Category: condo (5)

Condo fees

Condo fees

Buyers often ask “what are condo fees” and have a tendency to shy away from condominiums because they question the value of paying condo fees.

We hear the concern that Buyers don’t want to pay condo fees and yet the fear is often based on misinformation, so let’s try to separate the myths from the facts.

First, understand that in condo ownership you typically own the space inside the drywall of your private living unit and perhaps your parking unit as well, plus a common share of ownership in the shared spaces such as hallways, lobby, amenities (gym, party room) and the exterior grounds of the building. To sort all of this out you need a mechanism to share the cost of the common area, so when the property was built the developer surveyed all the components of the building with a goal to divide the private living areas and apportion the cost of maintaining the common areas. This is your “registered size” and it determines your proportionate share in the cost of maintaining the total property.

These costs are not much different than when owning a home with the addition of some items such as management, security and a few items often found in larger buildings like elevators and pools. Otherwise they are similar items of maintenance that would normally would occur in a home. In fact one could argue that the cost of maintaining a larger property provides some efficiency of scale and saves money over owning a similar sized home aside from the often lower maintenance construction features.

Where the issues arise are typically in the deferred maintenance and replacement of items which are legislated to be spelled out in a reserve fund study. Every condo must have a reserve study completed which reviews the construction of the property and recommends a timeline and budgets for the repair and replacement of building components such as roofs, siding, and structural components. Because these are costly items to replace, this is an important document to study when purchasing a condo and determine what items are due for replacement and how much money is allocated in the reserve fund to pay for these items. Recall that a portion of the condo fee goes towards the reserve fund. If the study does not accurately predict the upcoming replacement reserves or the condo has not allocated a sufficient amount for these reserves then a shortfall occurs and the present condo owners could be required to top up the fund. This can have disastrous results when taken to the extreme and has occurred in buildings which were poorly constructed initially or had major failures of building components and owners were required to pay tens of thousands of dollars to repair them – often more than the equity they had in their home.

So we can see that analyzing the reserve fund study is a crucial aspect of purchasing a condo. Your real estate agent can be a tremendous ally in helping you to steer clear of projects that have the potential for this calamity.

For the positive side of condo ownership take a look at the following example: Take only two or three building components that you would replace in your home every 15 to 20 years.

Say, a roof has an expected life of 15 years at a cost of $8,000. Amortized over 15 years that equals a monthly cost of $44.00

You would paint and repair the exterior siding or other components (windows, doors) every 5 years at an average cost of $2,000. Amortize this over 5 years and it  runs $33 per month.

Add in grounds maintenance (lawn care and snow removal) at a typical cost of $200 per month for a modest home plus water and sewer utility costs at $120 per month.

This example illustrates that a homeowner is actually spending $397 per month compared to an equivalent condo – the homeowner often doesn’t  realize that they are spending it because his expenditures are sporadic rather than regular monthly condo payments.

The important point is when the condo board has been operating responsibly and abiding by the recommendations in the reserve study, they would have set the amount of their condo fees to cover building their reserve fund so there are no surprises to future owners. Where a condo board has set low fees then this act may prove harmful to future owners that may be responsible for “topping up” the reserve to pay for future repairs.

The lesson here is  to discount a condo due to higher apparent fees – these condos may simply be the properties that are the healthiest financially and well managed. When reviewing condo fees, dissect them to determine what is included and how much is allocated to the reserve fund. You may discover that you are quite happy to pay condo fees in order to have someone look after all these maintenance items for you. In the end, choosing a condo is more a lifestyle choice than a matter of cost and may be the best choice for you.

Sano Stante Real Estate has a wealth of experience marketing Calgary Condominium property. Call us to help you make the best real estate decision for your future.

Condo Size

Measuring Condo Size

In Alberta condominiums are surveyed by the builder to determine the respective size of the common and private areas of the individual condo units. Developers have some latitude in deciding what to include in the registered size at the onset of the development and many will include areas such as storage, balconies (including outdoor) and parking areas in the calculation of
registered unit size. This registered size is then used to apportion the respective fees that condo owners pay for shared resources.

This all sounds fair enough, so why do some Buyers protest when they re-sell their condo and their real estate agent tells them that their home is smaller than they claim? The Calgary Real Estate Board (CREB®) has rules for the measurement of homes so that all homes are represented equitably. These rules have been in place for decades and they provide consumers with an assurance that the home they are purchasing is accurately represented. One CREB® rule for condominiums states that the living area must be heated, interior living space.
Developers who sell their property through in-house sales representatives who are not members of CREB® are not required to abide by these guidelines. As a result, the living area may be represented to include those unheated areas that show the space larger than CREB® measurements would allow. When the homeowner calls a real estate agent to re-sell the condo they are often surprized to realize that their 1,000 s.f. condo is really only 900 s.f. when measured by
these MLS® System standards and that this standards is a requirement to list the property on CREBs® MLS® System.

CREB®, and their provincial counter-part AREA, have been working to protect the public from such issues by lobbying the Government to mandate the Surveyors to standardize the measurement of registered size across the province and eliminate the variance in representation. CREB® is also working to educate
real estate agent’s and the public to the issue and raise public awareness to ask the right questions before buying a condo.

