Forty-five management executives offer their answers to questions that buyers are asking and that boards need to answer.
Definitive Guide to Questions that Buyers Are Asking and Boards Need to Answer
Depending on whom you talk to, the real estate market is picking up, is still pretty slow, or is poised to significantly move. There is more market movement this year than last, and many shareholders and unit-owners are trying to sell. Peek behind every potential sale and you’ll find someone doing due diligence.
What’s being looked at? Financial statements, reserve funds, building litigation, arrears, assessments, maintenance, capital plans, and bed bugs, to name just a few areas. How potential purchasers view your co-op or condo’s operations can make or break deals for its residents.
That is the thrust of our 27th annual “Management Leader” survey. Forty-five management executives participated, responding in two ways. First, they answered the question: “If you were buying into a co-op or condo building, what are some of the key areas that you would evaluate, and why?”
From that, we created an “Apartment Buying 101” list of the most-mentioned due diligence questions. We video-interviewed the execs about these questions and edited the responses into 14 video pieces. You can scan the accompanying QR codes to watch them on your smartphone or type in the URLs to view them on your computer.
So, whether you’re on a board that is being scrutinized or a buyer doing the scrutinizing, read, watch, and learn.
If I were purchasing a cooperative or a condominium, I would focus on three main areas. First is the underlying financial condition of the building – are they budgeting and operating properly, and are they planning for any future capital projects? The second area is the physical condition of the building – is it being properly maintained? I would walk the common areas and even ask to look at the boiler room. I would investigate the age of the major building systems – roof, boiler, etc. – to get a sense as to what work would need to be performed in the mid- and long-term. Finally, I would learn about the policies and procedures of the building for alterations, refinancing, sublets, etc.