In Part 1 of “How Do Presale Condos Work” we looked at three aspects of buying a pre-sale condo, including how much of a deposit you’ll need and your ‘cooling off’ period. We also learned that right now condos are outperforming other types of housing in Markham’s real estate market.
So we have more tips for you.
5 More Tips for Buying a Pre-Construction Condo in Markham
- Changes in Building Plans – Known as ‘materials changes’, builders may change construction plans for the project after they have sold units in the building. They may move facilities, add or take away floors or change floor layouts.
- Plan for Maintenance Fees to Go Up – Maintenance fees, or condo fees, are charged to cover the cost of running the building. Before construction begins, builders estimate the cost of running the finished building. Builders will generally try to keep their estimates low to attract buyers. Inflation can also affect the fees you pay after the project is completed.
- The Interim Occupancy Period– Even after the project is completed, and you are allowed to move into your new condo, you do not own the condo. During this period known as ‘interim occupancy’, you are required to pay monthly amounts that are approximately the same as your mortgage payments, maintenance fees and taxes. These payments cover the builder’s costs while the building is being registered and going through inspections.
- Condo Registration – Once the condominium building is officially registered, you can close on the purchase of your condo. Ownership of your unit is transferred to you and you begin making your monthly mortgage payments and maintenance fee payments. While the registration period can last as long as two years, it generally falls into a four- to an eight-month timeframe.
- Be Ready for Closing Costs – On closing, pre-sale buyers are obligated to pay a number costs. These can include land transfer taxes, development costs, HST on appliances, reserve (emergency) fund payments and utility connection fees, among others. In total, your closing costs can add approximately 1% to 4% of the purchase price to the final cost of your condo.
If you like this post, check out our recent article on why the real estate market for condominium apartmants is booming.