Ask Your Community Manager Kellene Richards

What can a board do to increase the appraisal value of our condominium?

QUESTION: In the last 6 months we have seen large increases in our sales price; however the last appraisal amount was less than the last sale price in our condominium. The last sale was a private party transaction, does this matter?

ANSWER: It can, it depends on what resources the appraiser uses for comparables. If just the MLS (Multiple Listing Service) is used a private party transaction would not be listed.

You bring up a great question. The board and/or the community manager can have an impact on the listing price and the appraisal. The listing real estate broker will call for information prior to entering the property in the MLS. At this point you have an opportunity to influence the listing price. Make sure any private party pending or sold condominiums that are positive comparables are disclosed at this point. In addition talk about what is great about your community. Items as simplistic as walk scores, recent upgrades, adequate Reserve Accounts are critical.

In order to facilitate the process, arm the listing broker with as much positive information as possible. Offer a dues explanation sheet that breaks down what each owner pays for dues. It is amazing how great an amount can look when explained. Mass purchasing power for condominiums can offer rates of $32.00 per door for lawn care, $15.00 per door for basic cable, etc. This can often show the owner how extremely reasonable dues are and how wisely they are used. This not only facilitates the sale, but also gives the new community member a good foundation for understanding the community they will be living in.

Should we raise our assessments?

QUESTION: We need to raise our monthly assessments. Our community is concerned that the new amount will discourage buyers in our community. Do you have any advice?

ANSWER: The previous answer is somewhat of an assist for this question. Breaking down your dues on a per unit basis makes the cost understandable. It is critical you think of your community as a business, albeit a not-for-profit one. If you buy one million watermelons for one dollar then sell them for ninety cents each, how does that impact the bottom line of your business? You would have $900,000.00 in sales volume which is a lot of money, but you would have lost $100,000.00 just on the sale price without including overhead. A community isn’t any different. You MUST be brave enough to make a decision that is long range planning for your community, including funding adequate reserves.

It is true that dues are factored into the debt to income equation for mortgages. It is also true that owners will balk at high dues. However if you educate your listing broker, make sure your management company is communicating the right message and provide the best materials to a broker you can make higher dues a selling point, not a negative.

I always think Tom Sawyer is a perfect example of life. His presentation of fence painting made people beg to paint the fence to the point his friends offered gifts just to be able to pick up the paint brush. All of life is sales and presentation. This is also true in the world of Community Business.

Legal Disclaimer: This question and answer content is for educational and entertainment purposes only and does not constitute the giving of legal advice. Anyone seeking legal advice should consult an attorney. The author of this column is not an attorney but thanks attorney Tony Rafel of Rafel Law Group for being a resource for this column.

Kellene Richards CMCA ®
Association Management
Tacoma Washington

Associations are a nonprofit business subject to all business standards. It can be a tough area to navigate for volunteer board members or members of the business, better known as owners in the association. Kellene Richards, CMCA ® is a Washington State Certified Community Manager, a licensed real estate broker and holds inactive licenses in Property, Casualty, Life and Disability Insurance. Kellene is partner and broker of Park 52 Association Management LLC. She is a former General Contractor. In addition she has nonprofit board experience. Each week Kellene will answer your Community Management and related Real Estate questions.

Do you have a question concerning Community Management “Ask Kellene Richards”.

Kellene Richards Email association@park52am.com

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