High maintenance and value of resale & Agent's Advince/Insistence (seller, fees)

[babo111]

I find myself in a peculiar situation. I'm under the impression my friend (looking to purchase) is working with an agent who doesn't have my friend's best interests. But I am not sure if agent actually does and I'm dead wrong or if agent doesn't and how shall I go about it. Basically the agent was telling my friend that unit with high maintence does not affect resale value. Agent was actually insistent on that strongly without explaining when I mentioned why would it not affect the resale value when it is time for my buddy to sell it unless big chunk of it is to pay off mortgage, building solid cash buffer, or so forth.

My advice to my buddy privately after that incident was that you need to look at the details when it comes to high maint but general rule of thumb is high maint affects your resale and high maint attributes to higher carry cost which is one of the reason why price of home is lower compared to similar size place nearby.

Am I completely wrong about high maintenance affecting resale value? My understanding is that high maintenance = less buyers who are willing to pay that or need the services is offered = lower or less bids = affect resale value.

This incident and how the agent handled himself is leading me down the path of the thought 'this guy isn't trustworthy for my friend to use'. But before I go have a chat and try to convince my buddy to stop using this guy, I just wanted to chat with group of professionals on this board to make confirm if I am not being a complete jerk and not talking out of my butt. Thank you!

Edit: Agent was not representing the seller for the unit.

[MikeJaquish]

Purchase and resale value are based on the closed sales history of the building. This is assuming a reasonable number of resales for comparison to this unit.
If the property compares well to other sold units, in condition, location, and price, then high maintenance fees appear to be priced in already, and discounting further may not be warranted.

If there is not a good, recent history of active sales, then it gets harder to support any position.

[MikePRU]

Just looking at the maintenance fee is a really narrow view of the property as Mike pointed out. There's a lot more to it than just how much the maintenance fee is. Some of the most expensive and sought after condos I've ever been in have had outrageously high maintenance fees which haven't seemed to have affected their values in the least.

[Silverfall]

Originally Posted by MikePRU

Just looking at the maintenance fee is a really narrow view of the property as Mike pointed out. There's a lot more to it than just how much the maintenance fee is. Some of the most expensive and sought after condos I've ever been in have had outrageously high maintenance fees which haven't seemed to have affected their values in the least.

Agree with this. Some of the highest HOA dues for condos in my city come in a neighborhood where they fly off the market when they come up for sale (which is rare). So, if you have two very comparable condo type properties and one has higher fees, then yes it can impact resale, but desirability of a location can trump that easily.

[thebigW]

Maintenance fees are relative. Typically, the higher the maintenance, the better the amenities. You have to compare apples to apples. Full service condos, those with concierge, valet, parking, pool, exercise room, community room, on-site restaurants, stores, management, etc. have high maintenance fees to pay for all that. And, people buying there are paying for those services.

You can't compare full service buildings with condos that have low fees and no or minimal amenities. There are two different markets and prices correspond to the building and services offered.

The exception would be a low service building that had poor management, deferred maintenance, high default rate by owners, etc. that now have to increase the fees to play "catch up". In that case, they are not getting that for which they are paying. That would keep values low.

[babo111]

Thank you everyone!

This is extremely helpful and learning experience. These are the type of experienced, professional, and instructional feedback I didn't get when I pushed my friend's agent about the high maintenance and affect on resale value.

[KonaKat]

You might also suggest to your "Friend" that if he has doubts about specific issues, he consult a real estate attorney who actually has some broad experience in transactions of this type.

[Bill Keegan]

Originally Posted by KonaKat

You might also suggest to your "Friend" that if he has doubts about specific issues, he consult a real estate attorney who actually has some broad experience in transactions of this type.

While I would always recommend an attorney be consulted for legal issues, I don't believe that's what's warranted here. Unless I've missed something, these are not legal questions, they are questions about the marketability of the unit, now and in the future. This is exactly the sort of question I would expect to be put to a real estate agent, who should be prepared to answer them. I doubt that most real estate attorneys would expect to be asked about marketability, and would likely not be prepared to answer.

[NinaN]

I can say that in the worst part of our market, the high HOA fee neighborhoods struggled more than the rest of the market. Now that the market is picking up, the buyers don't seem to care anymore as the prices in those developments have increased more than the rest of the neighborhoods. That's just one example, but since real estate is local, my market probably doesn't compare.

I agree with MikeJ that the current price already factors in the maintenance cost.