Homeowners Association (HOA)
An organization of homeowners of a particular subdivision, condominium or planned unit development. The purpose of a homeowners association is to provide a common basis for preserving maintaining and enhancing their homes and property.
(HOA Law and Legal Definition)
Homebuyers have wishlists…each has their own…
“big kitchen with an island that can fit six”
“three car garage, I have to have a three-car garage”
“a big backyard”
“master bath with dual vanities and a big walk-in shower”
“close to my parents”
Buyers wishlists…those things that make the home search fun, those things that make their eyes light up when they find them.
I’ve been at this real estate thing for a pretty long time I’ve heard a bunch of wish lists but in all this time I’ve never had a buyer include…
“a super reasonable, financially stable homeowners association with enough money in reserves to pay for the big stuff without charging a monthly arm and a leg and an association with less than 20% of its residents behind on their dues.”
That ↑ is not nearly as fun as a backyard or as sexy as dual vanities and a big walk-in shower.
So…nope…never heard that one on a buyer’s wish list.
But when you’re considering purchasing a property with a Homeowners Association…it’s got to go on the list.
The HOA can make an impact a big impact on your enjoyment, finances and future value of the property you purchase. When you’ve found that perfect condo, or townhome, or home or any other “wishes come true” property with a HOA…you have to pause before you proceed.
Before you reach the “all my wishes have come true here” emotional point of no return, pause and get in the know:
Know the Rules
Can you have a grill on the balcony? Are pets ok? How big and how many? Can I rent my condo after I buy it? What happens if I break the rules?
The HOA has a list of rules and you’ll want to make sure you can live with them.
Do you hate being told what you can and cannot do? If so, you’ll have to reconcile your independent streak with the control the HOA maintains. Consider your own your desires and temperament.
Know what’s included and what isn’t (FEES)
Fees will differ from one community to the next and you’ll want to know the answers to the fees questions of each…What does the monthly fee cover? How often have fees increased and by how much? How large is the HOA’s reserve fund? Is a special assessment on the horizon? How do the fees compare to others in the area?
Know the Association
Some associations are self-managed, others are managed by an outside company. Know how the association works…how are conflicts resolved? Is the association wrought with drama and silly politics? You’ll want to know what you’re getting into. Meeting minutes and talking with residents can be revealing.
Know you’re not alone
If you’ll be getting a mortgage for your purchase, the mortgage company will be checking out the HOA as well to ensure their lending on a good bet. They won’t lend on an association that’s financially weak by their standards. The mortgage company doesn’t care about grilling on balconies, but they do care whether the association has enough money in reserves to handle those big-ticket items that are sure to come up.
Homebuyers have wishlists, each has their own…but an HOA you can live with merits being on all of them…put it on the list.