Buying a Condo in London Ontario
Buying a condo in London, Ontario, be it an apartment, a townhouse, or a townhome, takes much more care than purchasing a house. The reason being is that due diligence is required to understand the condominium corporation’s bylaws and financial status, rules and regulations!
Apply these strategies, and you will never overpay for a home or regret your decision!
#1: Understand What You Need In Your Next Condo.
Two things you may want to consider: NEEDS…and WANTS. They’re two very different things. You may need three bedrooms because you have guests or need a place for your home office or hobby room. What you’ll find is your needs are relatively basic. It’s the “wants” that take a little more time to clarify. Here is a list of requirements you might consider before looking for your condo:
- General Price range.
- Approximate size.
- General location, area, or subdivision. Are you looking for an attached or detached condo, a townhouse, an apartment condo, a ranch or a bungalow condo?
- The number of bedrooms?
- The number of bathrooms?
- Style and layout of the condo. Do you want a more formal plan or a contemporary plan?
- Parks, Entertainment, Shopping, Distance to Work?
#2: Understand What You Want In A Condo.
A great way to get a handle on your wants is to take a good look at your present home. What do you like about it? Do you like its floor plan? Do you like the kitchen and eating areas? List out everything you want about your present home or condos you’ve visited.
Now, let’s take a look at what you don’t like about your home. If you dislike something with your present home, you’re going to oppose it with your new one. So the better you can identify these items, the more likely you are to avoid them.
Here’s a good suggestion: Take out a piece of paper and draw a vertical line down the middle. In the left column, write down everything you like about your present home. In the right column, write down everything you dislike about your current home. It’s also important you understand WHY you dislike something.
#2a Understand What Each Other Is Looking For, And WHY
If you’re a couple looking for a condo, this exercise will eliminate many disagreements down the road. You will both understand what the other wants and WHY they want it.
I recommend you RANK each feature regarding its importance to you and your partner. You’re both going to live in the condo, so as my wife tells me, it is wise to understand what she wants! If you are single, do this as well, you never know when that perfect person shows up and if never, no harm in going through the exercise. For example, a well-designed gourmet kitchen (remember, list ALL the kitchen features you’re looking for) may rank high with a woman, while having a man cave may rank high with a man. Or vice-versa. Try to understand each other’s priorities. If you have been married for a long time, hopefully, you are told that by now!
#2b Some People Have More Dreams than Money
The ranking will also show you areas you may need to eliminate because of price constraints. And by having each person rank the importance of the features they want, you won’t be eliminating a high-priority item and putting additional stress on an already stressful time.
#3: Understand What You Can Afford.
Like it or not, there are two guidelines bankers and mortgage lenders use to determine how much loan you can afford. The first guideline is the Payment to Income Ratio. This guideline compares your income, or your total household income, to the amount of mortgage payment you’re considering.
To calculate the “payment” part of the formula, the lender will take the mortgage payment (principal + interest) and add to its property taxes and condo fees. Hence the terms “PIT” (principal, interest, taxes). Usually, lenders will loan up to a payment amount of 28% of your total household income.
But before you think you’re home free, there’s something else you need to know. It’s called the Debt Income Ratio. Debt refers to ALL the significant monthly payments other than your mortgage payment (PIT). To arrive at this amount, the lender will consider.
- Your car payment.
- Your credit card debt
- Any Revenue Canada liens or payments due.
- Any other payments and debts you have (boat, second home, etc.)
They’ll then compare your total debt to your ability to make current payments with your condo loan added to the equation. Now, here’s the “stickler.” Most lenders have set different limits on your Debt Income Ratio, which is why it’s critically important to shop around. (I have seen huge differences in rates) Don’t follow the “canned” financial advice as you see on TV. Most of that advice is a “rule of thumb” and designed for the lowest credit rating and highest interest rates.
