Unless your haggling skills are rusty, you would never try to talk sellers up on their price. Yet, when it comes to condo fees on new-build units, going low could come at a high cost down the road.
“There is so much misunderstanding around the value and purpose of condo fees,” said Bernice White, owner of Condo Check, a Calgary company that provides condominium services, including document reviews. “Developers fear they can’t sell a unit if the fees are too high, so they often set them lower than what is needed to adequately maintain the property.
“When reality hits later on, no one is happy.”
To address the issue, White urges condo developers to focus less on getting fees down and more on keeping them realistic.
“The more realistic your condo fees, budget and reserve plan, the better prepared you will be for future issues with the development and to maintain it in the midst of rising costs for labour, material and such,” she said.
“The biggest mistake people make is picking the building based on low condo fees. It takes what it takes to maintain the property, and more bells and whistles mean more costs.” – Bernice White, Condo Check
Condo fees are influenced by several factors, including the type of building material, the amenities offered (e.g., pool, fitness room, guest suite, etc.), landscaping, parking facilities and snow removal.
“Determining the fees is usually done by the management company, which is the best approach,” said White. “They can consider all factors and determine what is needed to maintain the property and support the services being offered.”
So, how do you know if the condo fees for a new build are too high, too low or just right?
“Your best defence is to do some homework. You and your REALTOR® should go out and look at similar resale condos in the area to get an idea of what is reasonable,” said White. “If you’re considering a big apartment building with 150 suites, make sure you compare apples to apples – that way, you won’t be blindsided when fees are adjusted in a few years.”
Buyers should have a real estate lawyer review the purchase contract, and a document review company like Condo Check can also be hired to assess the fees.
“The biggest mistake people make is picking the building based on low condo fees. It takes what it takes to maintain the property, and more bells and whistles mean more costs,” said White.
“Some developments offer 24-hour concierge service and security patrols in the parkade overnight, and these are high-end services with a high price tag.”