| ||
|
SELLING YOUR CONDO? What
you need to know to get a fair price in a “Leaky Condo” market. Condo ownership is still an
attractive choice for empty nesters and young professionals despite the
“Leaky Condo” fiasco that resulted in millions of dollars in damage to
condominiums in the mid-90’s. That’s because condo ownership provides a buyer
with the equity provided by home ownership without the headaches of exterior
maintenance, landscaping, snow shoveling and other responsibilities shouldered
by the owners of individual homes. It is a home ownership choice that suits a
growing section of the population (Boomers and Gen X’ers as well as seniors)
and the problems caused by poor construction, faulty regulation and lack of
enforcement of building codes do not change this fact. But it does tend to make
buyers very wary. If you own a condo that was
affected by these problems and live in it, or rent it, you will have faced the
problem of remediation. If you are entering the real estate market to sell a
condo you must pay particular attention to ensuring that your building is
problem-free or that measures have been taken to solve any problems that may
exist. You can be assured that the buyer and their real estate agent will be
paying close attention to the condition and value of the property they are
considering as a home or investment. Damaged or not, will you be
tarred with the same brush? YOU BET! Even if your building has had no problems
you need to know that your unit, building and association will be put under a
microscope by people looking to buy. Don’t sit on the sidelines – it’s important to be involved in
your condo association.
As a condo owner you have a
choice when it comes to your level of participation in the activities of the
condo association (the organization of all the owners is called the Home
Owner’s Association, Strata Corporation or other name, depending on the area).
The current situation makes your participation as owner and/or resident more
important than ever, especially if you are planning to sell. It is the condo association
that is responsible for periodic inspection, detection and correction of
problems affecting the building. If you are fortunate enough to live in a condo
that has not been adversely affected, you will still need to have a certain
level of knowledge of the problem facing the sector. This knowledge will put
you in a position to reassure buyers that thorough and timely inspections of
your building have been carried out and that it has passed with flying colors. If you are putting your unit
on the market, you should consider that you have no choice but to be a
pro-active member of your association and to inform yourself of the overall
situation. There is little doubt that potential condo buyers and their advisors
will require detailed proof that problems have been identified and resolved,
and that the association has the mechanisms in place for early detection of any
future problems. Do you know what a buyer is looking for? Reassurance
(and proof)! Consider the property from
the perspective of a buyer. A buyer
wants to be assured that the property is in good condition and free of defects
that will result in costly repairs and reduced re-sale value. A buyer will be
advised to carefully study the compulsory disclosure documents (like the
Property Condition Disclosure Statement now required in BC). This document
details the condition of the building structure and the electrical and plumbing
systems as well as whether there are any taxes, charges or other assessments
affecting the property. This document will be used by the buyer to determine
whether or not to hire a building inspector to conduct a detailed inspection of
the unit and the building itself. Make like a Boy Scout and
BE PREPARED! In preparation for selling
your unit you should review the minutes of the meetings of the condo
association for the previous two years. These will show what measures have been
taken to complete or schedule any necessary repairs. The minutes will also
indicate if a building inspection should be ordered by the condominium
association or yourself as the owner of an individual unit. They will identify existing problems and give
you the opportunity to correct them before you put your unit on the
market. Note: an informed buyer
will be reading these minutes so you definitely need to know what they say. If an inspection reveals problems that fall within
the responsibility of the condo association you can initiate action through the
Association before you put up your “For Sale” sign. Information is Power.
The infamous “Leaky Condo”
syndrome of the 90’s has resulted in financial consequences for thousands of
condo owners. Developers, architects, builders, building inspectors and
municipal government have all, to one degree or another, been held responsible.
In various jurisdictions lawsuits have resulted in damages being awarded to
condo owners. In Other jurisdictions have
taken similar action to assist condo owners and protect future owners. For
information on programs and regulations in your area contact local, state or
provincial and federal agencies, as well as associations of homeowners and
realtors. In a “Buyer Beware” market YOU, the
seller, MUST BE INFORMED.
Condo purchasers are probably
the best-informed consumers in the housing market today. Because of the
publicity resulting from the leaky condos of the nineties, the general public
and prospective buyers in particular are well aware of potential problems with
any condo. A condo buyer is likely to be extremely diligent in checking out new
properties. The condo owner (that’s you)
is obligated to disclose all that they know about the state of the building,
including inspection results, any known problems that exist and the results of
remediation and repairs. Be prepared to give the buyer
the minutes of the condo association for the past two years (we told you they’d
ask!), which will show what measures the association has taken to ensure that
the building itself and all major systems are in good order. Active
participation by an owner in the affairs of the condo and in solving the
problems of the building will inspire confidence in a prospective buyer. Are you
sure you fixed the problem?
