If you are thinking of selling your strata roll, take a look at the paperwork and processes which will make it more attractive to a buyer.
Right now, many agencies are looking to diversify by adding a strata roll to their portfolio. There is a lot of interest in this area so it is a good time to consider selling.
However, before you do so, you need to get all your strata roll ‘ducks’ in a row. By taking the time upfront to be prepared, you will improve the value and make the sale process an easier one.
Here are some steps to take before you have your strata roll valued:
Fix the contract of appointment
Real estate agencies are less likely to take on a strata roll with a contract which is due to end in the next few months or which has expired and is continuing on a month to month basis.
Look at firming up the contracts of appointment across your strata roll for a fixed period of time so it is more appealing to buyers.
Determine which extra fees can be charged
By taking on additional responsibilities, you may be able to charge your strata clients higher fees. There may also be fees which you are not charging but could be.
Additional fees could include elements like phone calls, postage and handling, site visits and meeting attendance. Charge these at an hourly rate and the value of your strata roll could increase.
Claim unpaid fees
Under the Owners Corporation Act, you have the right to the fees promised under your contract. If any of your strata clients are lagging behind with payments, take action before you try to sell.
The law states you can sue to the point of selling a property if fees are not paid but hopefully you will not need to reach this point.
If being paid is an issue, work to set up regular direct debits so the person who takes over isn’t chasing unpaid invoices.
Review annual increases
Most stratas expect an annual fee rise of around 2.5%. Make sure this is incorporated into your contracts as a way to improve the value of your strata roll.
(Note: During COVID, some rate rises will be frozen in the interest of customer relationships. This is up to your agency to decide.)
Organise your paperwork
Nobody wants to purchase a strata roll with disorganised records and administration. Gather financial records and all relevant information so it is easy for your financial team and potential buyer to access and review. Be ready to explain any discrepancies which may appear in the records.
You may also wish to work with your accountant on some forecasting to help prove the future value of the strata roll.
Tips for getting your strata roll valued
Once you have taken steps to optimise the value of your strata roll, you still need to have the value measured and agreed on.
Hiring an independent valuer who has experience in this area is essential. They will be able to provide an estimate based on all the important elements.
It is also important for the person who is interested in purchasing the strata roll to have a valuer of their own. Before this process begins, agree on a method of valuation so you are comparing apples with apples.
As with a property sale, bringing in a broker makes sense with a strata roll sale. This third party will be able to help negotiate and get the deal across the line so everyone gets the right deal.
BDH Solutions are strata roll and rent roll brokers with over 30 years experience in connecting the right vendor with the right purchaser. To stay up to date with our latest listings, register here.