Home owners’ associations, or HOAs, get a bad reputation due to sometimes misinformed ideas about their high fees and strict rules. The CAI’s National and State Statistical Review estimated that 68 million Americans lived within an HOA community in 2015, which leads us to believe there’s a reason so many continue to choose HOAs. If you’re a potential buyer who wants to understand more about what you need to know when considering a home in an HOA, check out our guide below.
Understanding the fees
HOAs manage amenities and extra services by charging those living within the community monthly fees. On average, these fees usually range from $200 to $400 per month. Though depending upon the HOA, these fees can get even more pricey, the money goes toward the upkeep of landscaping, swimming pools, community clubhouses, fitness rooms and sport courts. When searching for a home, it’s important that buyers weight the importance of these amenities against the price and do the necessary research to understand the HOA’s fees.
Here are a few other questions to ask the HOA you are considering buying a property in:
- What determines a HOA fee increase?
- How often do increases occur, and by how much have the monthly rates been raised in previous years?
- How large is the HOA’s reserve fund?
- What does the monthly fee cover?
It’s also a great idea to ask for a printed record of special assessments that the HOA has made and to ask if they plan to make any special assessments in the coming years.
Understanding the rules
Most HOAs’ covenants, conditions and restriction guidelines, CC&Rs, are available for potential buyers to view online. HOA rules can range from where guests can park when they visit to how to cut the grass; from what flags residents can fly outside of their homes, to what colors residents can paint their homes. Though these rules may seem like annoyances, they actually can keep home value from decreasing. Many HOA boards also offer options for residents to request rule exceptions or are flexible with questions against rules residents disagree with. No matter what the rules are or how flexible they may be, potential buyers should review them before purchasing a home within an HOA and evaluate if they would feel comfortable living within the HOA’s terms.
Before purchasing a home within an HOA, buyers should evaluate if the property is already adhering to the HOA’s rules and regulations. If you buy a house is breaking these rules at the time of purchase, it is the new homeowner’s responsibility to bring the property back to compliance. Depending upon the adjustments needed, this can easily mean spending money the buyer did not originally budget for.
Though community rules can seem constricting, many who live within HOAs generally give them positive ratings. The 2016 Foundation for Community Association Research found the following statistics:
- 90% of residents would say that HOA board members “absolutely” or “for the most part” serve the best interests of their communities.
- 92% of residents say they are on good terms with their HOA’s association board.
- 70% of residents say their association’s rules protect and enhance property values.
If you’re considering purchasing a house within an HOA, be sure to do research on the community restrictions and fees to determine if it’s the best fit for you and your family.