There are a few challenges with selling a condo. A certain experience level and skill set is needed to sell condos and co-ops. It is very different than selling a single family detached house. The reason is that often you can’t put a sign in the front yard (by the homeowner rules—see below), you may have trouble getting your buyers into the complex, and you will be required to target buyers that understand and desire the shared lifestyle.
Thinking of selling your condo? Here are few questions you (or your agent) should ask your HOA or Board before you get started:
Do you allow signs on the property?
Since the front of a condo is typically owned by everyone in the association, you may not be able to put a sign in front. The reason is that many condominium bylaws preclude you from putting a “For Sale” sign for your condo in any common area and that includes the exterior walls, on doors, or in the windows of your own unit. (Such rules can be hard to enforce, but strict home- owner association boards may try.)
Therefore, as soon as you’ve determined that you want to sell, one of your first trips should be to the homeowners’ association or the board of directors to find out about their sign policy. If it’s strict, you may want to try and fudge a little. (You didn’t hear me say that.) Try putting a sign in the window of your unit. Most people won’t complain about that and at least it will help direct a potential buyer to your unit. Sign restrictions are also a good reason to use an agent. The agent can meet buyers at the gate or entrance and then bring them by.
Are there any restrictions on buyers?
In the very distant past some homeownership organizations would attempt to restrict buyers on the basis of religion or race. That is outlawed everywhere in the United States today (thank goodness!) and, in addition, buyers cannot be restricted in terms of health, gender preference, or national origin.
Most HOAs are quite progressive and wouldn’t dream of discriminating against anyone. The same holds true for most co-op boards. However, with a co-op there are special considerations when it comes to finances. Many co-ops do restrict buyers in terms of their income levels or their ability to pay their monthly fees. The reason is that the co-op may have a single, large mortgage covering the entire building. If one unit owner fails to pay, then the others must make up the difference. Thus, the other members, through their board, have a vested interest in seeing that your buyer is financially sound. By first talking to the board, or the property manager, you will be able to get a sense of what the board is looking for financially in a new buyer, and save yourself a lot of wasted time and effort in bringing in someone who’s not fully qualified.
Are there any restrictions on showing the property?
There may be. Usually these restrictions are the same that apply to any guests. The guests may need to park in special areas and may be limited to certain hours. Since these are usually quite liberal, there probably won’t be a problem. Checking with the HOA or board first, however, can’t hurt.
Can I allow buyers in the front gate/door?
This can present a problem. If your unit is directly accessible from the street by anyone, then there’s no need to be concerned. However, if there is a locked door or gate, then getting potential buyers in becomes more difficult. You probably won’t want to hand out the code that opens the door/gate because then almost anyone can come in. And waiting at home all the time so you can open the door/gate for potential buyers can also be tedious and time consuming.
Of course, one method may be to list with an agent who will have the access code and who can show the property. However, your problem is not unusual and your HOA or board may have suggestions on how to handle it.
If there is a guard or doorkeeper, he or she can be instructed to allow people in to see your unit. Or there may be a special one-time access code that can be used. Be sure to check before simply giving out your own access code to everyone who wants to see your unit.
Can my agent show the property when I’m not there?
One of the big advantages of having a real estate agent is that he or she can show your property for you at any time. Presumably your agent has a key to your front door as well as access to your building or development. Just be sure there’s no problem with this from the board or the HOA. Normally there isn’t, but sometimes someone on the board or the HOA has been sensitized by a bad incident that happened to them and they will want to restrict access by agents. You may have to argue hard and long to overcome this sort of bias. Yikes!
Can I put a lockbox on my door?
Usually you can. A lockbox allows not only your own agent, but other buyers’ agents to access your home. If your unit is directly accessible from the street, then a lockbox should work fine. If, however, the agents must get through a locked door or gate, the same problems will occur as when buyers themselves want to come by (see above). See how your board/HOA feels about agents other than your own coming by. Most are quite liberal. However, if yours is very strict, you may need to make special arrangements.
How can the buyer get a list of architectural restrictions?
It’s important that buyers be provided with a list of architectural restrictions. This is to keep them from coming back later on saying they were duped into buying your unit by thinking they could add on or change it only to find out that they are prevented from doing so. It’s a good idea to not only see that they get the architectural restrictions, but you get a signed and dated receipt from them.
How can the buyer get copies of the CC&Rs, rules, and bylaws?
As with the architectural restrictions, you’ll also want to be sure that potential buyers get copies of the conditions, covenants, and restrictions (CC&Rs) that affect the deed. Remember that these are often far more restrictive for a condo or co-op than for a single-family home.
As part of your disclosures you will want to see that the buyers receive the CC&Rs and that you get a receipt. However, you will first have to get them from the board or HOA.
Most states now provide that these must be given to you. However, you can be charged for the service. Many associations and boards now prepare packets to distribute and typically charge about $100 or more for them.
Are there any active lawsuits pending?
Nothing deters buyers (and their lenders) more than a lawsuit pending against your association or co-op. In recent years many condos and co-ops have become involved in lawsuits of one sort or another.
Sometimes it’s the owners suing the builder over defects. Other times it’s the board or HOA suing an owner for failure to pay fees. Or an owner suing the development over restrictions. Or owners suing owners over grievances. Depending on who wins and who loses, all of the members of the development might be asked to pay a sometimes sizable judgment. Thus, if you have a lawsuit pending, it could scare away a buyer, or make it difficult for that buyer to obtain necessary financing.
Therefore, it’s important that you declare to a buyer all lawsuits. This is to protect yourself from that buyer coming back later on trying to get out of the deal and saying you withheld important information about your unit.
However, before you can disclose, you must become informed. It’s a good idea to consult with a member of the board or association to learn what’s out there and to get some background on it. Thus, when your buyer is alarmed about a lawsuit the board has against the builder, you may be able to explain that it’s over leaking roofs and that the insurance will cover most of it, but the board is trying to recover the deductible.
Are there new assessments pending?
This is of particular concern with older developments.
For example- It may be time to re-roof the complex to the tune of $600,000. However, the reserve fund for roofs only has $100,000 in it. That means that board is going to have to come to the members for the remaining $500,000 as an assessment, which means that monthly fees could skyrocket. It may turn out that this has been a matter of discussion for 6 months; however, you never attended board meetings so you didn’t know. At the last meeting it was voted through and will take effect within 2 months.
Wouldn’t that come as a shock to a buyer who had assumed a low monthly fee only to have it quickly become much higher? And you should have disclosed it because it had already passed the board! Checking with the director of a board or HOA member could keep you out of this pickle.