We help buy and sell a lot of condos, and there are a few questions that come up pretty regularly. So we decided to run a short series to answer some of those questions – and help you make informed choices about what’s right for you.
First up, what kinds of condos are out there? There are three basic types – and each one has its pros and cons.
1. Resale.
Someone who owns a condo puts it up for sale and you buy it.
Pros:
• You don’t have to wait for it to be built – once the closing period ends, you can move right in and start paying off your mortgage.
• If you’re open to an older building, you may be able to get a larger unit for a similar price as a smaller suite in a newer build.
Cons:
• You don’t get a brand-new condo, and that can mean the layout and finishes aren’t exactly what you want, and you may need to spend some additional cash to get the unit to a place where you’re happy with it.
• Your selection is only as good as what’s available for sale when you’re looking to buy. And in a hot resale market, pickings can be slim.
• If you’re looking at an older building that needs work, you could end up paying higher maintenance fees than you’d expect.
2. Pre-construction.
You buy directly from the builder before construction has begun.
Pros:
• A brand, spanking new home no one has ever lived in before, with finishes you’ve chosen yourself and a layout you love.
• First dibs on in-demand locations. Popular buildings in great locations sell out in pre-construction, so if you wait, you may be out of luck.
Cons:
• Builders typically use funds from pre-construction sales to finance the build, so you might have to wait quite a while before you can move in – years, in some cases.
• Delays are typical. If you’re counting on moving in on a certain date, there’s a good chance it will get pushed. I’ve seen people sell their homes in anticipation of moving, then have to rent or move in with family until their new place is ready.
• The building must be registered for you to take ownership. If it’s finished but not yet registered (this can take a while), you have to pay an occupancy fee until it is. And infuriatingly, that fee doesn’t go towards the mortgage – it’s basically like paying rent, and can be a very frustrating experience if it goes on too long.
3. Assignment.
This happens when someone who has bought pre-construction sells it to another buyer before the building has been completed and/or registered.
Pros:
• You get a brand new unit no one has ever lived in, but you won’t have to wait for years before your home is ready for you to live in it.
Cons:
• You may still face occupancy fees and delays, and you’ll end up with finishes and a layout someone else picked.
That’s a quick rundown – our next couple of posts will dive a little deeper into these upsides and downfalls, so if you’re looking for more info, stay tuned!
***Next up: Pre-construction: the good, the bad and the ugly.
