Purchasing a new downtown condo is often a very wise investment for people new to real estate. These properties are constantly in demand, and their value only rises with time. Moreover, it is easy to get a mortgage loan for these types of properties, particularly if you intend to live in the condo for a period before attempting to sell or lease it. However, there are some common mistakes that first-time condo buyers make that can be easily avoided with a little bit of knowledge. In addition to the tips outlined below, be sure that you are always seeking professional advice before making a large investment in real estate, and that you are only investing within your means.
Condo sales staff will usually include the area of the bathrooms and balconies as part of the listed square foot area of a condo. Some companies will even calculate the total area as measured from the outside of the external walls of the building. While listing a property’s area in this fashion is illegal for most types of properties, it is not illegal in the case of new or pre-sale condos. Furthermore, developers or builders can deviate significantly from an advertised floor plan, and there is little or nothing that you can do about it.
Do not rely on any of the details listed in a brochure or on a website. Get a detailed and signed assessment of the projected floor space for each room, and then you can either negotiate for a price reduction or have a strong legal basis to sue if the final product deviates excessively from what was promised in writing.
When buying a pre-sale or new condo, your purchase agreement is the document that describes the conditions of the sale and what you are receiving. These are legally-binding documents that are full of legal-speak and fine print, and you risk being bound to terms you do not agree with if you sign it without having it examined by a lawyer first.
Spend the extra cost for proper legal counsel to be sure that you are getting exactly what you expect and that the document does not contain any loopholes or traps that condo developers are famous for.
It used to be the case that condo builders could delay possession dates and there was nothing that the buyer could do about it. However, over the last decade there have been very clear laws and legal precedents developed that outline the exact legal responses to a builder delay.
Do not just accept delays to your possession lying down. Any delays from a legally-binding possession date have clearly defined compensation amounts that the builder must pay, or you have the option of terminating the contract altogether. Again, be sure to have proper legal representation when dealing with possession delays.
Many buyers wrongly assume that their new condos are covered by a warranty. In many jurisdictions, builders can simply opt-out of coverage.
When buying a new or pre-sale condo, be sure to get your warranty in writing, and do not just assume that it comes with the sale agreement. There are a number of complex clauses in development warranties, in particular in the case of condos built in conversions of existing properties, so you should have professional legal advice when establishing your warranty.
Many of the closing costs that you consent to when signing the agreement for a new condo are merely estimates, and most of these costs will end up being significantly higher than what these estimates suggest. There are even add-on fees that approach the ridiculous, such as paying for art and sculptures used to decorate the entrance to the building.
Negotiate to have caps placed on the amount that you will need to pay for any closing fee that you have agreed to in writing. In addition, have yourself exempted from any additional closing fees that developers try to tack-on after, such as hook-up fees. Your contract should only include fees and their caps agreed on beforehand and in writing.
When buying a new condo as an investment, you want to get in at the earliest possible time. Most developers will raise their initial funding with a round of exclusive pre-sales for a limited group of VIP investors. Only after this round of funding will the developers go to the public at large, and the price of a unit may have gone up by as much as three times the price of the initial round. In addition, by this time all the best units have already been spoken for, leaving only the average suites for a higher price.
To get in on these VIP lists, you need to work with a specialist realtor who does a lot of business with your local condo developers. If you are a serious investor who can quickly and efficiently close a deal when interested, then your realtor will likely be happy to sign you up for these events.
26 Sep 2016