Problems concerning the
structure itself and the building envelope are the most costly, time-consuming
and difficult to correct. Water leakage can have taken place for a long time
before the effects are noticed and the resulting moisture problems can result
in the growth of mold, which is a serious (and well publicized) problem in
itself. After you’ve stopped the water ingress professionals must be hired to
eradicate any mold and ensure that it will not return. If your building has had
a problem with water leakage do the minutes of your condo association indicate
that the appropriate action was taken? Is there proof (an inspection) that
proves the problem was fixed properly? Your buyer will want to know. Take care of your investment.
Selling or staying put? Either way there are some basic steps you need to
take to protect your property investment. Condo owners should conduct an annual
inspection of the property along with the electrical, plumbing, heating and
other systems. Condo owners, through their association, are well advised to
have annual or even semi-annual inspections performed by professional
inspectors, including a building envelope specialist. Take immediate action if
problems are detected. The condo association should establish a building
committee to investigate the problems and their resolution. The committee needs
to know what builder’s warranties exist and will be responsible for dealing
with inspectors and contractors on behalf of the association. The condo association should
consider retaining experienced legal counsel to determine its legal rights and
remedies. The association’s annual budget should always include a contingency
fund that covers minor repairs and routine inspections (prospective buyers will
look for this). Major repairs may require
special assessments and may be eligible for government assistance. Legal
counsel experienced in construction/condominium deficiency matters will be an
invaluable resource when considering which leaky building experts to hire. The
building committee, through its legal counsel, should immediately inform all
concerned parties including the architect, general contractor, sub-contractors,
developer, municipality and relevant warranty programs. The information should
include a description of the problems with a request for input into potential
solutions. Litigation may be required at
some point and a legal firm with first-hand knowledge of the problems will be
better able to assist. The building committee will have to keep detailed
records, these will be important for condo owners and potential buyers. Remember that the new owner
is not only taking possession of your condo (the space between the walls) but
will also become part-owner of the building including whatever problems exist
along with the costs involved to fix them. Don’t
forget the basics!
In spite of everything the
bottom line is that a potential buyer is looking for a home. Don’t forget the
basics of preparing your condo/home for sale:
-replace old locks and loose doorknobs
Clean your room! - Or in this case ALL your rooms. Your mother was right
on with this advice. You wouldn’t believe the number of sales that have been
lost due to dirty kitchens and bathrooms, clutter, stains and strange odors.
There’s no excuse for showing a dirty home. Pretend your mother-in-law is
coming to visit and give yourself the “white glove” test, you’ll be laughing
all the way to the bank! Ask your realtor for tips
on how to show your home. – Knowing
exactly what to say and do when you show your home is crucial. There are “do’s”
that may help clinch a deal and “don’ts” that might sink it. For instance, keep
a low profile when your home is being shown, the realtor can do a better job of
selling your home if you stay in the background. Don’t have crowds of visitors when
someone is looking at your home, people feel like intruders when they enter a
room filled with people. Keep your pets out of the way (no mater how cute they
are) and turn down the volume on your stereo or TV. Little details can make a
big difference – ask! In Conclusion:
The most important thing a
seller can do is to participate fully in the condo association’s solution of
any problems related to the building and to provide accurate and thorough
information to prospective buyers. The existence of a growing
sector of the home-owning public that recognizes the benefits of condo
ownership means that even if a building has suffered water damage or other
problems, there is still a market for the units. Especially if diligent
attention has been paid to repairs. A pro-active condo association that has
taken charge of the situation and engaged appropriate legal counsel and
professional contractors for remediation, inspires confidence in a buyer. To realize the best price in
a difficult market a seller should do serious preparation and provide a
thorough record of the history and condition of the building and all measures
taken to correct any problems. Don’t forget that even if
your building has not been damaged it will still be subject to intense scrutiny
by potential buyers. They will want to know that the building has been
inspected regularly and that the condo association is active and conscientious
in defending the interests of the owners. This paper is intended for informational purposes only. Nothing contained herein constitutes legal, financial or other professional advice. Transmission of these materials is not intended to create, and receipt does not constitute, any relationship of any kind between the provider and the recipient. Some of these points may not apply in your area. Different term and conditions may vary from state to state and province to province. All articles, text and photographic material presented here is for the use and pleasure of the recipient only. | ||
| © Copyright 2005 Excalibur Communications |