Winning in multiple offers - more than just the money

I enjoy participating in multiple offers (a.k.a. "bidding wars") on behalf of a buyer because often times, it's about more than just who's offering the most money.

I won a bidding war on behalf of my buyers last fall for a condominium in downtown Toronto not because of price. We were neck and neck with another offer but the listing Realtor and the sellers ultimately decided to select mine and work with me simply because I *was there* and they could wrap it up on the spot! I presented in person. The other offer was faxed in. Do you think the other bidding Realtor was going to tell his buyers that they lost out on their preferred condo simply because s/he faxed in their offer?

I won another bidding war on behalf of my clients, again, not on dollar value alone, but because we had also more flexibility with the closing date - and I had made it a point to emphasize that in my offer presentation.

And there was another one I won again, more because of my offer presentation than purely the dollar amount. The sellers still had an emotional attachment to the house. And part of my offer presentation included an explanation of who my buyers were and what they loved about the house (Note: I can't divulge all of my specifics because I consider them a competitive advantage - and one that's clearly been working for me in these situations.) It made a connection with the sellers and we won.

And the odd time, even my best efforts or dollar amount don't work. Several years ago, my buyers and I were involved in a 7-group multiple-offer situation. Offer presentation started at 7pm and by 10:30pm, I finally found out that we won. I went back inside the house to finalize the papers only to have the seller-wife break down in tears about not wanting to sell and pleading with her husband to stay a little longer. He agreed and because they hadn't signed the agreement yet, they pulled out. Needless to say, the selling Realtors (it was a team of two) were as dumbfounded as I was. And one of them had to go outside to vent. I simply thanked everyone for their time, wished them the best and walked out to my car to break the news to my buyers:
We won, yet we lost.

I'll share this tidbit though, obvious as it may seem - manners matter.
I've encountered some huge egos in real estate, some who *try* to bully and some just simply bombastic types. But when you're dealing with a number of people and with an emotional issue like real estate and often dealing with large amounts of money, manners matter. One can negotiate hard and creatively while still being polite and respectful of everyone at the table. It's really an additional negotiating tool.

What's that old saying? "You catch more bees with honey than with vinegar"

Condo fees - too high or too low?

Condo fees are like the weather. Almost everybody likes to complain about them.

Most of the time, condo owners are likely to complain about the seemingly excessively high fees - and sometimes they're right. I myself have had the next to impossible task of trying to sell a condo that had comparatively high maintenance fees.

But what about when condo maintenance fees are impossibly low?
There was an article in today's Globe & Mail that talked about the perils of low maintenance fees.

Low maintenance fees can be attractive to buyers because it lowers their overall monthly carrying costs. However, if you expect to sell your property for good, competitive value down the road, you can't live in a house or condo without having to invest in its upkeep on a regular basis. In a house, there are some big-ticket items that you have to maintain - I.e. roof, driveway, windows. That's no different in a condo. There's a very large roof, a very large parking area and often hundreds of windows that at some point, all need replacing.

Where does that money come from?
A portion of condo maintenance fees is supposed to go towards everyday type maintenance.
Another portion is supposed to go into the reserve fund, to take care of those costs that only come up every 20 years or so. Everyone is supposed to share in the cost of that repair, not just those who happened to live there at the time.

But what happens when something wears out unexpectedly fast?
What if the parking garage has bad leaks that caused the the structure to crumble beyond expectation?
And what if the maintenance fees were too low to create a sufficient reserve fund to pay for those repairs?
Where does that extra money come from?
It comes from the unit owners.

If the condo board needs to raise money for an unexpected repair, they can levy a "special assessment" which is distributed proportionally to the unit owners based on square footage (just like maintenance fees).

And those fees can't be dodged. They go with the unit.
So if the seller tries to dodge these fees by selling their unit, the buyer should be aware of them.

Standard practice when buying a condo is to have a condition in the purchase agreement that enables the buyer and/or their lawyer to review the status certificate - a document about the condo corporation's current "state of fiscal health" as well as any specific special charges that have been levied against that unit.

So a condo buyer would see that the seller is trying to dodge the special assessment and then the buyer has the option of negotiating that "discount" into the purchase price or walk away from transaction.

This is not an unusual tactic by the seller.
But the problem intensifies when more than a few unit owners try to sell for the same reason. All of a sudden you have a large number of units for sale on the market and that means they're competing against themselves for the few buyers. So they try to get around that by lowering their prices and find themselves in a spiral of falling property prices .

When you have a condo that's well run, it has a healthy reserve fund and a management board that is prudent in spending money to maintain the value of every unit-holder's investments, then everyone wins.
You get a well maintained building.
You get a building that's desirable to buyers.
You get a building where owners don't want to leave.
And the units are likely going up in value because of it.

So if you're thinking of buying a condominium, don't just look at the dollar amount of the maintenance fees. Have a close look at where they spend this money.
Are they spending enough? Too much?
How well is the reserve fund is managed?
What kinds of people are actually on the board making these decisions?
Remember, the board is just made up of other condo unit holders like yourself - ones who wanted to get involved. That doesn't necessarily mean that they have financial property management experience.

With condo ownership, it truly pays to get involved in the management of the corporation to help ensure that you protect your own investment in the property.