To ensure that you are protected make sure you ask the Developer how the registered and unit size is calculated in the project. For the best protection and to assure yourself that you are buying right, enlist the services of a licensed real estate agent to represent you even if you are looking at new developments before you start shopping for a condo. Developers have fees built-in to the purchase to reimburse your real estate agent and this way you can have your real estate agent show you comparative new and used properties, help you determine the best lifestyle and value choices and even provide you with a market valuation of a property before you buy.

This is just one of the many reasons to ensure you call a real estate agent before you start shopping and ensure that you won’t be disappointed after the purchase.

 

important to look for when buying a home

buying a home

What is most important to look for when buying a home has much to do with the Buyer’s lifestyle and stage in life, as well as a other factors that experienced real estate agents evaluate.
To flesh out these nuances, ensure that you spend ample time with your real estate agent in a Buyer review. This is an interview where you review every aspect of buying a home, ensuring that there are no issues that would preclude you from buying your home, determining the best criteria for your new home, and  educating you on the entire process from start to finish.

Following this review you should have a solid foundation and comfort with the process you will be undertaking, a detailed understanding of the criteria you require in a home, and knowledge of how to go about selecting the best property. Essentially, after this review, all that is remaining for you is to pick the property that you “love” because you will only be viewing homes that fit all of your criteria – making the selection process that much easier and saving you an enormous amount of time.

The one common theme that emerges from these reviews which highlights what is most important to look for when buying is to “buy what you can’t change”

What do we mean by this?

Aspects of a property that you cannot change would be:

  • Location and surrounding neighbourhood
  • Zoning, restrictions, bylaws and regulations
  • Other factors that are outside of your control or too onerous to change such as major structural issues.

The components of a property that you can change are:

  • Cosmetics (paint, flooring and decorating)
  • Minor plan shifting (moving or opening a few walls)
  • Non-structural repairs
  • Landscaping

Often the best value can be discovered hidden in properties that are the less appealing, but with issues that are easily overcome. Conversely some of the biggest problems we have witnessed arise from properties that had lots of surface appeal masking a location issue, structural problem or other permanent condition. It”s easy to fall prey to these, so be certain to rely on an experienced real estate agent to guide you past these and shed light on the more important aspects of a property. Also, ensure that you insist on a home inspection as a condition of the purchase to ensure that you discover any serious issues that may be hidden beyond obvious sight.

There are more permutations and quirks to buying the right home than can be described in a synopsis, however a very important point is to ensure that you get the best representation on your side. Choosing the best real estate agent to find the perfect home won”t cost you any more and can save you much more than dollars – it can affect the rest of your life. Sano Stante real estate group has provided over three decades of expert real estate service to thousands of satisfied homeowners. We can help – call us.

 

The purchase of a home is one of the most important decisions that most of us will ever make. When selling a home, most people are aware of the listing agreement between the seller and a real estate agent which spells out the services and duties that  your real estate agent  will perform, but did you know that there is also an agreement that guarantees the services you will receive from your real estate agent when buying a property? It’s called a Buyer Representation Agreement (B.R.A.).

The B.R.A. is a contract between you, as a buyer, and your real estate agent. This agreement helps to ensure you will receive the very best “Client Service” and representation your real estate agent has to offer, rather than regular “Customer Service”. To fully understand the benefits of a B.R.A., it’s important to note the difference between Customer and Client Service in the real estate agent/buyer relationship.

In the Client Service buyer relationship, you enter into the B.R.A. knowing the real estate agent is taking a vested interest in your buying experience. You are becoming your real estate agent’s client and they is working exclusively for you. Your real estate agent will work with you to discover your needs, help find the best property for you, notify you of all new listings (including properties not listed or for sale privately), will provide you with expert advice, facts and comparisons to other properties, and will be instrumental in the negotiating your purchase; providing advice such as offering price counseling, financing alternatives and actively negotiating exclusively on your behalf.

As a Customers Service buyer, we can expect a real estate agent to show us the requested listing, present the material facts about the property, and show us properties within the criteria we have provided. What we need to realize is that in this relationship, the real estate agent may be previously contracted to work in the best interests of another client and
this may be the seller of the property. In any event, as a Customer the real estate agent is always ensured to provide you, the buyer, a good sales experience. Additionally, you should expect that the status of these relationships will always be disclosed to you by your real estate agent.

The Client Service buyer relationship is more involved. This relationship differs from the Customer service buyer relationship in
that it empowers your real estate agent to utilize his or her skills through all stages of the real estate transaction, and leaving ‘no stone unturned’ when it comes to your home purchasing experience.

Signing a B.R.A. does not mean you have to buy anything. It simply states that if you do purchase a home during the term of your contract, you will use this particular brokerage and that they will be compensated for the services they have provided. It also does not require you to pay up front when this compensation is most often included in the sale price through the cooperating listing contract. Alternately, you may chose to pay the fees directly thereby deducting this component from the sale price. You can also use a B.R.A. to ‘test drive’ your real estate agent. You and your real estate agent can determine the length of the contract and ensure that you and your real estate agent feel this relationship is a good fit for both of you.

When you are buying your home, why not receive the best representation possible? In one of your most important decisions of your life, signing a B.R.A. ensures that you have your selected real estate agent representing your best interests in your home purchase and that your real estate agent is working exclusively for you.