When you’re preparing to sell your condo, you should be prepared for buyer’s to ask about the financial health of your condo association. Homeowners in a condo association should be paying enough each month in dues to cover all regular monthly expense items as well as to put some money aside as a reserve for emergencies and for larger maintenance and repair items that may surface.
When maintenance or repair is needed and there is not enough money in the reserve to cover this expense, condo owners are faced with one or more assessments to cover the cost. These assessments are extra payments above and beyond normal monthly dues.
Prospective buyers will want to know about recent assessments, regular assessments and any assessments you know about that are coming up. And, according to real estate disclosure laws, you must disclose any assessments coming up that you are aware of.
When your condo association’s finances are questionable, it can definitely deter prospective buyers, as they may fear that owning the condo will cost them way more than the monthly homeowner’s dues suggest.
If you’re considering putting your condo on the market in the next year or so, you might want to talk to your condo association’s management about having a “reserve study” completed, if one has not been completed in the last five years. Reserve studies are completed by professional companies that come in and assess the condition of the building and the repairs/maintenance that are likely to be needed over the next five year period. They can also estimate the costs of these repairs so that the homeowners association can assess whether an increase in monthly dues is necessary now in order to prevent a large assessment on the community in the future. These studies give current residents and future buyers a lot of peace of mind.
Getting your condo ready to sell involves many steps. Don’t forget this important step for determining the financial health of your condo association – before a prospective buyer questions you.