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Selling your condo presents unique difficulties

TERRENCE BELFORD
Globe and Mail

March 13, 2009

Thinking of selling your condominium? Thinking of saving cash by doing it yourself? It is possible, experts say, but the process is fraught with peril and challenges. For some people, it may be right up there with self-surgery.

"It is not something I would readily recommend," says Tammy Evans, a lawyer with Fraser Milner Casgrain LLP. "Yes, it can be done. Yes, people continue to do it. But selling a condo is not like selling a detached family home.

"There are rules governing condos that just don't apply to private homes."

William Stynes makes his living helping people sell their homes privately. He is general manager of the website BytheOwner.com, which focuses on Montreal, Quebec City, the Greater Toronto Area and the lower mainland of British Columbia. As I write this, his website has 1,165 condos listed for sale across Canada. By comparison, the site offers 7,330 detached and semi-detached homes.

Of those condos, 53 are within the City of Toronto and 15 in outlying municipalities.

He readily admits condos are tougher to sell through websites such as his.

Letting passersby know a building has a suite for sale is nearly impossible, he says. "With houses, you can put a sign on the lawn; condo corporations usually prohibit for sale signs," he says.

Then there is the time it takes to move a property. BytheOwner.com takes an average of 78 days to sell a property through the website, he says, which can be more than double the time it takes a licensed agent or broker dealing through a multiple listing system. He also says 35 per cent of the properties listed on his site never find a buyer through the Web.

At the same time, the cost ranges from $300 to $650, a huge savings from the $15,000 a broker may charge for the average condo.

So all that said, what do you need to know if the basic hurdles do not discourage you?

Ms. Evans says there are two types of sale-by-owner. The first involves flipping the unit before the project is registered. The second takes place after closing when the original buyer has free and clear title.

If you are one of those speculators interested in flipping before closing, the opportunity has been severely restricted in recent years, she says.

"Many projects today have a prohibition, an anti-flipping clause built into the purchase and sale agreement," she says. "Developers don't want buyers of suites competing with them, which is what happens when there is flipping going on."

The same may apply to hiring an agent to sell a property you do not yet have title to or advertising it in any form.

So, if a flip is what you have in mind, read your purchase agreement. Know what you can and can't do before closing. That advice holds true even after closing when you do indeed have ownership. Condo corporations often have restrictions not only on things such as for sale signs on the property but in some cases even on who you can sell your suite to.

"The condo regulations may say that for a certain period of time the corporation itself has first right to purchase a suite placed on the market for resale, or it may be the developer's right or even another owner in the building," Ms. Evans says.

Then there may be rules on hours during which suites can be shown to prospective buyers or against the number of people who can attend open houses and restrictions on moving times if you strike a deal with a new buyer.

"You are also at a disadvantage if you don't have an agent but a prospective buyer does," she says. "Remember their agent is not on your side; his or her goal is to get the best deal for his or her client. What you want is a level playing field, but an agent on the other side tips the scale heavily towards the buyer."

Given those significant downsides, is there any positive advice she can offer? Good deals start with good legal advice, she says. Before deciding to sell, talk to a lawyer; have that lawyer walk you through the potential challenges and then draft a purchase and sale agreement that protects your interests.

If you get an offer for the suite, take it straight back to that lawyer to review and advise you on how to proceed.

"It does not have to cost a great deal of money," she says. "And it is worth it for the protection it offers. You want to be in the best possible bargaining position through the whole process and that can start with sound legal advice."

 

Posted on Tuesday, March 31, 2009 at 01:37PM by Registered CommenterElaine in | CommentsPost a Comment | References1 Reference

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