BUY01 - The Primary Rule of Buying
Typically the purchase of any piece of property is a rushed and lengthy affair….make an offer, have it rejected, you counter, they counter, repeat as needed….aaaand finally an agreement! (subject to conditions). Quick, you have *one* week to review all these condo docs, get the place inspected, get financing and waive conditions to close the deal (emphasis on the quick part!).
While a sense of relief (and perhaps joy) will wash over you – stay frosty - some of the most important work still lies ahead to save yourself money and grief. Ever see that show Dragon’s Den (or Shark Tank), where entrepreneurs go before a panel of “industry moguls” to try and get them to invest? The show just captures the deal making process and negotiating a preliminary deal – the exciting part. The real work comes after the show when both buyer and seller scrub each other down with respect to everything possible, including legal, financial, and operational aspects. This process often reveals all the dirty little secrets of the buyer and seller, and possibly amends the deal reached on the TV show. More often than not – the deals die during this “due diligence” phase. That leads to what I’m going to call the Prime Directive of Condo Buying – give yourself enough time to do your due diligence when buying a condo. This site is filled with all sorts of advice to consider when buying a place – it’s all pointless if you only give yourself a couple days to do your homework on what will be one of the most expensive purchases of your life. I’ve seen people pay more attention to the specs and reviews of an LED TV than the minutes of the $500,000 condo they were about to buy. Don’t do that. Part of the problem is that buyers will typically only release the juicy bits of information only after an offer is in place. There’s a few reasons for that. First, sellers (and Boards) don’t want to air all their dirty laundry to the general public so they’ll only release these documents to legitimate buyers. Second: many property management companies charge for these documents so there’s a cost to obtaining these. Bylaws can often be a fair number of pages – photocopying all adds up. Still there’s a fair number of things you can do to give you enough time to review your documents: Buyers: 1) Before you make an offer, have your agent ask the seller if they’ve got their Documents ready (give them a list of desired documents) to provide to you if your offer is accepted. If they don’t, add a few days to the standard week to waive conditions to allow for the inevitable delays in getting from the property management company. 2) Ask if the seller will provide documents before an offer is in. They'll probably say no, but it doesn't hurt to ask. Bylaws should be registered with land titles so you can at least get started with those without a conditional offer. Just know that it can take a few days to get from land titles, and they probably come at a cost - so you'd only want to do this if you're serious. 3) Try and push your waiver of conditions date as long as you can. 2 full weeks is a nice amount of time but not always possible. More would be great, but sellers will really hate two weeks as it is. At a minimum, give yourself 5 business days from receipt of the Documents. 4) If you’re using them, have a document review service, lawyer, property inspector, and your financing lined up *before* you make an offer. That way you’re not trying to decide who to use during this critical phase. 5) Even if you utilize a Document review service, free up your own time to review these documents yourself too. This site is all about empowering you the buyer as to what to look for – give yourself enough time during this critical period. 6) Have your agent tap into their network of contacts and see if there are any known issues. If your agent is good, they'll dig something up for you. Troubled condos tend to get a reputation around town. Knowing these issues in advance will let you focus your review of Documents once you get them. (i.e. Known water leaks) ~CondoSensei |
|