T
he number of homes governed by homeowners associations (HOAs) is rapidly growing, making it essential for real estate professionals to educate their clients about the pros and cons of living in an HOA community. Approximately 75.5 million Americans reside in a community with an HOA, representing over 30% of the U.S. housing stock. Newer communities are more likely to have an HOA, with around 84% of newly built single-family homes sold in 2022 belonging to one.
Community associations collect fees that cover the upkeep of neighborhoods, services like trash collection and snow removal, and maintenance of common areas such as walking trails, playgrounds, and swimming pools. Homes in communities with HOAs may command a higher sale price than similar homes without an HOA, typically around 5-6% more.
HOAs implement rules and regulations to protect property values, maintain a high standard of living, and keep the community safe. However, these rules can be strict, and homeowners must agree to abide by them or face financial penalties and even legal action for noncompliance. Reviewing HOA governing documents is crucial for homeowners and prospective buyers.
Some common services provided by HOAs include neighborhood landscaping, security, personal landscaping, sports and leisure amenities, and trash pickup. The most common HOA violations are related to landscaping, design changes to the exterior, fencing complaints, and trash pickup issues.
Real estate professionals should encourage prospective homebuyers to carefully consider what they're buying into when purchasing a home in an HOA community. Agents should disclose if a home is in an HOA community, provide information about the existence of an HOA, and advise clients to review HOA governing documents.
When representing sellers, listing agents should highlight HOA-related information on the MLS listing, compile information packets, and verify sale details with the HOA. Sellers may be required to pay transfer fees or schedule compliance inspections before selling their home.
For buyer's agents, it's essential to factor in HOA fees, research the HOA, and ask questions about the community association. Homebuyers should review CC&Rs, bylaws, and rules and regulations, gauge the financial health of the HOA, and ensure they can live with any restrictions that may affect their intended use of the property.
Ultimately, real estate professionals play a crucial role in educating clients about the benefits and responsibilities of living in an HOA community. By providing valuable information and facilitating conversations with current residents, board members, or community managers, agents can help homebuyers make informed decisions and enter the community with realistic expectations.
