Homework and a good real estate agent helps prevent buyer headaches


Potential condo purchasers should have their eyes wide open and fully understand what they are getting into before signing a purchase agreement. It’s all about doing homework regarding condo fees, reserve funds and lender requirements — as well as seeking affordability.

If you’ve never owned a condo before, take some time to educate yourself or find a professional to help you through the wads of paperwork that come with buying that apartment or townhouse.

Condominium fees are taken into consideration by mortgage lenders in determining if a borrower qualifies for a mortgage, he says.

For example, a $200 monthly condo fee can “affect your purchasing power by more than $18,000” based on a five-year fixed rate of 4.39 per cent with a 25-year amortization.

“So, if you’re looking for a higher-priced condo with high fees because you felt that was all you could afford, you should talk to a real estate expert to ensure you understand what you can qualify for if it is condominium versus single-detached home.”

It’s also key that you understand just what the condo fee covers — something that varies from property to property.

It’s likely the higher the fee, the likelihood it will cover more than just cutting grass and shovelling snow. In some cases, the building might have a pool or fitness facilities and that will mean more fees.

“While the pool or fitness room is nice to have, seriously consider if they will be features you will use,” “Otherwise, you might be better looking at a property with fewer amenities but more affordability,”

Then there is the reserve fund. If a condominium corporation doesn’t have one, think seriously about looking elsewhere. If there is a fund, know its status.

Condo fees are partly used to establish a reserve fund for the building, with the purpose of saving cash for long-term replacement of major components as they wear out, such as the roof or mechanical systems. Prospective buyers should understand the maintenance program that has been established for the building and determine if the reserve fund is sufficient to handle it.

If it isn’t adequate, there will either be an increase in fees somewhere down the road and/ or a special assessment.

If you have any real estate buying or selling questions, please contact James Garbutt, 604-315-3300 or james@jamesgarbutt.com