Selling a condo presents unique challenges. When selling a house, you are in complete control. Want to sell to a family member at a low price? Need to do showings in the evenings due to work schedules? Got a buyer willing to pay a high cash price, but a problem with credit or background check? You can do these things when you own a normal residence.
Condos drastically limit your flexibility . . .
You are at the mercy of the Homeowners’ Association. They make rules and you have little choice but to obey. If you must sell an HOA property, give us a call (954) 676-1846. House Heroes buys community properties regularly, navigating burdensome HOA rules.
There are a few steps you can take to make the condominium sale as smooth as possible.
Let’s get to them!
Learn The HOA Rules.
Homeowners’ Association (“HOA”) rules restrict how can sell your property. A Homeowners’ Association work like this:
Review and get copies of HOA rules before selling your condo.
When you purchase a condominium, townhouse or another type of property in a planned development such as a leased land property or a gated community, you are obligated to join that community’s homeowners’ association (HOA) and pay monthly or annual HOA fees for the upkeep of common areas and the building.
HOA’s set forth detailed covenants, conditions, and restriction that every condo owner must follow. These regulations pertain to property use, such as front door color, pets, permitted guests, common areas.
However, they are not limited to every day property use. HOA rules also govern the sale procedures. You can find the rules online, or by reaching out to the HOA board and requesting a copy. Sometimes the HOA will charge a fee. Be warned: HOA rules are often amended, so request the most up to date rules (you can even request the documentation is stamped to confirm time of receipt). As a last resort, the title company will obtain the covenants before closing.
Make sure to review and obtain copies of the HOA rules and convents before selling. Prospective buyers will make an offer – but if they haven’t reviewed the rules – they have the right to cancel the contract upon review. This wastes your time.
Here are common HOA rules that apply when selling a condominium:
Provide Buyer a “Homeowner Resale Package.” A “homeowner resale package” contains HOA info for the buyer, including unpaid HOA fees.
Property Inspection. When selling a regular house, buyer and seller may waive a formal inspection. HOAs demand them. You could also be required to make corresponding repairs.
Unpaid HOA fees. Convenants may prevent condo sales with outstanding HOA fees.
“Right of First Refusal.” The right of first refusal grants the HOA an opportunity to buy the condo at the agreed upon sale price, instead of the prospective buyer. This can thwart a sale to family and friends where you hoped to give a break on price.
Restrictions on Showings. HOA’s dictate when and how a condo is shown to buyers. Even down to hours in the day and who may enter the building.
Buyer Qualifications. HOA’s interview and approve buyers (discussed more below).
Select A Qualified Buyer.
Not anyone can buy a condominium. HOA’s carefully restrict prospective buyers and have power to choose who can and cannot buy into the community. For the condo sale to close, the buyer must obtain a Certificate of Approval.
HOA’s require buyers to submit an application for approval. Applications require info such as yearly earnings, employer, personal info (social security number; birth date), copy of purchase and sale agreement. HOA then run credit and background checks. Buyers with “red flags” may not approved by the HOA. There is also sit-down interview with the prospective buyer and an HOA representative.
Working with a buyer for months to reach the closing table – only to be denied at the last minute – is a pricey problem. You keep paying maintenance, taxes, and the dreaded HOA fee. Condo owners often lose money every month until the sale.
What can you do about the risk of a buyer being disqualified?
Ask the prospective buyer upfront about their credit and criminal history. Make it a condition, to enter the purchase agreement, that they provide you information sufficient to run a credit and criminal check. If you uncover issues, tell the buyer you won’t enter the contract or reach out to the HOA to ask if the background problem will result in disqualification.
Research Amenities.
Condo amenities like roof top recreation and gym access increase sale value.
Condos offer amenities that traditional single-family houses don’t (hence the HOA fees). Desirable amenities include rooftop recreation (pool, grill, cabanas), environmentally friendly features (energy-efficient appliances, LED light bulbs), fitness/spa, children playrooms and daycare, boat access, hardwood floors, new heating and cooling systems, parking, and attractive updates and renovations.
Although not an amenity, you can suggest to a prospective buyer that HOA rules are beneficial. HOAs will limit neighbor interference and make sure common areas remain pleasurable. When discussing the HOA fees, point out fees cover certain maintenance, repairs, and utilities. This saves the buyer money and stress.
Compile a bullet-point list of all amenities. Emphasize these features as part sale negotiations. This will help sell the condo faster for a higher price.
Understand How To Value A Condo.
Condos even in the same building can have very different sale prices. Just like regular property sales, you need to look at the recent sales and active listings for comparable properties.
However, identifying the right condo “comps” is not simply a matter of checking recent community sales on Zillow.
Even real estate professionals misunderstand how to price a condo. Condominiums sit on the market for months or even years because the realtor listed the property at an exorbitant price based inapplicable building comps. Key factors to be aware of when setting price include:
Waterfront/City View: Condos have two sides, and naturally some units have a superior view. This often occurs when facing an ocean or city. Units with the better view sell for much more. Use the same North / South / East / West exposure when looking at comps.
Living Area: Larger living area units sell for more.
Bedroom/Bathrooms: BR/BA count increases sale value.
Floor Number: Higher floors sell at higher price, even double or triple that of the lowest floors.