Think about this, f you spend two or three days to find a loan that saves you $10,000 to $60,000 over its term, your time is WELL WORTH SPENT! Doing a little homework on your own or suggesting where to shop will save thousands over your loan term.
#4: How You Evaluate (put a value on) Condos Will Save You Thousands of Dollars and Heartaches!
One of the biggest mistakes people make when buying a condo is they rely solely on “local neighbourhood market analysis information” to determine the right price to pay. Before you buy a condo, INSIST on seeing a “total market overview” of exactly what is going on in the ENTIRE market. Then narrow your analysis to local market information.
Why do I say this? Because you want to know two things: 1) what is the ENTIRE market doing with values? Are they going up? And by how much? 2) What is the specific area doing with market values? How does it compare to what the total market is doing? Are the growth rates the same, lower, or higher than the overall market? Understanding these parameters will save you thousands of dollars when you make an offer on a condo. Take the time and make sure that the real estate person you have decided to work with knows how to compare, compare with, and are those numbers accurate?
OK, so let’s say you’re now pre-qualified with financing, and you have narrowed down what you can afford, what, and you know where.
#5: The Way You View a Condo for Sale Can Save You Enormous Amounts of Money and Time
It’s now time to find a condo that fits your needs and one that will not be a money pit. Below are three important considerations you may want to take before making a rash decision.
- Location of the building or condo corporation
The general location of the condo you’re considering could determine how happy you’ll be living there. Here’s an important tip that will almost always make you money; “Buy the Midrange Condo in the Best Condo Complex You Can Afford”
Why do I say this? When you buy the midrange condo, the unit will “generally” appreciate faster and more significantly than a higher-priced unit in the same complex. Plus, you will most certainly spend money updating or decorating your new condo, and you don’t want to get “upside-down” on your condo’s value after spending money on improvements.
- Unit location.
The unit location has to do with WHERE your particular unit is in the complex or building you’re considering. Is it near a common area? Does it capture better views than other lots in the area? Is it more private or shaped better than other lots? Is it near a loud street? Near the elevator? Near the garbage chute and so on. Location in a complex or building will give you a basis for knowing how well the condo will appreciate vs. other units (assuming the apartment is reasonable).
- The condo layout.
How well did the builder take advantage of all the amenities the unit offers? Are the views great? How’s the curb appeal? Is there a balance between the front and back? Think through these things as you visit each condo.
As you approach a condo, keep in mind the following:
- What is your initial reaction (curb appeal)to the condo as you approach it from the street? Curb appeal dramatically impacts the value of the condo complex. Is it sited right on the lot? Notice the areas around the condo? Are they well maintained? Is the landscaping groomed?
- Take a look at the structure of the condo. As you go through the unit, windows and doors should be square, and they should close correctly. Look around windows and doors for cracks. Check corners of rooms for sloping or tile/wood cracks. These may reveal foundation or water problems.
- Now think about the floor plan of the condo. Is it functional? Do the common areas flow the way you want them? Are the halls narrow and long, or are they open? How far will you have to carry the groceries from the garage or underground parking? Are the rooms the right size and height for your desires? If there have been any additions, were they done professionally? Do they fit with the flow and style of the home?
- Now, check the roof, windows, doors and ceilings. Are they in good condition? Those will all be in the Status Certificate. The what? (I will go through what a Status Certificate is, who orders it, who approves it and what decisions you may need to make.)
- Now make a basic check of the plumbing, mechanical, and electrical systems. Do drains and toilets work correctly? Is the electrical wiring up to code? And are the mechanical systems working properly? Make sure you get these systems inspected by a licensed contractor or inspector BEFORE you close any transaction. I insist!
#6: Save Thousands of Dollars Writing Your Offer and Negotiating Your Purchase
Years ago, a real estate oldtimer told me that the less motivated party always gets a better price. The ONE single element that will determine how well you negotiate your offer is:
How MOTIVATED Is the Seller, And How MOTIVATED Are YOU?
