The problem with condos: How realtors can help guide these buyers

We know the majority of real estate agents love selling homes because they love architecture or helping and working with people. For many agents, there is nothing more satisfying than helping people find their first home or a new home, and they often wear many hats other than just helping to buy or sell properties.

The public asks a lot of their agents but maybe not enough when it comes to selling condominiums. Assessing the property value of a condominium is so much different than a single-family home. 

Be your client’s first line of defense in a potential condo purchase with warning signs

Buyers are purchasing a unit in a corporation run by a board of directors voted on by its owners — do real estate agents take this complex situation into consideration when selling a condominium unit?

Agents can be the first line of defense when showing potential condominium owners new units by helping them identify the signs of a bad board of directors — and to do this, they don’t have to review documents. A condominium board has a fiduciary responsibility to the owners and the corporation itself, so they are directly responsible for a neglected building.

The first time I walked into the building of my first condominium I was a little surprised that the entry system had not been updated. There was no fob system either, just the same old lock and key system installed over 20 years ago. A little ping in my head went off, and I remember thinking how odd it was — it’s not a huge expense to introduce a fob system into a building so what did this mean?

This was the first red flag I should have considered because the problems didn’t stop after I stepped into the building.

Bring up potential issues as you view a property

Real estate agents can help potential buyers by identifying a few potential red flags, which can be communicated while showing the property. Depending on the number of warning signs, it may be necessary to consider an additional review of documents.

Buyers can see the red flags but they often don’t register because buying a home is overwhelming.  We all know the only thing most buyers see is that fantastic kitchen or large patio, for example. Everything else just fades away and any practical signs are often overshadowed by those great features. If a realtor can help identify some of these flags, they can assist potential owners in making sure they don’t get stuck in a really bad condominium building with a unit that happens to have a great kitchen. 

Watch for these common red flags

These little signs will allow you to possibly make a suggestion to your buyer that a more detailed review will be needed: 

1. Little to no upgrades. If you’re walking into a time warp, it’s a sign that the board is not working well together. Why the building hasn’t been upgraded should be something you think about before your client buys.

2. Meeting minutes. A lack of minutes isn’t necessarily a flag but it could be something to consider. The board may be very efficient and do a lot of governing by emailing each other so they don’t meet every month, or maybe it’s because the board is dysfunctional or undemocratic and doesn’t hold meetings.

3. Neglect. Have a look in the corners of the common areas, elevators and back alley to see how often the building has been cleaned. Buildings need a good commercial cleaning and a power wash on the inside and outside every couple of years — if it’s not done, that’s a pretty good sign something is not working in the corporation.

4. No welcome or information package. The more services a building provides, even for small buildings, the more important these types of documents become. They should include items such as passwords, garbage policies, recycling and any number of helpful things an owner should know about their building. If there isn’t anything provided, it’s a sign that there is very little organization from the board and you may need to dig deeper.

Best to take it one step at a time

While it’s a big thrill to sit and write the offer for a unit on the spot, if the building is exhibiting several reg flags it’s worth the extra effort to first wait and check out how the building and corporation function.

If the owner isn’t interested in the time or expense of a detailed document review then it’s prudent to at least suggest taking a second look. Have the buyer bring a friend or family member to the building that isn’t wearing those rose-coloured glasses and can point out some of the flaws.

Selling a condominium should take a little extra attention and more work because of the nature of communal living. Ensuring your buyer is investing in the best building is your first priority. There are too many problems with boards and property managers that affect the health and well-being of an owner, unlike what they’d experience in a single-family home.

Working to safeguard and protect your buyer in picking the right condominium in a building where the board operates in the best interests of its owners should be at the top of the list.