What to Know Before Buying an HOA Property
Living in a homeowners association (HOA) can be a great option for many buyers. Neighborhoods or condo communities governed by an HOA can provide perks like low-maintenance living, a close sense of community, and sometimes convenient amenities.
Let’s take a deeper dive into this type of living and discuss some of the pros and cons, and what you need to know before making an offer.
Understand the fees
Depending on the community, there are a few different fees involved in an HOA. Some require a one-time capital contribution at closing, which helps build a reserve fund for future community improvements. Then, there are monthly HOA fees that typically pay for things such as ongoing maintenance, lawn care, and amenities, like a pool or fitness center.
There is also the possibility of special assessments. These are sometimes required by the HOA for large maintenance items not covered by the standard monthly dues or reserves. For example, while living in a condo community there may be a point where the condos need new roofs. If there aren’t enough funds in the association’s reserves to cover the expense, the association may charge a one-time assessment to cover the costs.
REALTOR® Amy Sweet with RE/MAX Real Estate Professionals says because there are different fees and expenses involved, it’s a good idea to look into how financially sound the HOA is.
“I always ask for a copy of the financials to see if there is a healthy reserve fund, especially in a community where the HOA covers the exterior,” she said. “I also ask for a copy of the minutes from the last board meeting to see if there are any recent discussions about rate increases or upcoming projects.”
In an HOA, it’s also important to understand what is covered and what is not. Some cover trash pick-up and landscaping, some cover other utilities including water, and some will include exterior maintenance, including siding and roof repair.
REALTOR® Mary Jo Garascia with Berkshire Hathaway HomeServices, Tomie Raines REALTORS® says these things can vary from association to association, and there can also be differences from state to state.
“For instance, in some states, it’s not as common for the exterior to be covered by an HOA,” she said. “We have a lot of people moving here from out of state for the university, and they may be surprised that certain things are – or are not – covered.”
Know the rules and restrictions
In some HOAs, you are limited in what you can do with your home. Rules may dictate what changes you can make to your exterior, what types of lawn decorations you may have, how many cars can park in your driveway, and what types of vehicles are allowed. Some may have restrictions on the number and/or size of pets, while some may not allow pets at all.
“Some people aren’t fans of HOAs because of these rules, but keep in mind that the intent is to keep the integrity of the neighborhood,” said Sweet. “This ensure the homes are well maintained and that they retain their value. In general, most HOA rules are pretty reasonable, but it’s important to review them carefully so there are no surprises.”
And Garascia says discussing your needs and wants ahead of time is important because they may determine which HOA, if any, is right for you based on the rules and restrictions.
“If you want a large cement pad to store your camper, a fence for your dogs, or a shed in the yard for storage, you may not be able to live in certain HOA neighborhoods or communities because sometimes these just aren’t allowed,” she said.
Research the community
As you would with any home purchase, drive through your potential neighborhood at different times of day to observe activity. You may even want to park your car and walk around a bit. You’ll be able to get a feel for how properties are maintained, and if you see residents out and about, you can ask them how they like living there.
“You may want to ask questions like, how accessible and communicative is the management? How do they respond to neighborhood concerns? How open are they to the opinions of community members? How quickly do they handle maintenance issues?” said Sweet. “Also, look into the HOA management. Is it the builder, a property management company, or has leadership been handed over to the homeowners?”
Lean on your REALTOR®
With so much to consider, one of the best things you can do is enlist the help of a professional, local REALTOR®, especially one who is familiar with HOAs.
“I live in an HOA myself and was recently speaking to some people who had just moved into the community,” said Garascia. “They didn’t realize all of the amenities that were available, they didn’t get a key to the clubhouse, and they actually hadn’t reviewed the association bylaws. When choosing an HOA it’s really about a lifestyle and it’s important to work with someone who will help ensure you have all the information needed to determine if it’s the right choice for you.”
If you are looking to purchase a home and would like more information, visit the Greater Lansing Association of REALTOR®’s website at www.lansing-realestate.com for a list of area professionals.