If the condo has been on the market for over three weeks, perhaps it’s because the seller hasn’t been motivated enough to sell. Or probably by now, the condo hasn’t sold, and he/she is very motivated. And if you are transferred, have your home listed, and you wish to downsize, or your spouse kicked you out, or you left, or you’ve had it with your landlord, YOU may be very motivated to buy! Nevertheless, here’s a tip you MUST bring to any real estate transaction:
Move Heaven And Earth To AVOID Emotional Attachment To the Home, You’re Considering
If you’re all excited about the condo and you can’t hold back your emotions when around the home, then you’re going to get clobbered when negotiating the purchase. That’s just ONE reason why you should use an experienced, well-grounded Realtor® representing you during any transaction. The middle person alone will help save you money.
So let’s say you have a Realtor representing you, and you’re ready to write an offer. What’s the single best piece of information you can have? Other than my phone number 519-435-1600, (I couldn’t resist!)It’s the comparable sales and market data for the entire market and the area. Ask your Realtor to print out both for you to use.
Now, here’s what you may want to do
You want to take a look at Five crucial “market telltale signs:”
- Take a look at the current (for sale) listings and the sold units for the past three-six months in the area. Was the condo you’re considering priced within reason to the others? If so, you know you’re at a reasonable starting point.
- Now, take a look at what is the average selling price compared to the listing price. You may notice that most apartment condos in London are selling close to the asking price or more. Take this into consideration when making your offer.
- Now, make sure you visit, if you can, several of the other listings in the area. How does your choice compare to the others on the market? Is the unit you’re considering in a similar shape? Is it better suited? Is it bigger, smaller, better style, better landscaping, etc.? These factors will help you determine how much you should pay for your condo vs. how much others paid for similar condos in the neighbourhood.
- Now, take a look at the average market times (how many days it took to sell) for condos in the area. If they’re long, the market may be soft, and you might have more negotiating room; however, if they are less than ten days, it could be challenging.
- What is the ratio of owners versus investors in the building or complex?
#7: Use A BUYER’S REPRESENTATIVE!
Avoid Dual Agency if possible and if you find a condo on your own, know that the Realtor represents the seller, not you! Yes, it’s true. And the question you have to ask yourself is: “Is this person going to represent MY interests?” Think about this: If you had to go to court, would you use the same lawyer the opposing side was using?
I think you know the answer! But did you know that by creating a “buyer’s representation” with your Realtor, you not only get someone representing you but…
- A buyer’s representative doesn’t cost you a nickel more than the listing Realtor.
- A buyer’s representative will keep everything about you and your transaction CONFIDENTIAL!
OK, so you know the difference between any Realtor and creating a “buyer’s representation.” But did you know what a dedicated professional real estate person could do for you?
- A good experienced Realtor knows the area you want to buy because he/she is always looking at condos.
- A good Realtor can spot trouble for you. He or she will be experienced at looking at condos and will see things you might not see.
- A good Realtor will significantly simplify the buying process.
- A good Realtor will have reliable financing sources and options.
- A good Realtor will refer you to proven inspectors, lawyers and accountants and other service providers you’ll need.
Most importantly, do you know that there are many, many “Realtors,” And Then There Is The Committed Professional?
Which One Do YOU Want Representing Your Interests?
I hope the information above has given you helpful advice on finding and buying a condo? And at this point, you’re probably pretty clear that to find the right home and save money, someone competent and professional to represent YOUR interests is very prudent. There’s a difference between Realtors who simply ‘do’ real estate and those who COMMIT to whatever it takes to serve clients.
Condominium Living Explained
More and more Londoners are choosing to live in condominiums. Be they apartment-style, a townhouse or a townhome. Empty-nesters, singles, couples and families enjoy the freedom from routine maintenance like grass cutting, raking leaves, shovelling snow, in most cases, replacing roof shingles, windows or doors.
Owning a condominium in London, Ontario, includes sharing common areas with other residents and following by-laws and rules set by the condo corporation. It’s essential to understand how a condominium corporation is established and operates so you know what to expect from condominium living.
