Condo buying FAQs
As condo professionals, we at Condo.Capital receive hundreds of questions from buyers concerning various elements of the process of buying a condo.
Rather than simply keep them buried in our emails...
We want to share these condo buying FAQs with you today.
Here are the most frequent condo buying questions we receive and our round-up of expert answers.
Q: Where should I buy?
A: That is up to you. First, you need to decide if you like urban living downtown, or the suburbs. With suburb condos, you typically get more for your money, but aren't close to the hustle of downtown life. Likewise, with downtown living, you pay more for less, but are close to everything. Take some time to tour at least four neighborhoods in your city where new condos are being built. Spend several hours walking around, and even talk to people in the area about their experiences. This is where your local expert comes in handy - whether it's a friend, a Condo.Capital expert, or a realtor. They are there to help you, so ask them about the benefits of each sub-market in your city.
Q: When is the best time of year to buy?
A: Because you're buying a pre-construction condo, this really isn't a factor. For resale real estate, spring is usually the hot time to buy a property - but for pre-construction, this isn't a huge factor.
Q: Can I negotiate with builders?
A: Sometimes. If it's a hot market and units are selling fast, there may be no incentive for builders to offer upgrades or price reductions. Ask the question up front - is the price firm, or are there incentives if I buy with your development? It helps to say something like this: "I was looking at X development yesterday, and they offer X, do you offer something similar?"
Q: What finishes should I pick for resale?
A: This is totally dependent on your style. The bottom line is you don't want to live in something you don't feel comfortable with. So pick what appeals to you. That said, in terms of resale, our advice is to go with the standard color designs, nothing too flashy, colorful, or busy. Take a look at the builder's model units - see what color patterns and designs they have chosen. Also, head over to MLS to see pictures of what other condos in the area have chosen as finishes, designs, and colors. If you're worried about resale, go with safe and modern designs.
Q: Is it better to be on lower or higher floors?
A: With everything being equal, the higher floors are usually more desirable because of the view - but this isn't a game changer. Don't worry too much about being on the 8th versus the 10th floor. It won't make a huge difference. That said, being on the lower floors - 1-3 - can sometimes affect resale because it's typically louder at street-level and the views aren't as good. But keep in mind that the most important thing is the unit and its layout, not what floor it's on.
Q: Are upgrades worth it?
A: Yes, depending on the upgrade. Depending on the price and your location, a parking spot might be a good upgrade choice. For units in the suburbs, people will be more likely to have a vehicle, so a parking spot is a good idea. Buying a condo in the downtown core, a parking spot may be less necessary. Further, there's a limit to the quality of finishes you will want - you can always pay more for better quality. Typically builders will have a base of what is provided in the unit, and you can pay more for higher quality. Don't go too crazy. And again, pay for what you want and need, not what they're trying to sell you.
Small upgrades may be worth it. For instance, a bike rack and rain shower may run only a few hundred dollars, and will be factored into your mortgage. So those upgrades may only end up costing you pennies extra a month. Those will be worth it. Always put it into perspective and consider how much extra a month this will cost you.
Q: Should I buy a parking spot?
A: Yes. No. Make sense? It totally depends on the price and where the condo is located. Condos in the suburbs typically have cheaper parking spots, and more people use cars. So in this case, it usually makes sense. In the downtown core, things are a bit different and more expensive. Do you have a car? Can you rent a spot instead of buying one? Remember that a $50,000 parking spot is going to increase your monthly payments by about $200. That's a lot of money over a 25 year mortgage! People are driving less thanks to advances in public transportation and peer-to-peer transportation services like Uber. You may not need a parking spot.
Q: What are reasonable condo fees?
A: In general, condo fees are a good thing because they ensure your building runs efficiently. Condo fees can range anywhere from $0.30 per square foot to $1.00, depending on the age of the building, its amenities, and the management company. In the U.S., average condo fees are about $200 a month. You should expect to pay anywhere from $100 a month to $300 depending on your unit size. Anything over $300, for a new build, seems excessive. And remember, condo fees will only go up over time.
Q: Is a condo mortgage different than a single-family home?
A: Yes, but you may not notice the difference. This is something your broker will have to worry about. Lender requirements are different for condos, so be prepared to ask the builder for documentation that lenders are requesting.
Q: What questions should I ask my builder?
A: So many! Have you built in this city before? Where exactly are those buildings (and then do see them!)? Have you had delays in delivery in the past? Who is going to be the property manager (and research them!)? What is your deposit structure for down payment? What are the most common questions you get from new condo buyers? When do you expect delivery of units to be? What is your best-selling unit and why? What amenities are planned? How much have condo fees in your other buildings increased year-over-year? Is there commercial space planned in this building?
And finally, our favorite, are investors buying here? This tells you two things - if seasoned investors are buying, that means it's good enough for them to invest in. This is good. If too many investors are involved, this tells you that the building will be mostly renters, not owners. A healthy mix of the two is usually a good thing.
Buying a condo is no easy task - it takes education, preparation, and action. But with these condo buying FAQs, we hope we can make the process more transparent and less stressful.
Good luck, and sign up for our email list to receives regular updates on condo buying, living, and your condo market.