Friday, August 21, 2020
Toronto house prices have been skyrocketing despite the covid-19 situation which is why homebuyers are finding it extremely hard to own single family homes, detached or semi- detached houses and therefore are leaning towards townhouses and condos as they offer more affordable housing options. However, although condos are lower priced compared to houses, a condo listed at a super-low price can be a matter of great concern as it is likely to be blacklisted condo.
So what are blacklisted condos and why should you stay alert for them?
A blacklisted condo means that lenders or mortgage insurers have considered that the property in question is a high risk one and you as a home buyer will be unable to get a mortgage or CMHC insurance for the condo you have bought so lovingly. On top of that blacklisted condos are extremely hard to sell back so once you have bought it unwittingly you will be stuck with it forever while also bearing unforeseen financial loss.
A condo could be blacklisted for a plethora of reasons such as:
• The condo corporation has taken loans to compensate for the common expenses deficit required to maintain condo amenities like pools, gyms, general building maintenance, and so on.
• There are liens against the property. A lien is a form of security interest granted over an asset such as property to repay a debt or some other financial obligation.
• The condo corporation is facing legal charges.
So how do you find this information? Is there some official list or a regulatory system? Not really. But while you as a buyer may feel comfortable going forward with a deal, a real estate expert can find the loopholes through reviewing appropriate documents required to check the condo status.
Always Do Your Due Diligence
When you are buying a property, you are spending your hard-earned money on it whether it is for investment purpose or your first home purchase. Instead of plunging into the first great deal that comes your way, make sure you have done your due diligence to avoid buyer’s remorse. For example, you might think blacklisted condos are only condos that are obsolete, dilapidated in nature and it may never strike you that a brand new condo beautifully renovated with high end finishes that has been sitting for months in an active market can also be a major red flag for a blacklisted condo. That is why it’s important that you take the help of a professional who can do the due research for you and save you from financial loss and emotional stress.
Even when you have a pre-approval, you should still do your due diligence as pre-approval does not shield you against blacklisted condos and you may be denied the mortgage by the lender or insurer if the property is blacklisted.
So how can you protect yourself from blacklisted condos?
• Watch out for deals that sound too good to be true
• Have the property documents analysed by a real estate professional
• Take the help of an experienced professional real estate agent in the area to guide you through the condo purchase
If you are looking to purchase a condo in Toronto or surrounding area, Lucky Arul Homes can guide you in the right direction. Call us at 4165189782 or email [email protected]