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Top-5 Disadvantages of Living in a Brand New Condo

When I have my first conversation with a new buyer-client, I often hear them say, “I want something brand new, never lived in!”. While I can definitely resonate with the appeal of moving into a brand new space, there are some notable drawbacks with living in a brand new condo. Here are my top-5 Disadvantages of Living in a Brand New Condo:

1. Property Management Issues. New buildings have plenty of ‘kinks’ that need to be worked out. Property management can be stretched pretty thin and your individual needs may not be a priority if there are significant building issues going on. Also, the property management company in a brand new condo is one hired by the developer. Many condo boards feel the need to fire their property management group and hire their own independent third party to manage the building.
2. Incomplete common areas. This is big one especilaly if you are on a lower floor and you are facing a long occupancy period. The common areas and the amenities are the last thing the developer will complete. Worst case scenario: it could be months or even a year before you can use your gym, party room etc.
3. Tarion warranty visits. You do your PDI (pre-delivery-inspection) and you find all your unit’s deficiencies, then you move in a couple days later. Chances are there is a long list of items that will need to be remedied. These will be done piece-meal over several weeks or possibly months. You will have painters and plumbers and handymen of all kinds entering your unit on a regular basis until this work is done.
4. Maintenance fees have nowhere to go but up. The initial maintenance fees are set by teh developer, and almost universally they are set far too low. After the first year of a new building it’s quite common for fees to go up 10-15%, but it can be much higher. Moving into a brand new building means uncertainty of what the maintenance fees will be in the near future. Established buildings are generally more predictable when it comes to maintenance fee increases.
5. Hidden expenses. Buying a brand new condo means you will have to buy some things that most resale buyers take for granted. Things like window coverings and light fixtures are not included when buying from a builder, but they are essentially ‘must haves’ in any apartment. Depending on your preferences these can cost a few hundred dollars to tens of thousands of dollars; money that you will not necessarily get back when you resell your unit.

Questions or comments about living in a new condo? Debating between going with a resale unit or buying new? Please contact me.

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5 Things Every Buyer Should Know about Model Suites

The model suite is built and designed to entice the senses and ignite the imagination. Developers know that they only have a few seconds to grab a potential buyer’s attention and make them feel like they want to move into the condo immediately. In order to achieve this result, developers have long been using several ‘tricks of the trade’ to make their model suites appear as appealing as possible. Here are 5 things every buyer should know about model suites before walking into any condo sales centre:

1. Ceiling Height. Often model suites are in loft or commercial space where the ceiling heights are far higher than what you will actually receive. Side note, The Berczy‘s model suite has 8′ ceilings whereas the suites will have a minimum of 9′ ceilings – first time I’ve actually seen this!
2. Doors. Many model suites don’t have doors between rooms, this creates the illusion of more space.
3. Upgrades. Every model suite has some sort of upgrade. Counter tops, appliances, hardwood in the bedrooms, the type of hardwood used, bathroom tiles used, etc. Ask yourself why is this? It can only mean that the standard finishes will not effectively ‘sell’ the building which means you will likely be paying more for your unit than you originally planned to! Quick tip: if a sales person can’t tell you exactly what is an upgrade and what isn’t an upgrade in the model suite – RUN the other way!
4. Custom wood work. I’m seeing this more and more in model suites – custom mill work on walls, built-in storage, built-in desks, etc. This is a design trend that developers are adopting in their model suites but remember, when you move it it’s nothing but concrete and drywall painted in “Egg Shell White”!
5. Furniture and Lighting. The furniture and light fixtures being used in most sales centres are top of the line, high-end pieces.  The average person would be shocked to hear how much money was spent on the furniture and lighting in a typical model suite. Look past the $10,000 couch and $2,500 chandelier and see if you still fall in love with the unit itself before signing on the dotted line.

If you are thinking about buying a pre-construction condo, educate yourself first and never register with a developer without representation. Questions or comments? Contact me.

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Why No One is Buying Your Assignment

Around this time last year I predicted 2009 was going to be the year of the assignment. I was wrong. While assignments did begin to take a greater role in the overall Toronto condo market, they still have not gone ‘mainstream’. Quite frankly, this method of buying and selling real estate will probably never go mainstream, however, in 2010 it looks like assignments will be seen as a “Third Way” of buying condos in Toronto (the traditional two ways being pre-sale or resale).

People contact me just about every day and ask me about assignments - I want to buy an assignment! I want to sell my condo by assignment! The truth is, most people have no idea what is involved when buying and selling an assignment. When the Average Joe learns just a fraction of what there is to know about assignments, 95% of the time Average Joe ends up returning to the comparatively simple world of pre-sales and resales.

So for all the sellers of assignments, as well as those who may be thinking about buying a condo by assignment, I’d like to introduce to the the top-5 reasons why many assignment listings never sell:

1. No Market Exposure. You are not allowed to advertise assignments on the MLS. Many assignment listings don’t sell because no one knows about them!
2. Lawyers. Most lawyers hate assignment deals. They often look for reasons to kill the deal – and with assignments, you don’t have to look to hard.
3. Price. This is probably the #1 reason why many assignment listings don’t sell. You can’t price an assignment like a resale property. Investors buy assignments and investors don’t pay current market value for property!
4. Closing Day Too Far Away. Buying a pre-sale condo then trying to flip it a month later is a fool’s game. The unit must be at or very close to occupancy so that market value can be accurately predicted and the investor can safely determine if they are getting a deal.
5. Closing Costs. Did you get your closing costs capped by the developer when you first bought your condo? If not, there is no way to tell exactly what they might be. Buyers of assignments need some degree of certainty as to what closing costs they will incur, otherwise they will move on.

Bottom line, assignments are not for everyone, but for the right buyer and seller, working with a good Realtor and co-operative lawyers, they can be a fantastic way to transact in real estate. Questions about assignments? Contact me.

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