People who are about to buy their first property often make rookie mistakes. Annoying and costly, but by no means surprising. After all, as a potential buyer of a property, you are entering an unfamiliar world. Observations show that when buying a condominium, there are significantly more hurdles awaiting the future homeowner than with a detached house. There is a misconception that buying a condominium makes you its owner. What is not considered here is that this apartment does not exist independently of its residential complex. As a new owner, you are joining a residential community whose rules and agreements you should be aware of before you buy in order to avoid any nasty surprises.
Home buying advice will guide you through the viewing and purchasing process. This will help you to select the right property. You will find out what defects the condominium you have selected may have and what renovation costs you could face in the near future. In our article “Overview and tips for viewing an existing condominium“, you can find out what you should look out for during the viewing and what hurdles you need to overcome.
This follow-up article is about advice during the buying process. What costs do you need to think about and what mistakes do new homeowners often make? These are some of the important questions about buying a condominium that are answered in this article.
What documents are required for a home purchase consultation?
If you would like advice on buying a home, we will arrange an on-site appointment. During this appointment, the apartment will be inspected together so that the expert can get a comprehensive picture of the property. The following documents should be available by this appointment:
- Energy performance certificate: If you want to rent or buy a condominium, you have a legal right to present an energy performance certificate. When applying for a loan from a bank, it can be an advantage if the apartment has a good energy certificate. However, you cannot rely 100 percent on the information, as the values often depend on the previous occupant of the property. An expert surveyor will therefore check the actual values of the property using a climate measuring device and a thermal imaging camera. In winter, this is a very good way of identifying potential weak points in the home.
- Minutes of the owners’ meetings: The documents of the last three owners’ meetings should be available. In addition, there is the collection of resolutions, which is mandatory by law. Reading through the minutes makes it clear how the owners interact with each other and what problems may exist. The minutes also show which maintenance measures are planned and how high the maintenance reserve is. Resolutions from previous years are also binding for you as a new apartment owner, which is why you should inform yourself in detail.
- Community regulations and declaration of division: The declaration of division is the basis for the division of the residential complex into individual condominiums. Since you will be buying into a community, you need to know the established laws of the residential community before you buy. In most cases, these documents are in order, but sometimes the community regulations may reveal some disadvantages for you as the owner.
- Property exposé: During the viewing, the surveyor will look on site to see which condominium you are considering buying. However, it makes sense to send an exposé in advance so that the consultant can familiarize himself with the property and compare it with the exposé. This may reveal any defects or special features that were not apparent in the written description of the property.
- Layout plans and floor plan
- Extract from the cadastral map: Your bank will need the site plan of the property if you want to apply for a loan.
- Annual statement of the property: Based on the last statement of operating costs, you can estimate how high the annual costs will be for you. Renovation work will be required in the apartment, for which a maintenance reserve must be set aside. The statement of operating costs will show how high the costs will be so that you can check whether you can raise the necessary funds.
- Extract from the land register: In the land register excerpt, you can read the parcel number and the size of the property, among other things. It also shows which special ownership exists and the ownership structure. If the building has a garage, there are certain rights of use and restrictions that are recorded in the partial ownership land register. These should be analyzed particularly carefully before buying a property.
- Calculation of usable and living space: In the exposé, usable space and living space are often combined. In addition, basement rooms or other usable areas often do not have sufficient lighting to actually be used. With the help of a living space calculation, which the current homeowner may have, usable space and living space can be determined quite precisely.
- Current rental agreement (if the apartment is rented and is to be used as an investment property)
Tip: What to do if not all documents are available at the time of the viewing?
Competition on the housing market is fierce. If you wait until you have all the documents before viewing and consulting, it is highly likely that another interested party will have snatched the apartment from under your nose. We therefore recommend that you book an appointment for the consultation even if you do not yet have all the documents. If you are interested in buying the apartment, you can still collect the documents later.
Advice during the purchasing process
The viewing with the surveyor has taken place and you have decided to buy the condominium. Once you have deposited the reservation with the estate agent, the purchase process begins. We explain how you can benefit from a home buying consultation during the purchase process:
Examination of the purchase contract and other documents
Once you have made the decision to buy, the purchase contract is drawn up. This differs greatly for existing apartments and new-build apartments. However, all purchase contracts for real estate have one thing in common: they must be notarized by a notary. Over the next few days and weeks, you will have to read numerous contract documents. The home buying advice service will help you to review the documents and address any necessary changes. The first contract documents that will be sent to you are the declaration of division, the deed of reference and the draft purchase agreement. The surveyor involved in advising you during the purchase process of your dream property will review the documents and discuss any potential obstacles with you.
- Declaration of division: The declaration of division is entered in the land register with binding effect. It shows which premises and parts of the property belong to which owner. A partition plan provides an overview. The declaration of division also shows which areas and rooms are used jointly by the owners of the residential building.
- Reference or referral deed: The deed is attached to the purchase agreement and is not read out at the notary appointment. It is assumed that it has been examined in detail by both parties. For this reason, it is important that your surveyor examines the deed of reference. This contains maps, drawings and the community rules of the owners.
