Purchasing a Resale Condo : What to Look For?

Unlike a pre construction Condo, a resale condo is one you can visit in person before submitting an offer. Here are a few of the things to consider when purchasing a resale Condo.

1. Location

It’s important to keep in mind that the value of a condo is influenced by a combination of  factors, and that the relative importance of each factor can vary depending on the specific location and market conditions.

Condos located near popular attractions, shopping centers, restaurants, and other amenities tend to be more valuable. Condos located near major transportation hubs, such as subway stations and  bus stops are also more desirable and therefore more valuable. The quality of the local school district can also affect the value of a condo, as many families prefer to live in areas with good schools.

Properties located in safer neighborhoods tend to be more valuable. Crime rates, police presence, and overall neighborhood safety are all important factors to consider

Zoning regulations can affect the value of a condo by determining the types of businesses or development that are allowed in the area. Condos located in areas with strict zoning regulations that limit development are often more valuable.

The local economy can also play a role in determining the value of a condo. Properties located in areas with a strong and stable economy tend to be more valuable.

2. Building Age

The age of a condominium can have an impact on its purchase price, as several factors are associated with the age of a building. Older condominium buildings are more likely to need maintenance and repairs, which can be costly this translates to higher Condo fees and can lower the value of the unit. Newer condominiums are often more likely to have upgraded features, such as modern appliances and finishes. For a given price,  older condos tend to have offer much more living space and in some case include utilities.

Generally speaking you want to be looking at condos less that 15-20yrs old though there are exceptions to this.

Overall, while the age of a condominium can be a factor in determining its purchase price, there are many other variables that come into play as well, including location, condition, and market demand.

3. Kitec Plumbing

Kitec Plumbing is a type of plastic pipe with associated fittings that were installed in Condos constructed between 1995 to 2007. Over time these fittings weakened and corroded resulting in leaks, significant water damage and clogged lines. Legally, if the corporation is aware of Kitec plumbing this must be disclosed in the status certificate which the lawyer can check for. This is also an item the home inspector can pick on during inspection. Cost to remediate this varies from $5k-15k (depending on size of condo) and is usually paid for by the Condo owner.

 4. Condo Fees

Condo Fees are mandatory, non-negotiable monthly fee that each condo owner has to make. Generally speaking your Condo Fees (also called maintenance fee) is used to cover three different expense items. Utilities, Common Area Expenses & Reserve Fund.

Buildings with high Condo Fees are generally less desirable and may be harder to sell later. It is also worth noting that Condo Fees typically go up every year.  When comparing Condo fees between buildings it is important to understand what they include. Some Condo fees are inclusive of all utilities while others include no utilities. A new Condo with an artificially low Condo fee may not be that way in a few years, quite often there are big jumps in the first few years as new issues are discovered. Older Condo’s generally have higher maintenance fees. A well managed Condo usually has stabilized fees with minimal annual increases.

The size of the unit as well as number of units in the building as well as amenities are also factors that will affect fees. More amenities means more fees. From an affordability perspective a $300 difference in Condo fees has the same effect of approx. 50k in mortgage (5% @ 25yrs).

The following is a good guideline to use for Condo fees based on square footage though it is not a hard rule:

< $0.6 / sqft    (Great)
0.6 -0.7 / sqft  (Good)
0.7-0.8 / sqft   (Ok)
> 0.8 / sqft       (High)

5. Parking

Having a designated parking spot in the building can provide owners with a convenient and secure place to park their vehicles, which can be especially important in densely populated urban areas where street parking can be difficult to find.  A parking spot increases the value of a condominium unit, as it is often seen as a desirable amenity and can be a selling point for potential buyers. Owning a parking spot can reduce the cost of parking, as owners don’t have to rent parking or rely on street parking. If you do not need a spot you can always rent it out, typically a spot rents for approx. $200-300down town and between $100-$200 mid town.

6. Closing Costs

It’s important to review and understand the closing costs associated with your condo purchase before signing a contract, so that you can budget appropriately and avoid any surprises at closing. It is worth noting that these are costs in addition to the down payment amount. Typical closing costs example:

Legal Fees :              $ 2000 Approx.

Land Transfer Tax : $ 8500 (Based on 600k Condo, Toronto, First Time Home Buyer)

Home Inspection : $ 500

Other:                        $1000 (Moving and other misc. expenses)

For example on a 600k condo unit in Toronto, closing costs can vary anywhere between $11k (First Time Home Buyer) to $20k. It is always advisable to set aside this amount.

7. Status Certificate

This is a very important step. Before you make a purchase, make sure to review the condominium’s Status Certificate. These documents will give you a better understanding of the condo’s financial health, maintenance
fees, and any restrictions on how you can use your unit. The status certificate is typically reviewed by a Real Estate Lawyer. Make sure the Lawyer goes through the status certificate in detail.

The following items are worth noting in the Status certificate, the Lawyer can help explain each in detail:

Lawsuits : Keep an eye out for an ongoing litigation the Condo corp may currently be involved in. Lawsuits are generally expense and if there are no funds available in the Reserve Fund then a portion of this expense is transferred to the owner.

Insurance Claims: Pay attention to the number and amount of insurance claims. More claims can translate to higher condo fees. Claims on newer buildings can also be indicative of building quality/workmanship.

Reserve Funds: The reserve fund are funds set aside from the Condo fees of each owner for building maintenance and repairs of the building. A reserve fund study is typically conducted every three years. The study will typically indicate what the recommended balance should be. If the current balance is typically below the recommended amount it usually means that the reserve is underfunded and may lead to larger than expected increase to condo fees and may even result in special assignments.

Liens: Unit liens may result from the seller not paying maintenance fees or assigned repair fees. This will need to be cleared before the property can be sold. Building liens may be placed by contractors and may lead to lawsuits.

Special Assignments: These are never a good sign. This usually means that there is not sufficient funds in the reserve to carry out a repair / required upgrade /litigation and the cost associated with this is passed on to the unit owner. While some items maybe one off and not be a cause for concern, others such as expensive ongoing litigation and end up being very expensive for the individual unit owner.

Units Leased: The number of units that are leased vs owner occupied can give a good indication of the mix of occupants in the building. Generally speaking owner occupied units are generally better taken care of than tenant occupied units. Some buyer prefer buildings that are majority owner occupied.

There are obviously more items to in the Status Certificate to review, this would fall under the Lawyer scope during the review process.

8. Other Factors

Floor Level : Generally speaking higher floors carry a higher premium while this is not as apparent in resale condos they are certainly the case for pre-cons. Being at a higher floor typically means better view, lower probability of obstruction and less noise from the street level. 

Proximity to Elevators : Being too close to elevator may mean that you can always hear the elevator opening and closing, people chatter and pets. If the building had good sound proofing this is not an issue, however, generally speaking you don’t want to be too close.

Views : Views are better with higher floors, however be mindful that your view may not be permanent. There is always the possibility that an adjacent building may be demolished for a high tower which could block your view. In some cases the probability is very low for example if two sides of Condo are adjacent to a major intersection, body of water or if all the adjacent buildings were constructed around the same time. 

Lockers : Lockers are additional storage units that typically come with the some units. Extra storage is always good. Some buildings offer rentable lockers.

Balcony : Some units have no balcony,  some have Juliet style balconies and some have decent size sit out balcony that can be great in the summer.

Amenities : Amenities vary from building to building but common ones are swimming pools, suana, gym, rec room etc. It is advisable to chose buildings with amenities that align with your lifestyle. Keep it mind that more amenities translate to higher condo fees, so if you are a type of person that will not be using any of that its best to stick with a building with the most basic amenities.



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