Selling an apartment? A few basics for the first time seller.

Apartment sale basics for the first-time apartment seller. What's different about selling an apartment? What will you need to provide? What will your buyer want to know?

Selling an apartment is a different experience to selling a home or unit. 

You have some unique obligations, your buyer is likely to have a lot more questions and they will be more reliant on you to help them access information than they would be throughout other types of sales. First off is...

Disclosure Statements

If your apartment is Statum in Freehold (most are and this is the only form of Title we will discuss in this particular post) there are three disclosure statements you will need to provide at various parts of your process. You would organize these via your Body Corporate.

THE PRE-CONTRACT DISCLOSURE STATEMENT

Timing: Must be provided to buyers before they make an offer.
Type: Mandatory
Who pays? Seller

THE ADDITIONAL DISCLOSURE STATEMENT

Timing: Buyer is able to request within 5 working days of the date of their agreement with you.
Type: Upon request only.
Who pays? Buyer

PRE-SETTLEMENT DISCLOSURE STATEMENT

Timing: Must be provided no less than five working days prior to settlement.
Type: Mandatory
Who pays? Seller.
What can happen if you don't provide it? Your purchaser can defer settlement until you do or can cancel your agreement altogether.

Deposit

Be aware that your deposit cannot be released until after the period for requesting the additional disclosure statement has lapsed and the pre-settlement disclosure statement has been provided.

This is important to bear in mind with your planning if you intend to use the funds from your deposit to pay the deposit on your next property purchase.

Info Pack

In addition to your LIM and Title, documents you will (or may) be asked to provide are...

• Annual General Meeting minutes (AGM)
• Committee Meeting minutes
• Long-Term Maintenance Plan
• Body Corporate Operational Rules
• Building Warrant of Fitness (BWOF)
• Insurance Certificate

Questions you may be asked

In my experience, the drive to buy apartments outside of Central Auckland is usually down to convenience, desire for security or budget. Sometimes a mix of the three.
Knowing what kind of questions to expect will help you frame what you are selling as favourably as possible and help your buyers make a quick decision. Here are some common questions.

• What is the floor area? (Note: Most of the time lenders require a 20% deposit when lending on an apartment but the size of deposit they require can be much larger for especially small floor areas - restrictions vary but usually over 48sqm inclusive of covered deck/patio is fine.)
• What are the Body Corp fees and what do they cover?
• Is there a gym or other resident facilities?
• Are pets allowed?
• Where is the sun at (insert time of day and area of the apartment)?
• How many apartments in the complex are there?
• What is the makeup of the buildings other residents?
• Are there any issues with the building? (ie. weathertightness)
• Are there any security issues in the building?
• How far away is parking from the apartment?
• Is there guest parking?
• Is there a lift (if there are stairs)?
• Can I choose my own utility providers?
• Has there been any discussion about rule changes?
• What have other apartments in the block sold for?
• What is the Earthquake Rating? (Note: buildings built pre-1976 are required to have an Earthquake Rating but Council can require one on a newer building if they have reason for concern. If in doubt, check with your Body Corp and reference the Earthquake Prone Building Register)

A word on Building Inspections & giving your buyers peace of mind...

Building inspection companies limit their inspection services to the apartment itself - they do not usually inspect the building.

Buyers are very reliant on information provided from the Body Corporate via the owner (disclosure statements, AGM minutes, Committee Meeting minutes etc.) when doing their due diligence and the volume of documents to review and things to consider can feel a wee bit overwhelming. It's important to promptly assist when asked for help accessing information otherwise buyers can fear something is being hidden and shop elsewhere. Taking a proactive approach to providing information, anticipating their likely areas of concern and showing transparency goes a long way towards helping them commit to and pay well for your lovely apartment.

Happy selling!

Blog