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Are your HOA policies hurting your home value?

Posted on Oct 17, 2016 by in Uncategorized | 0 comments

The more potential buyers there are for a property, the more likely it is that the price will be driven up.  The opposite is also true, if there are fewer potential buyers, the price will tend to be pushed downward.


Over the past couple of years, we are seeing HOA’s adopt policies that may be hurting the value of their home owners by having policies that drive away potential buyers for the area.  While it is likely that this is not what was desired by an individual policy, the unintended consequence is that these properties end up more expensive to purchase and thus the number of potential buyers are reduced.


The specific policies I am referring to usually take place in a few areas.  First, in getting a potential buyer access to the HOA information and documentation.  When a purchaser is looking to buy in a given neighborhood that has a HOA, the buyer will want to review the HOA rules & regulations, newsletters, meeting minutes, covenants and other pertinent information.  Most Associations have moved this information online so that access is quick and easy.


Unfortunately, some HOA’s have instituted policies that require a potential buyer to register and pay for the ability to review these documents.  One of the buyer’s first impressions of the neighborhood is then very negative compared to other areas.  If they have to pay for this access, they are likely to want to pay less somewhere else, which is typically on the sales price of the home.  This charge can also act as a deterrent to purchasing in this subdivision as compared to another that does not have the fee.


The second, similar problem is with transfer fees.  Some HOA’s charge excessive or different transfer fees, depending on the seller of the property.  If the seller is a bank, or HUD, the transfer fee is doubled or tripled.  What is not realized is that in most all of those transactions, the transfer fee is passed along to the buyer, thus increasing the cost of the transaction to the buyer.  Again, when the cost is increased in a fee, the amount the buyer is willing to pay for the property decreases, thus hurting the property values in the neighborhood.  Similarly, the buyer may just choose to look at other homes without the additional fee, thus decreasing the number of potential buyers for a given subdivision.


The third area we are seeing difficulties with is in communication.  Often times during a transaction, the buyer or seller will need to contact the HOA regarding a specific issue.  If it takes more than a few days to speak to someone, that can cause problems in the transaction.


There are benefits to having an HOA in a subdivision and often times, that can be one of the reasons that people buy a particular property.  You just need to look out for the unintended consequences.  Be involved in your local HOA so that it can be an asset for your neighborhood.


Greg Zadel, CRB, CRS, GRI, e-Pro
Zadel Realty   303-833-3012
8110 WCR 13 – S-4
Firestone, CO.  80504

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