A Status Certificate Explained
When people think of a condominium’s financial position, they believe it regards money in the reserve fund. The myth that has grown up around this is that a condo corporation with a large amount of money is in better shape than a condominium with a much smaller sum of money in it.
A Status Certificate contains information regarding the condominium corporation’s operational, legal, and financial dimensions. The corporation must give each person so requesting a status certificate concerning a unit in the corporation.
A request for a Status Certificate is given to the property manager. On behalf of the condominium corporation, the property manager is allowed ten days to deliver the Status Certificate to the requester. The cost is generally around $100.
The enjoyment of owners is most directly affected by the By-laws and House Rules of the condominium corporation. The by-laws explain to owners how a building is managed on a general level.
The following are the types of matters by-laws cover:
- The Board of Directors – how many, how they are nominated, elected or removed, and how long they can serve.
- How the condominium corporation can borrow money.
- The assessment and collection of contributions to ordinary expenses.
- What constitutes a standard unit? This covers what the condominium is or is not responsible for in-residence regarding damage, repair or replacement. Owners need to know this to get insurance for their unit.
- How the units and common elements are to be maintained, they are used and managed.
- Members’ meetings and annual general meetings. The appointment, remuneration, functions, and duties of agents, officers and employees of the condominium.
By-laws must be reasonable and consistent with the Condominium Act and the condominium’s declaration.
By-laws can be added to, amended or removed. Changing a by-law requires a majority vote of the owners (i.e. 50% of Unit Owners plus one). That vote must take place at a meeting of the owners that must be called explicitly for. All owners are given 15 days’ written notice of that meeting.
The 1998 Condominium Act requires that a minimum of 3 directors be appointed. Generally, boards will have between 3 and 7 directors depending on the size and type of Condominium Corporation. More often than not, within aboard, there will be a President, Vice-President, Treasurer and Secretary at minimum.
In most condominiums, directors of boards restrict their activity to making decisions and advising the Unit Owners to maintain or improve the condo’s affairs. They deal with the financial, legal and physical aspects of running the building and the Unit Owners’ concerns.
It is not usually the board’s job to carry out the building’s day-to-day running – that job is delegated to the property manager. However, the board is responsible for ensuring that the building is being run properly by the property manager.
A Board of Directors is well advised to seek expert advice and opinions from professionals such as lawyers, accountants, contractors, architects, and designers before making decisions or communicating information to the Unit Owners.
Once a year (must be within six months of the end of each fiscal year of the corporation), the corporation will hold an annual general meeting for all the Unit Owners.
The involvement of as many Unit Owners as possible at an annual general meeting or generally in the corporation’s affairs (whether on the board or committees) is vital for a condominium’s welfare. More input can
Suppose a unitholder does not want to or cannot attend an A.G.M. or another special meeting. In that case, they can appoint, in writing, another person to represent them as a proxy and vote at the meeting following their wishes.
Unit Owners can call their special meeting provided they can obtain 15% of Unit Owners willing to sign the meeting request.
The property manager has a variety of responsibilities, including the following:
- Enforce By-laws and House Rules.
- Ensure the building is properly maintained.
- Deal with contractors and oversee the work being done by them on the building.
- Hire and supervise employees of the condominium, such as cleaning staff, concierge and door attendants.
- Advise the board concerning the by-laws, house rules, renovations, security and problems arising from the unit holders or such things as damage to common elements.
- Communicate and deal with unitholders. For example, they must advise unitholders of fire alarm drills and window cleaning and deal with unitholders’ complaints. Depending on a claim’s nature, a property manager may want to bring the complaint forward to a Board Meeting for resolution.
- Prepare monthly and annual financial budgets and statements.
- Manage the receipt of monthly maintenance fees and the payment of expenses.
