We wrote a post back in September which highlighted some of the key questions that are important to ask prior to purchasing a condo. Now, after entertaining hundreds of visitors to the RiverHouse Condominiums Presentation Centre, we’ve compiled another list of those we’ve heard from a number of prospective buyers. These are certainly worth asking before you dive headfirst into a condo purchase.
Is parking included in the purchase price?
Comparison shopping in the housing marketplace is paramount. It’s also important to ensure you’re comparing apples to apples. Some condominium developments include parking spots in their price, while others will charge you for your first spot, and for subsequent others. Consider too that condominiums with limited parking may also cap the number of spots you may buy, based on the type of unit you’re purchasing. Think about whether you’ll be able to part with a vehicle given your lifestyle and the location of the project. Oftentimes, spots may be available for rent down the road in the event you’d be unable to purchase an additional spot when you select your unit.
Does the developer need to pre-sell a certain number of units?
Sometimes construction can be financed by a builder, and thus they can begin building before any units are sold. This is the case with regards to the RiverHouse Condominiums project. Oftentimes though, developers will finance their builds through a third-party who requires some degree of assurance that they’ll see a return on their investment. This threshold can vary based on the size of the project and the proportion of the cost the builder requires a loan for. It’s important to note this percentage since it can impact the construction schedule if the builder’s sales forecasts are off-base. Developments which require pre-construction sales can set an “Economic Viability Date” where they can decide to cancel the project until that date. This gives builders flexibility should they not meet their targets. They must refund your deposit, but you won’t be entitled to any damages. Know this date early on, since you may need to do some contigency planning.
Are there additional expenses payable on closing?
Each project allocates its costs differently, so knowing how close the list price is to your actual cost can have a profound impact on your buying decision. A common closing charge is enrolment in the Ontario New Home Warranty Program, more commonly known as Tarion. The cost of the warranty is proportionate to the selling price of your condo (net of HST), and thus the fee is greater for a more expensive suite. This fee is non-negotiable. Other expenses can range from development charges to costs brought on by the connection of utilities.
If HST is included in the list price, the builder will often stipulate that you assign them the portion of the HST rebate the goverment entitles you to. This won’t come at an additional charge, but is merely a correction to ensure the price you see is the price you pay. However, if you never occupy this unit (whether you choose to rent it or otherwise), you won’t be entitled to the aforementioned rebate and thus will have to re-imburse the builder in the amount of the rebate they were expecting. In turn, there are credits you can apply for through the Canada Revenue Agency as a means of recouping the amount you paid the builder, though you may need to pay these up front and wait for your rebate through the CRA.
What is the standard level of finish?
Condominium showrooms are a flashy place. They feature the latest stylings which appeal to their target market, but at what cost? If a model suite features higher-quality finishes such as granite countertops or hardwood flooring, it is important to understand whether the price you’re seeing includes those features. Model suites can be exactly representative of what you’re buying, or they can showcase tens of thousands in upgrades, so ensure you’re satisfied with the standard features. If you’re not, find out the approximate costing for your desired level of finish ahead of time.
Should I be worried about the Toronto condo market?
The huge difference between Toronto’s condo market and the one in Guelph is supply. It seems in Toronto that a new condo highrise is being built on every block. In Guelph, there is one condominium highrise under construction in the entire city. The over-supply of new housing stock is driving the competition in that city, and builders are left scrambling to offer lower and lower prices to reach necessary sales levels. This in turn can drive the prices of new and resale units lower, since it makes their valuations appear too high given the alternatives. With too many big developments in Toronto, some may have to fail for the greater good of the market, otherwise market prices will likely tumble across the city. The lower supply in Guelph creates a more optimal balance with the units demanded, promoting steady growth and viability of condo developments in the city. The difference between the two markets is night and day, regardless of the similarities the types of buildings may have.
If you have specific questions about condo living and what you should know about the buying or selling process, feel free to contact myself or Matt LaFontaine at 519-837-0900.