15 Tips…Selling or Buying Condos post Surfside

First, our thoughts & prayers go out to all the families affected by this terrible tragedy.

A lot of people of people in general and in the Realtor community have asked me how this will affect the condo marketplace. Here are a compilation of thoughts.

I asked a veteran inspector and a local prominent builder friend of mine how they thought the condo market would be affected by the Surfside tragedy.

Question to the Inspector: Do you think Surfside is a 1-off or could there be more issues in other condos or oceanfront condos?

Answer: (Paraphrasing)

“More of a 1-off in Palm Beach County as not as many older buildings. The buildings to be looked at most will be ones older (some in Palm Beach are 100 years old) with sub-level garages with exposed concrete.  The top-level roof and abnormal settlement cracks around the building (different types of settlement cracks tell a story).  Looking for spalling and rebar is important. Look at recent engineering reports. But for the most part if a building is maintained well, it should be fine.”

Question to the Builder: Do you think Surfside is a 1-off or could there be more issues in other condos or oceanfront condos?

“Not the ocean. Surfside appears to be a combination of poor construction, 1980s corruption (Hurricane Andrew uncovered a lot of it), 40 years of cheap maintenance and the political infighting of neighbors not wanting to spend money. 

It’s not the ocean, it’s the people. I’m not saying you will see condos collapse, but there will be a lot of talk. Remember the Tiara on Singer Island after Jeanne and Frances.   Memories are short.”

So it’s not taken out of context, ”short memories” by my builder friend, was meant purely from how this will effect the condo market, not on those affected. For those not familiar with Tiara, Tiara was a building that was battered badly by back-to-back Hurricanes Jeanne and Frances in 2004.  It was underinsured and had $146,000 in special assessments per unit. At the time that became a condo scare.  But it was a 1-off as my builder friend alluded to.

Here are 15 tips from a Buyer perspective in dealing with the current condo market.

1. Reserves. (25% to fully funded on reserves is a good guideline)
2. How old is the roof?  (20 years is a good baseline according to a good building manager.)
3. When was concrete restoration done?
4. When were the elevators replaced?
5. Inspect the sublevel garage if there is one.
6. Balconies?
7. Reserves?
8. Pool and patio replacement?
9. Financials?
10. Budget?
11. Last time engineering study was done?
12. Get a list of improvements over the past 10 years.
13. Ask for last 2 sets of minutes meetings.
14. Who has been sitting on the board?  Is there an engineer?  Accountant?
15. Remember that we’re still at 1% inventory with a lot of demand.  If a Buyer is difficult in bidding too low, the Seller isn’t going to deal with them. My advice is to go though all the 13 tips above and do not buy if you aren’t satisfied. However, be mindful if you are satisfied the building is in a good order as those buildings will be in high demand. The vast majority of buildings in our area are run extremely well.

My advice to Sellers is disclose disclose disclose!  Get everything ready on this list, a pre-inspection on your unit, and proudly disclose it as ready. If you are only waiting to disclose these items when a condo is under contract, then change that policy. Also, push your Condo Board for an updated Engineering Study to be done now if there hasn’t been a recent one. Buyers need to be assured of the safety and financial health of the building. If you provide everything on an upfront basis, it will give potential buyers confidence. A Buyer has the right to know and they are going to ask anyway. By getting ahead of the curve, you’ll ensure a smooth transaction at fair market value.

Jeff Lichtenstein is owner and broker of Echo Fine Properties, a luxury real estate brokerage selling real estate in Jupiter  and homes in Palm Beach Gardens, Florida. He has 20 years of real estate experience, has closed over a 1,000 transactions, and manages over 50 agents in a non-traditional model of real estate that mimics a traditional business model.  Some publications he has been quoted in.

Feel free to ask him a question directly at jeff@EchoFineProperties.com.