I’ve heard countless buyers say to me that they feel maintenance fees are a complete waste of money. While there are some condos in the city that are poorly managed and have very high maintenance fees as a result, I don’t believe maintenance fees are as bad as some people may think, especially when taking into account a longer term perspective.
Condo fees are one of the most misunderstood aspects of condo ownership. Some feel that it can turn an outright purchase into what feels like a rental, with monthly payments to budget for as long as you live there.
If you have never paid condo fees before, here is what they cover:
• The costs of keeping shared spaces, such as the elevators, outdoor gardens, parking garage, lobbies and hallways, in clean and good working order.
• The maintenance of the building amenities such as the gym, swimming pool, games room, party and theatre room - the facilities that initially attracted you to the condo.
• Snow removal, balcony, window and roof repair
* Building insurance
* Security and concierge services
How much should you pay in maintenance fees?
This is a difficult question to answer as amenities, the age of a building, location are all significant factors. In Toronto today, the average the rate per square foot is around 70 cents a square foot, or $560 a month on a 800-square foot condo.
The first step is you must consider the amenities offered at the condo and whether you will make use of them. For example, if you can cancel your gym membership and dine out less and use your condo’s rooftop patio, that can help justify a portion of the monthly cost.
When you think about the actual costs of maintaining the exterior of a single family home, including landscaping, paving, fertilizer, cutting grass, snow removal etc., most homeowners would spend more than $120 a month, on average. Also, if you factor in eventual larger maintenance items such as a roof ($8,000-$10,000) and furnace or air conditioning replacement ($5,000), and condo fees can be justified since it has the convenience of living a carefree lifestyle.
I was recently part of a very interesting negotiation on an offer to purchase for a condo in the West-end of Toronto. I was representing the buyers in this particular transaction and the seller’s agent – Gino – requested that we negotiate the entire offer by SMS Text Messaging. No, I am not kidding.
This process was a very interesting experience and definitely eye opening – something that I wanted to share with you today.
Now, I consider myself a person who’s very comfortable with technology, yet I have never negotiated an offer this way. Call me old school, but I really feel that negotiations of any kind should be done in person or at the very least over the telephone.
There is an important “human” element to negotiations that gets lost when transmitting electronic messages on our mobile devices. As a matter of fact, depending on the circumstances, negotiating this way can potentially put you at a disadvantage with the other party. Let me explain.
So, when Gino the listing agent, asked me if I was “text-friendly” I had no idea he was asking me to negotiate this way. I originally requested to Gino that I meet him and his sellers in person so I can highlight the benefits of our offer, but Gino declined. I was stunned to tell you the truth, as I do think it hurt his clients more than it helped.
I had a good discussion with Gino earlier that day and got some very valuable information about why the sellers were selling and what their personal situation was. Interestingly, Gino said they received an offer last week that fell apart at the last minute and divulged all of the juicy details of the offer they were going to accept. I learned that the closing date was extremely important to them and what price they previously accepted. With this valuable information I spoke with my clients and gave them a good picture of the seller’s situation. We agreed to give them the closing they wanted and from a strategic perspective gave them our “best offer” we were prepared to give them, which coincidentally was several thousand less than they previously accepted.
So at Gino’s request I emailed the offer and waited for him to arrive at his seller’s home.
Not too long thereafter I got a text from Gino that read: “Reviewed the offer. Any movement on the price?”
“No, Gino. As I said before this is the best my clients are prepared to do right now.”
There was a pause. About 5 minutes later, I got another buzz on my phone. It’s Gino again. He asks: “How about the conditions, can we reduce the number of days to 3?”
I reply: “No, their bank has specifically requested 5 days condition period. Let’s stick to that.”
Gino comes back several minutes later and says: “About the price, it’s lower than my clients really want.”
I reply: “Ok. This is my clients best offer.”
At this point we offered $261,500 which is about $5,000 less than they previously accepted. A week has gone by and I know they need to close by the end of June and their window of getting this closing date is shrinking fast. Our offer was a good one and slightly below market value based on recent sales in the building.
Gino comes back at $264,000.
“Sorry Gino. That won’t work.” I quickly texted.
Another 10 minutes goes by and my phone buzzes again. “Ok, my clients are willing to do $262,000 – they really like the sound of that number.”
In my head I am thinking, what does the sound of a number have to do with anything?? Realizing that’s just an expression I reply: “Not going to work. As I said before this is our best offer. Your clients can take it as is or wait for another one”.
I knew there some risk that they could decline our offer and wait for another, but for $500.00 difference and understanding that we had their preferred closing date, they would be silly not to take our offer.
At this point, I don’t hear from Gino for a good 45 minutes. I check to see if my phone is still operational. Check. Full signal strength. Check. Battery at 80%. Check.
Not to long thereafter Gino texted: “We have a deal!”
I then spoke with my clients and they were thrilled about their new home. There were also somewhat surprised that they accepted our offer without any changes whatsoever.
The next day I called Gino to give him an update with how things are progressing on our end, and I asked him: “Out of curiosity, why did you want to negotiate the offer by SMS Text Message?” He replied, it’s more speedy and efficient. While that may be true to some extent, I told him that I would have preferred to meet the sellers in person and present our offer this way.
I couldn’t help but think that Gino didn’t do his clients any favours by negotiating this way. He knew virtually nothing about my clients (he never asked) and was more focused at getting the deal done quickly than negotiating a better offer for his clients. Very rarely is there no give-and-take in any contract. Granted, we were able to determine that the closing date was of utmost importance to them – and we gave them that. But still, I can’t help but wonder if the outcome would have been different if we didn’t negotiate by texting back and forth.
Technology makes it so easy to communicate with others quickly and efficiently, however I do think we rely on technology a little too much to the detriment of the human element. Sometimes the old fashioned way might actually be the better way.