BUYER BEWARE
No matter which way you look at it buying a condo is a major investment. But for many condo buyers, it can be an even more expensive process than it needs to be because many fall preys to at least a few of the many common and costly mistakes which trap them into either:
- paying too much for the condo they want, or
- losing their dream condo to another buyer or,
- (worse) buying the wrong condo for their needs.
A systematized approach to the condo buying process can help you steer clear of these common traps, allowing you to not only cut costs, but also secure the condo that’s best for you.
This important report discusses the 9 most common and costly of these condo buyer traps, how to identify them, and what you can do to avoid them.
- BIDDING BLIND
What price should you offer when you bid on a condo? Is the seller’s asking price too high, or does it represent a great deal. If you fail to research the market in order to understand what comparable condos are selling for, making your offer would be like bidding blind. Without this knowledge of market value, you could easily bid too much, or fail to make a competitive offer at all.
- BUYING THE WRONG CONDO
What are you looking for in a condo? A simple enough question, but the answer can be quite complex. More than one buyer has been swept up in the emotion and excitement of the buying process only to find themselves the owner of a condo that is either too big or too small. Maybe they’re stuck with a longer than desired commute to work, or a dozen more fix-ups than they really want to deal with now that the excitement has died down. Take the time upfront to clearly define your wants and needs. Put it in writing and then use it as a yard stick with which to measure every condo you look at.
- UNCLEAR TITLE
Make sure very early on in the negotiation that you will own your new condo free and clear by having a title search completed. The last thing you want to discover when you’re in the back stretch of a transaction is that there are encumbrances on the property such as tax liens, undisclosed owners, easements, leases or the like.
- SKIP “STATUS CERTIFICATE”
As part of your offer to purchase, make sure you request a copy of the condo’s status certificate. The status certificate is a document, as per Section 76 of the Ontario Condo Act, that provides basic and essential information concerning the financial status of a unit and of the condo corporation. Its main focus is to inform a prospective owner of the fees, of any large increase that is going to come into effect, of any special assessment that is being contemplated by the board, and any arrears or lien that a particular suite might have.
In addition, it contains the condo declaration, by-laws, budget, reserve fund, insurance, management contract, rules, minutes of the last annual general meeting, and mention of any lawsuit involving the corporation. his certificate can run into one hundred pages.
- UNDISCLOSED FIX-UPS
Don’t expect every seller to own up to every physical detail that will need to be attended to. Both you and the seller are out to maximize your investment. Ensure that you conduct a thorough inspection of the condo early in the process. Consider hiring an independent inspector to objectively view the condo inside and out, and make the report. This inspector should be able to give you a report of any item that needs to be fixed with associated, approximate cost.
- NOT GETTING MORTGAGE PREAPPROVAL…
Preapproval is fast, easy and free. When you have a preapproved mortgage, you can shop for your condo with a greater sense of freedom and security, knowing that the money will be there when you find the condo of your dreams.
- CONTRACT MISSES
If a seller fails to comply to the letter of the contract by neglecting to attend to some repair issues, or changing the spirit of the agreement in some way, this could delay the final closing and settlement. Agree ahead of time on a dollar amount for a holdback by your lawyer to cover items that the seller fails to follow through on. Prepare a list of agreed issues, walk through them, and check them off one by one.
- HIDDEN COSTS
Make sure you identify and uncover all costs – large and small – far enough ahead of time. When a transaction closes, you will sometimes find fees for this or that sneaking through after the “sub”- total – fees such as loan disbursement charges, underwriting fees etc. Understand these in advance by having your lender project total charges for you in writing.
- RUSHING THE CLOSING
Take your time during this critical part of the process and insist on seeing all paperwork the day before you sign. Make sure this documentation perfectly reflects your understanding of the transaction, and that nothing has been added or subtracted. Is the interest rate right? Is everything covered? If you rush this process on the day of closing, you may run into a last minute snag that you can’t fix without compromising the terms of the deal, the financing, or even the sale itself.
Find out if your agent offers a Buyer “Condo-hunting Service,” which takes the guesswork out of finding just the right condo that matches your needs. This type of program will cross-match your criteria with ALL available condos on the market and supply you with printed information on an on-going basis. A program like this can help you to affordably, move into the condo of your dreams.
At Home Leader, we pride ourselves in being specialists in resale and pre-construction condos for the past two decades. Use our FREE services and we guarantee you’ll like the result and you will join the pool of our happy clients.