The motivation for sale could be a positive or negative one. If the vendor is selling in a buyer’s market, be particularly thorough in finding out why the vendor is selling in a market that is clearly disadvantageous in terms of the negotiating climate and eventual sale price.

Why Principal Residence Properties Might Be For Sale
Some of the frequent reasons for sale of a principal residence include the following:
• Separation or divorce.
• Death of owner or co-owner.
• Loss of job of principal wage earner or of one of two wage earners.
• Job relocation.
• Ill health of one or both home owners.
• Retirement and therefore relocation or downsizing house size needs, or desire to take some of the equity out of the house for retirement purposes.
• Owner lost money in a business or other investment venture and needs to sell the house to pay off the debt.
• Owner has not made payments on the mortgage due to personal or financial problems, resulting in court proceedings by the lender. This could be in the form of an order for sale or foreclosure proceedings. The length of time before the house could be sold in the above circumstances varies depending on the provincial jurisdiction
• Owner wants to sell in a seller’s market.
• Owner is concerned that the market is changing and could become a buyer’s market.
• Owner is testing the market to see what the market will pay, without any serious attempt to sell.
• Children leaving the home and therefore downsizing.
• Desire to buy a larger home due to increasing family size or needs. • Desire to trade up to a nicer home or better neighbourhood.
• Desire to buy a house with a rental suite in basement for revenue.

Why Investment Properties Might Be For Sale
There are many reasons why a condo bought for investment could be listed for sale. The motivation for the sale does not necessarily mean the property has serious problems or is a bad investment. Possibly the condo complex is poorly managed, poorly maintained, or has excessive rental vacancies. In many cases, an astute investor could turn the property into an attractive investment by identifying the exact problems and opportunities, devising a plan for turnaround, and buying at below market value. Explore to find out the real reasons why the property is for sale.

Here are a few of the common reasons for sale:
• Inexperienced Owner. Possibly the owner was a first-time investor who bought beyond his skills, resources, and “comfort zone,” and feels intimidated by the responsibilities, time, and risk involved.

• Partnership Disputes. About 75 per cent  of business partnerships at some point break up or have conflict. Maybe the property is for sale due to unresolved disputes. Another possibility is that some investors need to get out for financial reasons or changed investment goals.

• Tax Benefits. Maybe the owner has depreciated the building as much as possible and wants to sell because the land value on which the condo is situated has gone up substantially in value. The owner wants to minimize the capital gain aspects by selling in the current market.

• Settling of an Estate. If the owner of the property has died, the executor of the estate wants to settle the estate reasonably quickly, and the property could therefore be priced at fair market value or below in order to entice a sale.

• Poor Management. This could be because the owner is attempting to manage it himself, but lacks the skills, knowledge, or personality to do it profitably. Maybe the owner has hired the cheapest management firm and they do the least amount possible. If an owner lives outside the city, province or country, possibly the management company is indifferent and allows the property to deteriorate, causing problems to occur.

• Excessive Vacancies. If a condo development has a lot of condos for rent, and suffers from ongoing vacancies, it could be because the building is run-down or has poor management; there are unstable employment opportunities in the community; there is the wrong mix of tenants in the building; there are more attractive competing condo buildings, or the rents are too high.

• Financing Problems. For various reasons the owner could have, or anticipate having, difficulty refinancing the property.

• Distress Sale. This means that the owner is forced to sell, generally due to legal action by the mortgage company, in the form of a court order for sale or foreclosure litigation.

• Personal Problems of Owner. The owner could be having personal, marital, health, employment, or financial problems.

• Change in Investment Strategies of Owner. The owner could have revised his or her personal investment strategies and goals.

• More Attractive Investment. The owner may be interested in purchasing a different real estate investment property that is a more attractive investment package.

• Seller’s Market. Possibly the market is an attractive one for selling revenue property and there is more demand than supply, hence sale prices have gone up. The owner could decide to take advantage of the increased market activity.

• Concern that a Downturn Might Be Coming. The owner could foresee that the real estate cycle could soon be taking a downturn, and that property values could drop.

• Run-down Properties. Due to management or financial difficulties, the property could visibly deteriorate, causing the owner to want to sell.

• Run-down Properties. Due to management or financial difficulties, the property could visibly deteriorate, causing the owner to want to sell.

Douglas Gray, LL.B., formerly a practicing lawyer in Vancouver, B.C., is now a consultant, speaker, columnist, and author of 22 bestselling books, including the recently released Canadian bestseller, Making Money in Real Estate (The Canadian Guide to Profitable Investment in Residential Property), 2nd edition.

Excerpted with modification, from 101 Streetsmart Condo Buying Tips for Canadians, by Douglas Gray, to be published by John Wiley & Sons in May, 2006. Copyright  2006 by Douglas Gray. All rights reserved. Any reproduction of this material without the author’s advance written consent is prohibited.

The author assumes no responsibility whatsoever for any information provided above, as the purpose of the column is for general information only, and not intended to provide professional advice.