Q. Does the size of the assessment make a difference?
A. Size certainly does matter. The larger the assessment (generally) the larger the amount of work that is required. Sometimes this work is done over a period of time, and therefore the total cost of the assessment isn’t always known. Often this type of assessment is sold to the owners by saying “that it will improve the value of the property.” In most cases this is true, but a lot has to do with the management of the project and money. I have been involved in projects where the concept of the scope of work of the assessment was fantastic and would definitely add value to the property once it’s done. However, if the project is not managed properly it can lead to further assessments.
Q. If the value is only going to improve why would people be nervous about buying a condo with an assessment?
A. Fear of the unknown. In my experience buyers fear that unknown quotient – how it will turn out, will there be additional assessments, will the project well be well managed? They are also comparing the properties that they are looking at now in their current state, and it is often hard for people to conceptualize the work that needs to be done. Again this depends on the size of the assessment. If the assessment is only $1500.00 and the seller is willing to pickup the tab it is a lot more palatable than something in the range of $20,000. Even if the larger sum will be due and payable in installments. It is because of uncertainty that buyers will stay away. The more detailed the plan, the lower the uncertainty and the more likely the buyer will consider the property.
Q. How do I sell my property if I have had a large assessment?
A. Information is important:
- Having as much documentation about the “why, how and when” will certainly be helpful.
- Details about the scope of the work will help buyers understand what inconveniences they may have to endure.
- Financial details of when the money will be due. Will it be lump sum installments or added to the existing condo fees?