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A Checklist For Selling Your Condominium
You’ve been reading countless articles in the paper about overwhelming demand for real estate and, after much thought, you have decided to take advantage of the strong seller’s market and sell your condo. While many local media stories suggest that selling anything in today’s market is as easy as snapping your fingers, the purpose of this blog post is to help you with some of the important considerations that, if planned properly, will help to ensure a smooth sale.
First Things First
Why are you selling and where will you go? If you are selling a condo that is your primary home with an intent to rent your next home, the answer is easy. If you are selling an investment property because timing is right, the answer is easier still. If you are selling to buy something else, understand that you will be entering a very competitive market (think bidding wars) and you might have to bridge the gap between selling your current place and buying a new one. I will stop right here as that’s a completely different topic that I only wanted to mention to get you thinking and planning ahead.
Next, Do Your Best to Properly Time the Market
While it goes without saying that fewer buyers shop around the holidays, there is more to timing the market. Understanding current inventory levels and estimating demand will help you list during the time when you are more likely to attract qualified buyers. If an owner currently has a listing in your Association, have a chat with them; ask them to share their experience with you. If someone recently sold, talk to them if you are keeping in touch (if not, talk to the new neighbor to find out exactly what the market conditions were at the time they bought).
Be Ready to Disclose What you Know and Research What You Don’t
The “Sticking your head in the sand” approach is unproductive 100% of the time, due diligence can keep you out of legal trouble should there be issues later. There are several disclosures that are a part of a condo sale. Many are significantly different than those of single-family homes. Some of the simple ones are “lead-based paint” (for condos built prior to 1978), FIRPTA (US residency/citizenship status) and utilities (mostly important for rural/vacation HOAs). Two major disclosures to know about are Form 17 (homeowner disclosure of what you already know about your unit) and the Resale Certificate (Condo Association disclosure).
If you are a Board member or an active committee member, you likely know what’s going on within your Association and potential issues that the buyer (or at least the real estate agent) needs to know about. If you are not very familiar with current standings of the Association, it’s often worth it to order a resale certificate in advance (learn about that process in advance as cost and turnaround time will vary depending on whether your Association is professionally managed or self-managed).
Some of the things that buyers worry about the most are current (and future) special assessments. A special assessment can make a unit unfinanceable and must be disclosed. When properly explained, and dealt with in advance, a special assessment doesn’t have to be a deal killer.
Make Sure Your Condominium Unit is Financeable
A number of things can make your unit unfinanceable for a buyer including: association delinquencies, litigation, the number of rentals, the number of units owned by a single entity, and percentage of commercial ownership, among others. When you know about those in advance, appropriate steps can be taken to resolve the issue, properly explain the issue to a buyer, adjust marketing strategies accordingly or find specialized lenders that can help a potential buyer with a portfolio loan on short notice.
If you live in an Association where demand is above average, consider doing an inspection and sewer scope (if applicable) early and provide those to potential buyers. Not only will you avoid having a dozen pre-inspections dirtying up your place, you will have an opportunity to address some of the things that can possibly kill a sale. Know about your smoke detectors and install a CO2 detector in advance to avoid issues with an appraisal later (appraisal is another important topic but we will leave it out for now as current market conditions helped decrease the number of low appraisals and other issues, though still possible).
Know Your Associations Rules For Selling Your Unit
It’s important to know any House Rules that might affect the sale. Here are a few rules worth mentioning that are important to know in advance. Are “For Sale” signs allowed? Is there a designated spot where key boxes should be installed? Is there a rental cap and has it been met? Are pets allowed and, if so, what are the restrictions? What is the move-in/out process, how much does it cost and does it need to be coordinated up front? Is there an ACC process and, if so, is there a waiting list to have an ACC application reviewed/approved? Are there other rules that restrict or otherwise play a major role in your use of your condo? Your Association might have unique policies that could be important or should be disclosed. Having these answers early can help your sale go smoother.
Here are a few rules worth mentioning that are important to know in advance. Are “For Sale” signs allowed? Is there a designated spot where key boxes should be installed? Is there a rental cap and has it been met? Are pets allowed and, if so, what are the restrictions? What is the move-in/out process, how much does it cost and does it need to be coordinated up front? Is there an ACC process and, if so, is there a waiting list to have an ACC application reviewed/approved? Are there other rules that restrict or otherwise play a major role in your use of your condo? Your Association might have unique policies that could be important or should be disclosed. Having these answers early can help your sale go smoother.
Prepare A Strategy
Finally, figure out the marketing strategy and decide whether you are selling yourself or hiring a real estate agent. If you go with the latter, do your due diligence. Pick out a real estate agent the same way you’d select a major contractor. Interview multiple people and select someone with condo experience and a proven success record in the condo industry. Your agent will assist you with many of the topics covered above as well as other recommendations, such as staging and photography. You should also consider doing what it takes for maximum buyer exposure, such as a very flexible showing schedule or, ideally, having the place vacant.
With a little research and prep work, selling a condo should be a fun process. Good luck with your sale!
By John Petrov
Managing Broker, Washington Condo Brokers, Inc.