I was supposed to be part owner of a condo. It was going to be great. I was supposed to move in, make all my renovation dreams come true, and live like a queen. Unfortunately, that didn’t happen and the condo I wanted ended up slipping through my fingers.
My mother decided to buy a condo that I would live in. She would own it and when it was paid off through my rent payments to her, she would turn it over to me. She included me in every part of the process. We looked online for listings and hired a real estate agent. After about three months of searching the agent finally found something with potential under her $200,000 budget. It was a fixer upper on the first floor of a 4-floor building. It had 2 full sized bedrooms, plenty of closet space, a single wall kitchen, and a large living room. So when I ended up losing the place, you could imagine my disappointment. I couldn’t understand how it happened so quickly. We put in an offer that was accepted, we had the paperwork drawn up, and we even signed our part of the agreement. Yet and still, it wasn’t meant to be. This happens more often than I realized so I think with a situation like this, it’s important to reflect on what transpired and what was learned during this process.
Condos come with maintenance fees
I expected to pay the regular utility bills such as electricity, cable, and cooking gas. What I didn’t expect was a maintenance fee. For those who don’t know, a maintenance fee is a monthly mandatory fee to help cover the costs of maintaining the building. That umbrella can cover anything from garbage removal and lobby cleaning/repairs to snow pickup. As the owner of the condo, it would have been my mother’s responsibility if she were living there. Since she was renting the condo out to me, I would have to cover that cost. I had to rework my budget to make sure I was able to afford the fees along with the mortgage, taxes, utilities, and my existing expenses. Fortunately I was able to swing it; barely. But in some cases, that maintenance fee can completely crush a budget and leave you having to search for another listing.
Even though you own the condo, you still have to ask permission for certain renovations.
Cosmetic things such as painting and changing fixtures in the condo are never a problem once you own the space. However, if you plan on knocking down and moving walls or changing the floor plan of the condo, you have to go through your condo’s association before you do so. It’s not like a house where you can do whatever, whenever you want (as long as it’s up to your city’s code). You may own that apartment, but the final word still belongs to all the building’s owners and committees.
Buying a condo is like getting a divorce, all parties must be lawyered up.
I had no idea how much paperwork came with getting a condo! I figured you just sign a contract similar to a lease and it’s yours. I was sadly mistaken. My mother had to get a property lawyer to help with the negotiations. The seller’s lawyer drafted up papers for the agreement we had made. Then our lawyer looked over the papers and made any changes we needed to be made. That went back and forth at least twice. When the money part was settled, my mother’s lawyer and the seller’s lawyer drafted up the final contract together. Then we had to sign papers with the bank we would get the loan from and our lawyer had to head that as well. It can all be very overwhelming at times but everything has its purpose.
The condo’s lawyer won’t always be 100% honest with you. They work for the condo so their best interest lies with them. You’ll have to rely on your lawyer to get all of the answers, so make sure you get a good one.
Do research on the company you’re buying the condo from
Speaking of honesty, companies have absolutely no loyalty to their potential buyers. So its best that you do a little background check on a company you are interested in doing business with. Negotiations can either go really right or really wrong. In my case, shady managers and missing financials made it go horribly wrong. We couldn’t get our loan from the bank approved because the managing company didn’t have financial records for the last 6 months of business. They kept on trying to delay the delivery of the records so we were forced to back out of the deal. Doing some company research will save you a lot of time and heartache. If you find that they had a bad history with building maintenance, management, or their financials, you can back out of the deal before it even begins and move on to the next listing. If the building managers aren’t on the straight and narrow, your deal won’t be.
List price isn’t final price
The condo my mother and I were interested in cost $185,000. It was well under her top budget but it needed a lot of renovations. The kitchen and bathroom had to be gutted, the floors needed to be redone, and most of the doors had to be replaced. So my mom offered to buy the condo for $10,000 under the asking price. The seller wasn’t happy about it but he wanted to sell and he knew the condition it was in so he agreed. After the agreement papers were drawn up and signed, my mother hired a contractor and an inspector to look at the condo and assess all of the damage that needed to be fixed. When she got the reports back, she realized that there was more work to be done than she had originally predicted. So she went back to the seller through her lawyer with a different offer on the price. At this point, I was so scared he would get offended by the back and forth with the money and back out. She eventually got the seller to shave another $2000 off the price, which made the final price $173,000. Looking back on it now, it was probably so easy to get the price down because the owners knew they were on shaky ground with their financials. To be completely honest, they were crooks and they just wanted to make a quick buck off an unsuspecting buyer.
After all was said and done, I’m happy I went through that experience. I was taken on a rollercoaster ride that wasn’t gratifying, but I learned a great deal that I can take with me when I do decide to go down the condo road again. Hopefully my experience will help a few others along the way too.