Holiday Closure

The OREA office will close for the holidays at 12 p.m. Tuesday, December 24th.  Normal business hours will resume on Thursday, January 2nd.  Happy Holidays!

Holiday Closure

The OREA office will close for the holidays at 12 p.m. Tuesday, December 24th.  Normal business hours will resume on Thursday, January 2nd.  Happy Holidays!

December 6th - 2005

Condominiums: what you should know

You may be an expert at selling a house, but what do you know about condos?

You may be an expert at selling a house, but what do you know about condos? Condominiums aren’t right for everyone. For example, you might want to steer clients who are control freaks away from condo ownership, since decisions about their home are taken out of their hands and governed by by-laws and house rules and managed by a board of directors. People who are sensitive to noise, who own several pets or who enjoy entertaining by the barbecue may not find the right home in a condo, either.

The more you know, the better prepared you’ll be to answer client questions, empathize with their situation and understand their plight. Condominiums– What Every Good Salesperson Should Know is a course that focuses on the kinds of questions REALTORS have to deal with when selling or buying a condo for a client.

Seeing is believing
For buyer clients, inspecting is the critical first step; it will let you know how the building is cared for. If the condo is not in good condition, find out if renovations are in the plans and if so how much will be spent on the repairs, and, more importantly, if there is enough money in the reserve fund for the repairs. Many clients are sensitive to noise, so proximity to a garbage chute or machinery should be checked out. Outside, check out the lay of the land; if the unit has a view, is it likely to change? A parking lot today may be a high-rise next year, so check with the building/zoning department for any applications for development.

The condo corporation and property managers can answer many questions but they are not your only sources of information about the building. Talking to the concierge can uncover key information– things that you won’t learn from the property managers and things that will protect your client. The concierge can also tell you the demographic of the people in the building, whether they are young or old, conservative career-minded professionals or hard-partying night crawlers. These people can be a good resource.

Finding value
Undoubtedly a buyer will want some advice on the value of the unit, so finding suitable comparables will be important. Exposure, view and floor level may have an impact on the unit, and the salesperson should look at the past selling prices of units with the floor levels and exposures that are of interest.

A condo’s value can also be estimated, where exposure, size and conditions are similar, by looking at the selling price of a similar unit in the condo and the price per square foot at which it sold. Good comparables are essential in figuring out a reasonable valuation.

When looking for a good comparable sale the salesperson should ask him or herself “would the buyer of the comparable unit have purchased the subject property if it had been available instead?” If the answer is yes then this is a good comparable even if a couple of adjustments are necessary.

If you just can’t find a sale of a similar unit in the same building and have to look at another building, check that the view/location is similar, common elements and facilities compare, that the finishes compare and that the floor plans and financial situation including reserve fund of the buildings are similar. In essence, you are checking to see that the two buildings would attract the same buyers.

What else to check for
So, you’ve found a place your clients like, the price is right, and the neighbours probably won’t keep them up all night. What else do you need to check?

Once you’ve listened to your clients and established their needs, read over the status certificate and applicable sections of the accompanying declaration, by-laws and house rules to see whether any of their requirements are negatively impacted. The status certificate and the declaration, by-laws and house rules will allow you, your clients and their lawyer to ensure that the finances and rules of the building are in accordance with what your client wants. Include a clause in an offer to purchase a condo unit that allows the buyer’s lawyer to receive and review a status certificate as well as the accompanying declaration, by-laws and house rules within a given period of days.

Check with the seller’s agent as to whether there are separate titles to parking spaces and lockers and be sure to include the locker or parking space in the agreement of purchase and sale.

If your client wants to buy a property with the intent of doing renovations, verify with property management that the client will be allowed to make those changes.

Ensure renovations to the unit by a previous owner, if any, were legally done and with the permission of the property management, to avoid your client getting stuck with the cost of returning the unit to its original state.

How to get more info
To learn more, OREA’s three-hour, three-credit course on condominiums is taught in the classroom and is available on CD-ROM. Check the course listings in the Continuing Education section of OREA Real Estate College or your real estate board for details on upcoming seminars. To view a status certificate clause and other condominium clauses go to OREA Standard Clauses. There is also a Legal Forum topic on condominiums, with questions and answers in six separate subtopics on the OREA website. To learn more about the Condominium Act go to http://www.e-laws.gov.on.ca/ and click on Statutes and associated Regulations.

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For more information contact

Ontario Real Estate Association

Jean-Adrien Delicano

Senior Manager, Media Relations

JeanAdrienD@orea.com

416-445-9910 ext. 246

Ontario Real Estate Association
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