Buying a condo is an exciting process. If you are still living in your parents’ house or have been renting an apartment, it may be the perfect time to finally make that big purchase. While it seems like times were a little rough on the economic and political fronts here in Montreal over the past year, I would like to point out that, contrary to popular belief, our real estate market is far from depressed. As a matter of fact, all the turmoil caused by such things as the student riots or the victory of Marois as Quebec’s premier have contributed to a slight housing market correction, especially on the condo market. Inventory is up and prices are more competitive than was the case last year.
Before you go on this adventure, however, there are a few crucial things you should consider, especially as a first time buyer!
1. Don’t buy if you can’t stay put.
Being a young professional also means always being on the go. We operate at a fast pace both in our work and our personal life. That being said, if you can’t commit to staying put in one place for the next 2-3 years, then owning may not be for you.
There are many transaction costs associated with buying a place aside from the actual cost of the condo: notary fees, welcome taxes and realtor commission all have to be taken into consideration and put into the equation. If you decide to sell sooner than you actually should, you may end up losing money, even in a healthy real estate market. And if prices are dropping… hmmm, let’s not even go there!
2. Before house hunting, get pre-approved.
Aim for a property you can actually afford! You might think you know what your budget is, but trust me, getting pre-approved will save you and me the grief of visiting condos you simply can’t afford. It will also put you in a better position to make a competitive offer when you do find your dream flat. If you have not yet hired a real estate broker (usually he/she will give you a few referrals), simply ask to meet with your bank’s mortgage specialist. With all the necessary documents on hand, you should get a pre-approval within 24 hours and get ready to hunt!
3. Hire a real estate broker.
I’m not only suggesting you do so because I am a real estate broker myself and believe in what I do, but I’ve witnessed too many people try to tackle the market on their own and really burn themselves. That’s right: buying without a professional is asking to play with fire! If you think you will save money by doing the legwork on your own, you are wrong. First of all, it’s free to have a realtor represent you on the buy side because the commission comes straight out of the seller’s pocket. Secondly, you may end up spending way more money than you ever imagined if you put your hands on a bad place. Ask me… I’ve got horror stories for you!
Today, finding a real estate broker who will have your best interest at heart is easy. Just post on Facebook a status similar to this: “Looking for a skilled and trustworthy real estate broker specializing in condo buying in the Old Montreal. Any recommendations?” Make sure to be specific about the type of property and the location of interest.
4. Location, location, location!
Know where you want to be, specifically. While you may think Montreal is a small city, there are many neighbourhoods in and around downtown. To some, downtown is the Mile End; to others, it’s Griffintown or Little Italy; it may even extend to NDG! By narrowing your area of interest, you’ll also narrow your search and reduce the time spent in the car getting from one showing to the next.
If you are new to an area you might want to consider renting for six months to a year before buying so you can get familiar with your new location and all that it has to offer. If that’s not an option, explore the hood for a few consecutive weeks. Get to know the proximity of the closest metro station, Starbucks, Provigo or SAQ. You won’t regret it!
5. Determine your must-haves & be open-minded.
Once you’ve established where you want to live, you need to figure out what it is that you have to have in your future home. How many bedrooms do you need? One bathroom or two? Do you want a balcony or a fireplace? Is having a parking spot non-negotiable? Is 1,000 square feet too small or not big enough?
Prepare a list of all your must-haves for your real estate broker. This will simplify the search and spare you from going through an endless inventory of unsatisfactory MLS listings. Please keep in mind that you won’t necessarily find all of your must-haves in one condo, so know which of them you are willing to compromise. And be open to suggestions from your realtor even if they don’t exactly match your criteria!
6. Do your homework before bidding.
Your first offer should be based on the sales trend of similar properties in the neighbourhood in the last year. If a CMA (Comparative Market Analysis) has not been done, ask your realtor to do one for you. Such an analysis will show active, expired and sold listings of comparable condos, allowing you to make a solid and educated bid.
7. Know the building’s health.
A promise to purchase is usually conditional upon the buyer’s verification of the documents related to the co-ownership, such as the declaration of co-ownership, the minutes of the last general assembly of the co-owners, the budget and the financial statements. I can’t stress enough how important it is to take the time to go over these documents. If you don’t, you might be faced with a very unpleasant surprise that will put a big hole in your wallet… like having to contribute to a $2-million lawsuit against the contractor. Ouch!
8. Hire an inspector.
Even though you’re not buying a big house, hire a building expert to inspect your condo, especially if it’s one of those ground floor apartments of a duplex. It will cost on average four to six hundred dollars, but it might save you a couple of hundreds, if not thousands, in the near future. Can you imagine brick work estimated at $50,000 that you’d have to split with the only other co-owner? I can… and I’ll tell you this: it’s more common than you think in those hip neighbourhoods like the Plateau or St-Henri!
9. Account for notary and welcome tax fees.
As mentioned above, there are fees associated with buying a property which are unavoidable and which can affect your bottom line if not accounted for.
Downtown notaries are pricey; come to me and I’ll refer you someone who will prepare the deed of sale for only $1000, tax in! As for the welcome tax, you may ask yourself why Quebec has one and what it is. Well, once upon a time there was this guy name Mister Bienvenue and he had the brilliant idea (yeah right!) of making more cash for the province by taxing home buyers. Until this day the tax exists and keeps its name, “Taxe de Bienvenue,” meaning “Welcome Tax.”
10. Enjoy the process.
Good luck and happy hunting, YPs!
For more information, contact Karine Doche at firstname.lastname@example.org