There are plenty of benefits associated with buying a brand new condo. From the fancy finishes to the white-glove cleanliness, it's hard to argue with brand new...or is it? If you want to buy a new condo, by all means, go for it. Just make sure to review the purchase information in your contract carefully.
The following are four things that you might not know when it comes to buying a new condo.
Four common new condo snags
1) Exaggerated square footage
It's important to note that condo owners buy a "percentage of common interest" when they sign their purchase papers. This includes the square footage of the individual unit as well as small portions of the hallways, lobby, and elevator — any common space in the building. As a result, that "900-square-foot" listing could actually be much smaller. This is because some listing agents will include the total square footage (common square footage space included) rather than just the unit's dimensions in order to "pad" the property's specs. The best way to make sure you're buying a property that's spacious enough? Think about your furniture rather than a magic number. If your stuff will fit, it's probably big enough.
2) The condo fees are understated
Condos are a great first-time home buyer option, especially for single people, because they require very little outdoor maintenance. Instead of spending your weekends weeding, you simply pay your portion of the condo fee and enjoy the professional landscaping all year round. When a new building opens, however, the developers can only guess at what these types of upkeep projects will cost in order to calculate the necessary common charges. If this estimate is low, sooner or later your monthly maintenance statements will begin to rise in order to make up for the difference.
3) Don't amortize forever
When searching for your dream condo, make sure you know exactly what you can and cannot afford. A mortgage pre-approval can help you assess your financial situation and streamline your property search. Without this knowledge, you could find yourself making dangerous financial decisions in order to bid on a beautiful, but unrealistic housing option. Just because you can extend (or amortize) your mortgage for 30 years doesn't necessarily mean that's a good thing. Heed some good mortgage advice and spend within your means.
4) Be aware that buildings can get "stuck"
A sure sign of a shaky economy is the state of the real estate market. During the Great Recession, it became increasingly difficult for building developers to get financing. As a result, many companies couldn't finish the buildings they'd started. This still happens today, so be extra careful when pre-purchasing a unit in an unfinished building. You could find yourself right back at the beginning of your house hunt if the building hits a financial snag.
Don't throw caution to the condo winds
New isn't synonymous with perfect, so remember that as with any house hunt, use caution when considering a unit in a brand new condo development. A little due diligence can go a long way to protecting your home buyer investment.
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