If potential homeowners have never lived in a condo before and they are considering it for the first time (whether as first-time owners or if they’ve only lived in detached homes), there can be some mystery surrounding condos, especially when it comes to their fees. Breaking down what the fees cover, how they work, and what to look out for when considering condos will give potential owners more insight and confidence to navigate this real estate journey.
What are Condo Fees?
Condo fees are a monthly charge on top of a mortgage. Fees will vary depending on the size of the building and unit under consideration, what amenities the condo building offers, and if any utilities are covered. A few condos don’t have fees, so the condo owner is responsible for all maintenance and repair fees.
What Do Fees Cover?
Prospective buyers should not expect each condo they visit to have the same fee coverage. Just as the cost of the fees varies, so will what they cover. Typically, monthly fees will cover the common areas: parking lots (indoor or outdoor), elevators and lobbies, and any amenities the condo building has, such as an exercise room. Condo living fees also cover insurance, but this does not replace homeowners insurance. Some condo fees will also go to a reserve fund.
What Is A Reserve Fund?
A reserve fund is set aside from the condo fees. How much of those fees go into a reserve fund will also differ. These funds are for larger repair projects, such as updating the roof or the boiler unit. These will typically be on a schedule as determined by the condo board. The board is responsible for informing unit owners of these repairs. Things, however, sometimes go differently than planned in condo living, and in that case, the board will inform condo owners of a Special Assessment.
What is A Special Assessment?
Even the most engaged condo board can’t thoroughly plan for emergencies. If emergencies occur and there are insufficient funds in the reserve fund, condo owners must do a special assessment which means that in addition to the condo fees, they will need to provide more money. While this is less than ideal for any unit holder, there are a few things potential buyers can do to mitigate this. When looking at condo fees, lower fees are not necessarily better. A condo board that doesn’t require a large monthly payment may not put enough of those fees into a reserve fund. If that’s the case, the likelihood of condo owners needing to spend more money on a special assessment regularly is higher.
Can Buyers Negotiate Their Fees?
Condo living fees are, in fact, non-negotiable. The amount will depend on several things, including the unit’s size, the building’s size, and amenities and utilities. Instead of negotiating, potential buyers should work with their real estate agent to look at condos that more closely fit their wants and needs so they’re not paying for something they won’t use (like an exercise room, a pool, etc.). There is also no cap on condo fee increases, but once buyers become owners, they can sit on the board and influence any fee increase decisions that may come about.
Buying a condo doesn’t mean the process is any more or less stressful than buying a detached home; it just means there are different considerations. Finding a real estate agent that is an expert in the condo market is key to working with your budget and lifestyle needs. The real estate agent will be able to help buyers ask the right questions and find the right condo.
Contact one of our Fully-licensed REALTORS® today!
Looking for an experienced REALTOR® that specializes in real estate across Wellington County? At Royal LePage Royal City Realty we are focused on helping you unlock your future.