Balancing Condo Fees and Resale Value

One of the most common questions I hear from clients considering a condo purchase is:

“Are high condo fees a red flag?”

It’s a valid concern—and one that deserves a deeper look. Condo fees directly impact your monthly budget, long-term ownership costs, and future resale potential. But not all fees are created equal. Let’s break down how to evaluate them from a practical, investment-minded perspective.

Let's consider three common fee structures I've seen recently:

• Option A: $550/month – Includes only heat

• Option B: $620/month – Includes heat & water

• Option C: $850/month – Includes heat, water, electricity (and sometimes even internet services)

At first glance, Option A appears most attractive—lower monthly expenses mean a higher budget for your mortgage, right? But the reality is more nuanced.

The True Cost of Ownership

When evaluating condo fees, you need to consider the total cost of ownership. Let's break it down:

With Option A, you'll pay separate bills for water, electricity, and internet—potentially adding $250-400 to your monthly expenses. Meanwhile, Option C's all-inclusive $850 fee might represent better value when you total everything up.

The predictability factor also deserves consideration. All-inclusive fees provide budget certainty—no surprise $200 hydro bill during a particularly cold winter month.

Evaluating Total Cost of Ownership

To make an informed decision, consider the total ownership cost—not just the sticker price. This approach calculates the true long-term cost of ownership by converting future expenses into present value. Here’s a simplified 10-year comparison using present value:

Example 1: High Fees, Lower Purchase Price

• Condo A: $525,000 purchase price with $850 monthly fees

• Over 10 years, those fees total $102,000

• Using a 3% discount rate (accounting for the time value of money), the present value of those fees is approximately $87,000

• Total effective cost: $612,000

Example 2: Low Fees, Higher Purchase Price

• Condo B: $580,000 purchase price with $550 monthly fees

• Over 10 years, those fees total $66,000

• Present value of fees: approximately $56,000

• Additional utility costs not covered by fees: $300/month or $36,000 over 10 years

• Present value of additional utilities: approximately $31,000

• Total effective cost: $667,000

In this scenario, the higher-fee condo represents better value by about $55,000 over a 10-year period. This calculation becomes even more favorable if the well-funded building with higher fees avoids special assessments that the lower-fee building might face.

The Resale Value Question

Now for the million-dollar question (sometimes literally in today's market): How do fee structures affect resale value?

Here's what I've observed over the years in the business:

1. Sticker shock is real. Many buyers experience immediate hesitation when seeing higher maintenance fees, often without fully understanding what those fees include.

2. Educated buyers look deeper. Experienced condo shoppers understand the value of all-inclusive packages and will do the math themselves.

3. Building health matters most. The most crucial factor isn't the fee amount but whether the fees adequately fund the reserve and maintain the building.

Due Diligence: What Smart Buyers Investigate Before Committing

Before making an offer on any condo, it's essential to go beyond the listing and understand what you’re buying into. Here's how to protect your investment:

Review the Status Certificate Thoroughly

Your realtor should obtain the status certificate, which includes the condo corporation’s financials, reserve fund study, upcoming maintenance plans, and any pending legal issues. This document offers a clear view of the building’s financial health and future obligations. A well-funded reserve typically signals good management and fewer surprises.

🔍 Tip: Have a real estate lawyer review this document before waiving any conditions. They’ll spot red flags others might miss.

Compare Maintenance Fees to Similar Buildings

Your realtor may provide a comparison of maintenance fees across similar buildings in the area. This helps determine if the fees are in line with the local market—or if they’re unusually high or low based on what’s offered.

Investigate Fee History and Special Assessments

Ask your realtor to help you review whether condo fees have increased significantly over the past few years and whether the building has a history of special assessments—unexpected charges to cover large repairs. These often point to underfunded reserves or deferred maintenance. For a more complete picture, your realtor can also reach out to the property management company directly to confirm the timing and reason behind past increases or assessments. While they may not disclose everything, they can often provide helpful context regarding the building’s financial planning and upcoming projects.

The ideal condo fee structure ultimately comes down to your financial priorities and lifestyle. Some buyers value the predictability of all-inclusive fees, while others prefer to manage individual utility costs themselves.

From a resale perspective, condos with moderate, well-managed fees tend to attract more interest than units with unusually low fees that may signal poor maintenance or future financial issues.

When buying, think long term—just as a future buyer would. Look for a property with transparent fees that support a well-run building. That kind of financial and operational stability is the foundation of a smart, lasting investment.