The Condominium Act puts the following obligations on the owner and the condominium corporation:
- Within 30 days of leasing or renewing a lease, owners must notify the corporation of this fact and provide the lessee’s and owner’s names. Within this same period, they must also provide a copy of the lease and furnish the lessee with a copy of the corporation’s Declaration, by-laws, and rules.
- Owners must notify the corporation of lease terminations.
- The Corporation is required to maintain a record of all the notices needed regarding leased units.
A check should be made of the Condominium Declaration, by-laws or house rules as very often they may contain restrictions on leasing/renting. The following are some typical restrictions:
- The owner is still responsible for the monthly maintenance fees and any damage caused by the tenant.
- The suite cannot be used for hotel purposes or leased for less than one year.
- The details of the lease and information about the tenant must be provided to the property manager before the tenancy’s commencement.
- The property manager must inspect the unit before the lease to ensure it is in a good repair state.
- A tenant cannot sublet a unit.
- An owner must notify the property manager that the unit is no longer being rented or occupied within seven days.
Warning: Here Comes a Sales Pitch!
Buying and selling real estate is a business and involves money, and after hundreds of transactions, I have seen people act in specific ways when it comes to money! That’s why I have designed a specific program designed for buyers. I call it
Exclusive “Dedicated Buyer Program”
Our Preferred Buyer Program is FREE to you. Here’s what you’ll get when you enroll
- Each day, we’ll forward to you condos on the market that meet your desires. (By the way, I do not use what most Realtors use and do, overload your inbox with everything out there; we are very selective and can take up to an hour daily to sift out the best fit for you.)
- We’ll evaluate the value of your chosen condo, so you buy the most condo for your dollar, the very same way we described earlier.
- Negotiate the best possible terms and conditions for you, so you avoid costly traps and pitfalls.
- Guide you to locate the most affordable financing in the market if required and for your situation.
- Coordinate all inspections, appraisals with the very best firms, so you can feel confident and focus on other important tasks during your move.
- Because of our experience and systems, we can make the entire process HASSLE FREE for you.
- Everything you do stays COMPLETELY CONFIDENTIAL.
- If we both agree to work with each other, you will receive a portfolio with everything you need to know about buying a condo and your checklists.
Before Finding You, a Condo-We will
- Meet with you to discuss your needs and desires;
- Highlight various neighbourhoods or buildings to determine which ones are best suited to your needs.
During the Search for the Right One -We will
- Launch our detailed High Energy Home Buyer Program action plan;
- Keep you informed of daily updates on newly listed properties that meet your buyer profile;
- Ensure that we are available to you by phone and after hour service for offers, questions and concerns;
At the Time of Offer-We will
- Review the Offer to Purchase;
- Explain all conditions and special clauses;
- Present the offer and handle negotiations until we have an agreement.
When we have a Conditional Sale, Agreement-We will
- Ensure that all documents are sent to your Mortgage lender;
- Assist you in choosing a lawyer to represent you for a smooth and successful closing; or, forward all the documents to your lawyer who you have used before.
- Assist you in choosing a reputable and professional Home Inspector if needed;
- Monitor that all conditions are fulfilled on time (inspections, mortgage financing, status certificate etc.)
Once we have a Firm and Binding, Agreement-We will
- Keep in touch and maintain communication with you;
- Ensure that all documents are forwarded to your Lawyer & Mortgager ;
- Give you a list of movers and checklists to help your move be less stressful.
As you can see, we do not leave any stone unturned when it comes to helping you BEFORE you buy a condo. You should see what we do when we help buy one! I hope you found these tips to be helpful and that you found a few that got you thinking about how to go about buying a condo.
I have three series of e-zines, some sent once every nine days for those who want to move in 1-3 months, another series every 18 days for those who want to move within six months and for those who are unsure, we have a series that goes out once a month.
I should point out that:
- You are under no obligation.
- You can cancel anytime.
- We will not solicit, bug, call, impose or bother you in any way; you hear from us ONLY if you request we do so!