comes out of condo fees, which are determined proportionally to the size of the owner’s condo. Should the reserve fund (the aggregate of the condo fees) not have sufficient funds in it to both pay for the required update and keep a baseline extra amount behind, condo fees may go up.
As a new owner, you’ll want to know about these updates to determine not only if your condo will be up to your standards, but also to keep abreast of any potential increase to your condo fees.
Keeping these four important questions in mind will help you get to know your prospective home a little better.