A couple of years ago, as construction of Mayfair Station neared an end, the developer sold the last few town homes at a deep discount. Unit owners who paid full price were distressed. Those about to put their homes on the market feared a fire sale.
Then the board of managers stepped in. Using a desktop publishing program, they created a brochure that listed amenities and depicted floor plans. On a Saturday morning, board members delivered them to local real estate offices. They chatted with agents and touted the many benefits of their community.
Bob Packham, president of the 239-unit association in northwest suburban Hanover Park, believes the action protected property values and gave sellers a boost as well. “What we did was present Mayfair Station in a positive light for the long range. More demand was created and more homes were shown.” Prices are steadily climbing, he adds.
Homeowner associations can make or break sales, say real estate professionals who specialize in community living. Some drive away both brokers and buyers while others extend a figurative welcome mat.
How can your association help you sell your condominium, town home or cooperative apartment? And should it?
To answer the second question first: No, an association is not required to make all sellers and buyers and their respective brokers and attorneys happy. But because sellers are marketing along with their units a lifestyle ordained and governed by the association, it isn’t good business to thwart sales, say the experts.
“It is not a direct responsibility of the association to facilitate a sale but it is in their best interests to be helpful,” says Debra Bass, staff vice president for the Community Associations Institute, a national homeowners association education and advocacy organization headquartered in Alexandria, Va. “The board is responsible for maintaining property values and that makes all units more salable. Making the property difficult to sell can result in lower values.”
Because most associations in the Chicago area are professionally managed, the property manager is one of the first contacts a buyer and his or her broker will make. The property manager, too, should be sensitive to seller needs, says John Kretchmar, a real estate broker with Coldwell Banker Residential Real Estate, Water Tower, and board member of a downtown association. “It is the responsibility of property managers to treat both prospective buyers and sellers with the utmost in customer service. The owner who is selling is a present customer and the prospective purchaser is a potential customer.”
Associations and the property managers who represent them can assist sellers in several ways. Board members can help, too, without stretching their volunteer spirit so thin it snaps. A few suggestions follow:
– Create a positive first impression by keeping the common elements attractive and up-to-date. “Boards have a fiduciary reponsibility to maintain the property but sometimes someone colors that with their own need to keep assessments low,” says Beth Lloyd, a broker with The Prudential Preferred Properties, Schaumburg, and president of the Association of Condominium, Townhouse and Homeowners Associations, a statewide homeowners association education and advocacy organization headquartered in Chicago. “When buyers go to a complex, the common elements are the first things they see. They form an opinion before entering the unit (that’s for sale).”
Attorney Caryn S. Gardner of Bickley, Hart & Gardner, Schaumburg, advises associations to stay on top of repairs that affect the units, too. “A homeowner can’t fix his ceiling until the roof has been repaired.”
– Present a pretty financial picture. Condominium and town home buyers are savvier than ever. So are their lenders.
“Any mortgage company is going to want to see the financial condition of the association,” says Gardner. “Maintain proper reserves so there is no need for special assessments.”
Kretchmar agrees. “Special assessments can have a depressing impact.”
– Be accessible and courteous. Property managers and their office personnel should return telephone calls promptly. They needn’t engage in lengthy conversations but should try to be helpful.
Some property management firms appoint an office employee to handle all buyer queries and real estate closings. They may also have a telephone answering system that directs callers to this employee.
“You want to give a prospective buyer the sense that if he lives in this community he will have access to people who can solve problems,” says Bass.
– Board members can be available on a limited basis. The caveat here is that they should not be inundated by every prospective buyer who tours the property.
“You don’t have to physically have a board member stand at every open house,” says Gardner.
“There might have to be some procedures in place,” says Bass. “It might be that phone numbers are available to Realtors and the Realtors have to understand they shouldn’t call these people for information they can get on their own. Board members could be called on to answer what it’s like to live here.”
To cut down on phone calls, she suggests associations publish a fact sheet or a small pamphlet that answers commonly asked questions.
Deborah Dorr, president of Horizon Management Inc., Elgin, prefers buyers and brokers not disturb board members. “The only time I think they should be available is if someone tries to get information from the management company and the management company fails to give it. Board members are volunteers. They don’t get paid for this. Also, they might say something without having the right information at hand.”
– Provide documentation quickly and for a reasonable charge. During the selling process, most unit owners will have to obtain two types of information. The first is the financial background and governing documents of the association, which buyers may request under the provisions of the Illinois Condominium Property Act. The second is a closing or assessment letter, which states the seller’s payments are up-to-date.
The law gives associations 30 days to come up with this information. Most will try to comply within a week or so.
“One of the biggest things we can do to help a seller is getting out the paperwork he needs,” says Dorr. “Title companies will not allow condos or town homes to change hands if the documentation has not been properly filled out or received on a timely basis.”
Lloyd counteracts the occasional slow-moving association by requesting her sellers to assemble the financial and governing documents before they sign a listing agreement.
“I don’t think it is unreasonable for the association or management company to charge a fee but some are charging exhorbitantly,” she says. “Or they want it so many days ahead because they want the check to clear or tell you to bring in a money order or certified check.”
– Inform unit owners of association policies and procedures in advance. Lloyd recently had a closing delayed because a seller found out at the last minute the association required a $150 moveout damage deposit before issuing an assessment letter.
She suggests associations periodically run articles directed toward sellers in their newsletters. “Give a checklist, time frames and charges,” she says. “Education and disclosure are always appropriate.”
Some associations have restrictive procedures that delay closings and deter sales, say the experts. Among these are boards that exercise their right of first refusal (which means they review sales contracts) or require prospective buyers to interview before an admissions committee before issuing keys or assigning elevator time for a move-in. In some areas, buildings that do not permit pets sell more slowly than those that do. In the suburbs, real estate brokers may shy away from complexes that ban lock boxes.
Prohibitions against “For Sale” or “Open House” signs, however, are fairly common and usually do not inhibit sales.
“If you have a condo which is apartment-style, sometimes a unit is facing in such a direction no one sees the sign anyway,” says Lloyd. “In an area where you have dense town homes or quads, a lot of signs is unsightly. I prefer window signs.”
“Signage can work both ways,” says Bass. “If there are no rules about signage and (you have) 25 `For Sale’ signs in front on one street, what does that say to potential buyers?”
