As real estate professionals, we are considered the experts when it comes to property buying. We are being paid for our expert advice and I think one area where potential buyers often need advice is when they are looking to enter the condo market. Potential Calgary condo buyers are often wary of condo fees and they aren't sure they will get value for money.
Buying A Lifestyle
We need to help them understand that when they are buying a condo, they are buying a lifestyle. Look at it this way: in a condo, someone else shovels the snow and cuts the grass. These services are ones that, as individuals, most home owners couldn’t afford to pay for on a regular basis. Condos make these luxuries affordable by sharing the costs. They may also cover services that would otherwise have to be paid for through higher property taxes like water and sewer services, and garbage collection.
Condos Are Like Democracies
Potential buyers must be reminded that when they buy a condo they are buying not just the space where they will live, but also a share of any common areas. These may be just a lobby and an elevator, but could include a clubhouse, swimming pool, gym, etc., and as a co-owner of these facilities they will share responsibility for their upkeep. They will also have a say in decision-making through elections for the condo board. They need to remember that decision-making, when it comes to the common areas, functions like the representative democracy we are all familiar with. In other words, if you don’t like the decisions the board is making, not much can be done about it until the next election!
Buyers also need to be advised about the potential for special assessments. In a condo, maintenance on structural elements is managed by the condo association. Some of their monthly fee is allocated to a reserve fund to offset the costs of these repairs. Buyers might feel that this money is just sitting there doing nothing. But when their roof needs repairing or large sections of outdoor decking need replacement, they’ll see the value of these fees when they don’t have to bear the total costs themselves. That doesn’t mean they won’t pay anything though. Buyers must understand that extraordinary assessments may be levied when the maintenance fund falls short.
Expect The Unexpected
While condos do set money aside for large projects, the fact that a particular project requires additional payments from the owners should not be taken as a sign that the condo is necessarily badly managed. Ultimately, the condo owners are responsible for the upkeep of the property. The reserve fund is generally used for planned maintenance and may not cover an unexpected repair. In that case the owners will have to make up the difference.
Good Condo Management
That being said, not all condos are equal when it comes to management. Potential buyers should investigate typical fees for condos offering the set of services and amenities they are looking for and should be wary of complexes charging both much more and much less than the average. Either can be a sign of poor management.
A Few More Things To Remind Clients About:
- No one profits from condo fees, unspent money is held in reserve against larger repairs;
- Condo fees will go up annually, at the very least by the rate of inflation;
- Know the rules! In Canada, all provinces and territories have an act governing the establishment of condominiums and all condos will have a declaration, by-laws and rules and regulations;
- Even in their living space, clients may not have complete autonomy when it comes to repairs. Condo regulations may require that they hire professionals for some types of work, even when they may think they could tackle it themselves.
Krista Kehoe, Calgary real estate agent & REALTOR®