Fixer Upper Condo Divorce Buyout

[Greg Flannery]

Trying to offer ex an amount for condo were both on title and mortgage for. How do I get an accurate value based on HOA financial health and interior defects? Something in writing I can use in court to argue what the buyout value should be. Of course ex wants the Zestimate

Appraiser came by a year ago and didnt ask for any HOA financials (said none provided in report) and said any visible issues would only resort in a "cure cost" factored in the value. I dont understand why it wouldnt be appraised as is?

HOA has a Reserve Study outlining $400,000 in outstanding work that needs to be done between the two buildings and property. It reflects components of both buildings and community areas beyond their useful life. Roofs, Balconies, Fencing, Planters etc. With 8 units that is potentially $50,000 per unit. There is only $3,000 in the total HOA accounts.

Condo has alot of issues documented in a Home Inspectors Report. Deck is falling down (covered by HOA) but has resulted in an ongoing ceiling foyer leak. Same wall has an exterior defect that allows water to intrude through stucco from below due to no weep screet and soaks the base wood frame. Was previously rotted but replaced awaiting HOA fixing exterior. Inspection also reflects a Furnace leak needing replacement, six rotting french doors, 1/2 bath shoved in with grinded down and re mudded up drywall and some other minor issues.

Is there a special kind of report to include these factors in a value for an as is sale? 

She has refused to counter any amounts offered and were on path for a settlement conference and then hearing trial on the property.

I’d like a document in hand stipulating an as is value I can just offer to buy her out on. Or if she refuses it will possibly hold up in front of a judge to have them set a buyout price.

[Nicholas Coulter]

Greg, 

Thats a tough one. Only way I think you could get the info would be to see if you can forecast the work needed to be done based on the inspection and work out the total cost to the HOA.

That is a trick one tho!

[Greg Flannery]

The Reserve Study outlines components of the property (fencing, roofs, decks) that are beyond their useful life. There is a cost documented for each item in there. And it’s done by a licensed professional. I’ve talked to two appraisers that are hesitant to dig that deep….does that seem normal? 

My imagination is in the event of a sale, the purchasing party would see HOA Meeting Notes, Budget, Reserve Study. So they would probably want to negotiate down a price if it looks like each unit is on the hook for $50,000 each. That's just the components that are beyond their useful life. There's more in the next 5-10 years with only a $3,000 in the HOA account…

[Chris Seveney]

@Greg Flannery

Why not get two appraisals done and take the average of the two? Each person can provide a recommendation for the appraiser and the other party agree

If you cannot agree on an appraiser then you sure as you know what will never come to an agreement on the price.

Another option is to list it and you have ROFR

[Matthew Paul]

Quote from @Greg Flannery:

Trying to offer ex an amount for condo were both on title and mortgage for. How do I get an accurate value based on HOA financial health and interior defects? Something in writing I can use in court to argue what the buyout value should be. Of course ex wants the Zestimate

Appraiser came by a year ago and didnt ask for any HOA financials (said none provided in report) and said any visible issues would only resort in a "cure cost" factored in the value. I dont understand why it wouldnt be appraised as is?

HOA has a Reserve Study outlining $400,000 in outstanding work that needs to be done between the two buildings and property. It reflects components of both buildings and community areas beyond their useful life. Roofs, Balconies, Fencing, Planters etc. With 8 units that is potentially $50,000 per unit. There is only $3,000 in the total HOA accounts.

Condo has alot of issues documented in a Home Inspectors Report. Deck is falling down (covered by HOA) but has resulted in an ongoing ceiling foyer leak. Same wall has an exterior defect that allows water to intrude through stucco from below due to no weep screet and soaks the base wood frame. Was previously rotted but replaced awaiting HOA fixing exterior. Inspection also reflects a Furnace leak needing replacement, six rotting french doors, 1/2 bath shoved in with grinded down and re mudded up drywall and some other minor issues.

Is there a special kind of report to include these factors in a value for an as is sale? 

She has refused to counter any amounts offered and were on path for a settlement conference and then hearing trial on the property.

I’d like a document in hand stipulating an as is value I can just offer to buy her out on. Or if she refuses it will possibly hold up in front of a judge to have them set a buyout price.

 Its simple the other party wants the zestimate . Tell them thats fine let them buy you out . 

There was a couple getting divorced , they owned a company . The wife had it appraised and said it was worth 2 million dollars . But the husband ran the company . When they were at the settlement table she threw down her numbers , the husband then agreed . And then turned the tables , he tossed the keys across the table and said , here its yours , cut me a check . Make sure you are there at 4 am to do xxxxxxx , this needs fixed , etc , etc . 

No one wins in a divorce , its just who thinks they won .  Half of nothing is nothing .  I would list the condo for sale and see what it brings . Sounds like the place is going to be a money pit any whey 

[Steve Meyers]

@Greg Flannery a lot to unpack here.  Nick has a good point in getting quotes done for the work needed based on the inspection report, that would really give you an idea of the cost associated.  Since you got an appraisal done about a year ago you can add about 10% to that value they provided to get an idea of where fair market value stands today as a ballpark.

No appraiser I know is going to look at the HOA financials and factor that in, because they are only concerned with the asset for appraisal although we all know the health of the HOA and financials still play a factor in the sale of a condo.

I'm dealing with a similar HOA right now for one of my listings where the reserve is at only 7% funded for what's needed for the budget and there is an upcoming special assessment for each unit. No buyer is going to come in and be willing to pay an assessment unless they are getting a deal on the unit. So that will more than likely fall on you to have to pay.

If I were you I would get quotes for all the items on the inspection report from a few different companies and get a new updated appraisal to show the judge what the true value is.  If you need some vendor recommendations for work, shoot me a message and I can send you my vendor list.

[Nicholas Coulter]

I am with Steve on this one! Best option it seems. Would it be crazy to write up a contract that would have some verbiage around the parties agree to split any special assessments? Might be 50/50 year one 60/40 yr two and so on? Not even sure if that's possible.