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Friday, April 19th, 2024

Common Pitfalls in Purchasing Strata Properties


28 JUL 2015


Common Pitfalls in Purchasing Strata PropertiesLooking to purchase a Condo in a Strata?image

During my time as a Mortgage Broker, I have helped Buyers side step a few pitfalls.

Most of these are really easy to avoid and come down to simply doing your own due diligence prior to and during the shopping process.

#1 – Work With Your Own Realtor!

The first and most common issue that I have seen is only working with the Listing Realtor or the Realtor in the Sales office. There should be no surprise here that the selling Realtor/Agent is working on the Seller’s behalf and even if they agree to work with you too, their end goal is to sell the unit.

There is nothing wrong in looking around and initiating conversation with a Realtor in the Sales office, as they should be quite knowledgeable about the current build status and features within the units. It is still advisable to enlist the help of your own Realtor from day 1; A Buyer’s Agent! It will cost you nothing yet you gain the benefit of a Realtor working in your corner and covering your best interests.

When clients work only with the Sales Agent, there are far fewer Subjects or safety clauses in the contract that cover the buyer and allow them a few ways out of the contract. Far more important details will be pointed out by your own realtor than getting the fireplace put in or a free microwave. Perhaps you have a large SUV and the parking stall appointed at the vendor’s discretion has a large ventilation unit or obstruction leaving it useless to you. Use your own Realtor!

#2 – Ensure Strata Documents are Readily Available

On several occasions this year clients have put in a rush offer with a short, four business day Subject Removal yet the Listing Realtor had not pre ordered the Strata Documents, Engineers Reports and/or Depreciation Reports. These documents, along with meeting minutes and insurance papers, should be on hand and ready for review immediately on acceptance of your offer.

An expedited sale contract requires a quick mortgage broker and lender review that is difficult without these papers and reports. A rush order for Strata docs can jump from a standard fee to over $150.00 if required this quickly. Before putting in an offer to purchase, your Realtor should ensure that the Property Documents are readily available for you immediately on acceptance of your offer.

#3 – Purchasers Need Time To Review Strata Documents

Most importantly, YOU are the intended purchaser of this property. You should have ample time to review these documents while you are also working on booking your home inspection, re-negotiating your offer to purchase and ensuring that you have your financing in place. There is much to do in a short time.

This rush scenario with little time to review docs has seen people go into a binding contract only to realize that they have major repairs scheduled or that the Strata is ill funded.

#4 – Self Managed or Poorly Managed Strata

Better to find out early on and possibly before spending hundreds on a home inspection that the Strata Corp has failed to order a Depreciation Report, or that the contingency funds are not there to support the ongoing maintenance that your home will need. Lack of proper funds saved now equal special assessments and possibly large financial burdens in your future.

Lenders are looking more carefully at Self-Managed Strata’s and are scrutinizing Depreciation Reports if they are available. They want to make sure whether the Strata is self-managed or not, that the property is sound and that it is run with a good financial picture. You should too.

With a good Realtor and Dominion Lending Centres in your corner, you should have all of your documents ready up front and ensure that all personal and property information is readily available prior to setting a subject removal date. A quick file can be a breeze and you will be far less stressed when all is in hand ready to go!

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