Should You Buy a House with a HOA

For many first-time homeowners, buying a home with a Homeowners Association can sound like an additional headache you don?t need. It?s true that many of the experiences that we hear about regarding HOA?s are negative ones. Exorbitant fees. Stuffy board members who never take your side. Maintenance requirements that are difficult, if not impossible, to live up to. Regardless of what you?ve heard, before you completely write anything off when looking to purchase a home, it?s important to understand what we?re dealing with.?


Let?s start with what a Homeowners Association is. They?re essentially a community council that sets rules and regulations to enforce the community?s common interests. Bankrate defines an HOA as ?a self-governing organization in ?common-interest? communities where homeowners collectively pay fees to maintain the units or neighborhoods. They are typically run by resident homeowners elected to a board of directors that oversee the HOA?s management.??


HOA?s are commonly associated with condominium or townhome communities but can be in place for neighborhoods with houses as well. Each HOA has its own set of rules and guidelines, all varying in how strict they enforce the set standards. Every HOA has an annual fee that covers the cost of amenities and services fulfilled by the organization but additional fees can be incurred over time.?


Before we dive into all of the cons and pain points of an HOA, let?s start with some of the reasons why it could be beneficial.?


Property values of homes with an HOA tend to be much more stable. Because of all those ?pesky? rules that HOA?s put in place to maintain the appearance of homes within their community, it helps prevent the dip in property value that can often be caused by one or two homes within the community being at a lower standard in quality and appearance.?


Neighborly quarrels have a place to be worked out. If you have a neighbor that often gives you trouble for any reason property-related, the HOA board will act as a mediator to solve the disagreement. It?s a nice perk when you?ve tried everything you can think of to amicably resolve the issue.?


Amenities come with the deal! Some HOA?s have neat extras that come with the home like community fitness centers, swimming pools, and security. The more amenities a community offers, typically the annual fee is more expensive. If these are important things to you in your home buying decision, it?s something to consider.?


Like we mentioned earlier, every HOA is different, especially in what rules they?ve established and how strictly they enforce them. However, some of the more common issues with HOA?s come down to the strict maintenance guidelines and high fees.?


Your creativity is limited. Your personal style doesn?t matter within an HOA if it doesn?t comply with their design structures. There?s a symmetry to HOA communities which means if all the doors are painted white, your door will need to remain that color as well. Any outward design decisions are limited to what the HOA deems appropriate and in some cases, indoors as well. This symmetry is one of the reasons why property values remain stable but it can also create a cookie cutter community that some people are not interested in.?


Let?s not forget about the rules that don?t have to do with the physical appearance of the home. Many HOA?s have a set of rules members must adhere to from pet restrictions to curfews. If your HOA has an 11pm curfew, meaning no noise or guests past 11pm, and you love to entertain, this might cramp your lifestyle. If your HOA has a limitation on pets to 25 pounds or less, that dream of owning a Golden Retriever is out of the question. Failing to adhere to these rules can mean anything from a first-time warning to large fees that might seem a little ridiculous.?


Special fees can occur if the HOA needs to cover a large, unexpected expense and they have the power to charge you whether you agree with it or not. Say, for example, a tornado sweeps through the community and there are a lot of fencing and landscaping repairs to be made. An HOA has the authority to charge each member as much money as they deem necessary to cover these costs. If this is a concern to you, triple check the contract to see if there are any minimums or maximums on these costs, how much say you have in them (if any), and what control you do have. Looking at the financial reports of the HOA before purchasing can also give you a glimpse into what you might be getting into.


As far as pros and cons are concerned, these cover the bulk of it. When it comes down to deciding whether or not you should buy a house with an HOA is entirely up to your personal preference and the community you?re considering. Before deciding, do a little research on the HOA. Information to consider includes:


  • The HOA?s Rules & Bylaws: The fees don?t matter if you can?t stomach the community rules. Read them very carefully, making sure to not miss any fineprint. Make sure to note each of the things that are important to you: pet restrictions, design modifications, requirements for any services to be approved like roof repairs or painting, how many cars you can have in your driveway, etc.?


  • Fees: Let?s say the rules and bylaws are ok. Now look at the fees. What would you be committing financially on an annual basis and what are some of the additional financial contributions you?d have to make in theoretical situations, including possible citations?


  • The Community & Its Leaders: Time to get a little creative with your detective work. An HOA might seem like a dream until you have to deal with a board that typically votes against the homeowner. Check Facebook groups and other online communities to see what people are saying about the HOA. Do they seem pleased or are there a lot of negative statements. You can also ask to attend an upcoming meeting to get an even closer inside look at how things are run. If they don?t allow you to join, that could be a red flag. Investopedia recommends looking into who runs the committee or government and how well they work together.?


  • Look at the Numbers: What is the HOA?s financial situation? How much money is already saved for emergencies? Are they in debt? Are they working on any projects the members will need to fund? How have the fees increased (or decreased) over the years? How is an increase decided on? Will it be put to a vote or will members not have a say? This information is crucial for anyone living within the community and should be considered in advance.?


Bankrate shared a great list of questions to consider and the details to look for while gathering information. The main perk in deciding whether or not to live in an HOA is that you can see a lot of the details up front to make a well-educated decision. The experience you?ll have with the board and people within the community is still a gamble but if you do enough research, you should at least get an idea of what they?re like.?


If HOA?s were all bad, we?d probably have seen them phased out at some point but they?re still thriving. According to Nerdwallet, ?20% of the US population lives in some type of common-interest community, and more than half of them are part of an HOA.? After all, people love to complain about negative experiences more than they?ll talk about how well things are going. The best way to make a decision of whether or not to purchase a home with a Homeowners Association is to make sure their community aligns with your lifestyle. If not, it?s naturally not going to work out.?

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