- Draft purchase agreement: The final purchase agreement is later drawn up on the basis of the draft purchase agreement. It specifies the price at which the apartment is being sold, the size of the property and the date of transfer. The location of the property is also specified. The contract is read out and notarized by the notary at the signing ceremony.
Tip: Be careful with a leasehold
If the condominium is located in a residential complex on a leasehold property, you acquire part of the house, but not the land. This has a positive effect on the purchase price, as it is usually significantly cheaper. However, you will have to reckon with monthly lease costs, the ground rent. There are several disadvantages. First of all, the property can only be used to a limited extent. In addition, the owner of the property can assert his claim to personal use. In this case, you and the other apartment owners would have to leave the residential building.
Advice on financing the condominium
Once you have all the documents, it’s time for the next step: financing your condominium. The home purchase advisory service is on hand to help you with this. They will help you to calculate sample conditions and have direct contacts with banks.
Overall, it is advisable to submit as many applications as possible to different banks. In this way, you can compare the various conditions and ultimately decide on the bank that offers you the lowest interest rate and also meets your other requirements of the lender.
In any case, you should only sign the purchase contract once you have clarified the financing of your condominium. Otherwise, you may have contractually committed to a purchase that you cannot finance.
Tip: Make sure you also consider the ancillary purchase costs
When you consider your equity and calculate the amount of the loan you will need to apply for, you must not forget the ancillary purchase costs. The home buying advice service will point out additional costs and calculate the actual costs of the apartment for you. In this way, you can avoid unpleasant surprises.
The ancillary purchase costs cannot be generalized 100 percent, as their values depend on the federal state in which the condominium is located. However, the rule of thumb is that ancillary purchase costs generally amount to around 15 percent of the purchase price of a property. You can find valuable information on the subject of ancillary purchase costs in our detailed article on this topic.
Who can I get advice from when buying a home?
You have the option of taking advantage of a home purchase consultation with an independent expert or surveyor. However, you can also contact a real estate agent. They have the necessary expertise and will guide you safely through the process of buying your dream property.
How much does a home purchase consultation cost
The scope of a home purchase consultation is determined by the interested buyer together with the surveyor or service provider. For this reason, it is not possible to make a general statement about the price of such advice at this point. We recommend that you get in touch with the service provider or surveyor and discuss with them the specific requirements you have for a home purchase consultation. You may already have some information about the property and just want to get a second opinion.
Common mistakes that homebuyers make when buying their first property
Anyone buying a condominium for the first time is usually not very familiar with this area. We explain the four mistakes that prospective homeowners often fall victim to:
1. misconception: I can do whatever I want with my condominium
The fact is that you only own the interior doors, the wallpaper, the flooring, the plaster, the air space and the non-load-bearing interior walls in your home. There are also some details, such as the bathroom and kitchen fittings. The essential components of the apartment, such as the load-bearing ceilings and walls, the apartment entrance doors and the windows, remain community property. If you want to carry out repairs or modernization work on these components of the condominium, you need the approval of the co-owners.
2nd misconception: I don't have to worry about anything after buying the apartment
Decisions that have a major impact on each individual co-owner are made at the owners’ meeting. These are serious meetings that are recorded in the minutes and are binding. Anyone who thinks that nothing more needs to be done after buying a condominium is very much mistaken. This is because, among other things, the management of the common property must be organized. The owners must jointly negotiate a wide variety of contracts with the administrators. Investments and spending must be monitored, as must the annual accounts. The maintenance of the residential complex is a never-ending process that must be managed jointly by the co-owners. When contracts for modernization and renovation are awarded, their progress must be constantly monitored. If the management fails to meet its responsibilities, the homeowners must take action themselves in case of doubt.
3. misconception: The amount of the house allowance can be compared with the ancillary costs of a rented apartment
If you buy a condominium with this belief, you will soon be surprised at the high house fees. This is because the house fee, which must be paid by the condominium owners to the owners’ association, far exceeds the ancillary costs paid by a tenant. Other items, such as the management fee, are included in the service charge. These items may not be passed on to tenants if you have purchased your condominium as an investment property and are renting it out. If you would like to find out what monthly costs you will incur as a condominium owner, we recommend our informative article on this topic.
4. misconception: everything to do with home ownership is regulated by law
Condominium ownership is a special form. This is because, unlike a single-family home, the property and residential complex do not belong to a single owner, but to a community of owners. Special regulations are therefore listed in numerous places in the Condominium Act. However, many of these are not dealt with. Gaps and problems are settled in lengthy court proceedings. Several instances often have to be gone through before a court ruling is reached, and the outcome of a legal dispute is uncertain in advance. The case law overwhelms many condominium owners who are not familiar with legal principles and legal texts. However, this makes it all the more difficult to deal with knowledgeable co-owners and administrators on an equal footing.
Conclusion
Home buying advice is a wide-ranging and very important topic if you want to buy your first condominium. It covers the entire process from viewing an apartment to signing the purchase contract. To avoid any nasty surprises, the surveyor will take a close look at your dream property. He checks the contract documents, examines the property for possible defects and informs you of any upcoming renovation or refurbishment work. They will also assist you throughout the purchase process and support you in your search for a suitable loan. When you take advantage of home buying advice, you can rely on a first-class service that will point out potential pitfalls and make the buying process as straightforward as possible for you.
