Florida is condo heaven. If you’re interested in condo living, Florida offers condos in all price ranges, in all locations and with a variety of amenities and floor plans. The condo selling challenges we’re facing in Florida is both a good and bad thing.
The bad thing is that condo associations are now being held to a standard of disclosure that they previously never had to prove. Many associations now have to pass milestone structural inspections by a qualified contractor and inspector. They need to disclose their financial position and disclose adequate funds in their reserves to meet future necessary repairs.
This is also a good thing. Knowing an association is structurally sound and that it has adequate funding for the future can make units more attractive to potential buyers. Buyers will likely not get scared off by associations that can prove their structural integrity and financial soundness.
In addition, special assessments have become the boogie man of condos in recent years. Some of these assessments have to do with the age of the buildings or repairs mandated by the state, as well as the fact that previous boards neglected to fully fund their reserves. Other assessments are for unplanned expenses like storm repairs and increases in insurance.
The best way to handle special assessments that have already been voted on by the condo board or even one that may come up in the near future is to be fully transparent. Hiding the fact that special assessments are looming will not only discredit sellers but will send buyers running. There are no mandates dictating who pays for special assessments. However, sellers need to be prepared to cover any special assessments already voted on and leave future assessments as a negotiating point. The idea is to make buyers feel comfortable with their investment.
The Florida condo market is taking a hit on all sides. The median price of a condo in the state was down 9% in April from a year earlier compared to the single-family home market, which had a 3% drop in April per Redfin.
That said, in my opinion, the condo market will return once the state structural mandates are fulfilled and reserves are replenished. Buyers love condo living and, remember, owning a single-family home does not relieve you of repairs, structural expenses and increased insurance costs. The difference is you’re not spreading out the financial shortfall with 50 or 100 other owners, it’s all on you. If you add up dollar to dollar what the cost of single-family homeownership is compared to paying condo HOA fees, you will be surprised how close they are.
Whether you’re selling a condo or single-family home now, more than ever you need to be transparent and disclose everything and anything about the property. This includes any facts or conditions about the property that may have a substantial impact on the value or desirability of the property that may not be visibly obvious.
Any potential claims, court proceedings and – as discussed – pending special assessments all need to be disclosed. Disclosure can be in the form of a written disclosure form or a verbal disclosure. I strongly encourage everyone to disclose on one of the disclosure forms available as an additional measure of transparency. You’ll be happy to know that you are not required to disclose if a homicide, suicide or death took place on the property and if in your view the property is haunted, crazy as that sounds.
Like any real estate investment, condos can be good or bad, and like any property, pricing competitively to the market is the most important thing followed closely by transparency.
