Planning To Sell Your Honolulu Home Part Ten-Condominiums

August 14th, 2009 categories: For Sellers

Until now my posts on planning have generally applied to house and condominiums, but today’s post has to do with condos alone (part 10 of my planning post).

10. For condominiums.
a. Review the house rules.
b. Try to determine if any special assessments are coming up.
c. Determine the owner occupancy ratio.
d. Determine the percentage of reserves on hand.

Review the house rules. The house rules will have answers to many of the questions that a buyer may have. Here are a few examples.
a. Are pets allowed? If so, what type and how big?
b. How long may a guest park in the guest parking?
c. How may a guest use the common area amenities?
d. Is barbequing allowed from the lanai?
e. If the water to the unit needs to be shut down, when and how can it be done?
f. When and how are move-ins allowed?

Special assessments. As the owner you should be aware of any existing or pending special assessments from the Association. This is important because if Purchase Contract paragraphs C-12 and C-13 are structured with the seller paying assessments in full then these items need to be put in the budget. Also, with a little digging you can find out if the Board of Directors is about to authorize a special assessment. If one is discovered, then plans can be made for minimizing the impact on the sale.

Determine the percent of owner occupants in the building (owner occupancy ratio). This item used to be important and now it has become very, very important. Knowing the percentage of owner occupants will allow you to assess the viability of financing proposed by a potential buyer. If your occupancy level is below the required level of a particular program, it can be acknowledged and during the negotiating process a new financing program can be considered. If you don’t take this item into account, you could go through a 45-day escrow period only to find out that the loan is denied because of the owner occupancy level.

Determine the percentage of reserves on hand. Almost every condominium association has a reserve budget. The amount on reserve is closely related to the reserve study. Many loan programs require that a minimum percentage of the amount projected by the reserve study to be collected and on hand. If the amount on hand is less than required, again, you could go through a long escrow only to find out that the lender won’t make the loan.

A mentor of mine gave me the six P’s, “Prior Proper Planning Prevents Poor Performance.” Advance planning can save time and make you money.

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If you would like to discuss your real estate needs, feel free to call me at 808-737-2093 or toll free at 877-737-2093. You can email me at keahi@lava.net.

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