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Looking at an HOA? What Every Homebuyer Should Know

Nov 22 2021

If you’re looking to buy a home, chances are you’ll consider buying into a homeowners association (HOA).

Also known as community associations, condo associations, or common-interest developments, HOAs can consist of townhomes, condominiums, or single-family homes.

They operate a bit like private governments, managing and maintaining common areas, shared systems, and even shared roads, all through fees paid by the homeowners. They also make and enforce community rules.

(Learn more about what HOAs do and how they work.)

More than half of all U.S. households are in an HOA, according to HOA-USA. But if you’re new to them, you may not be sure about how to choose one.

Enter, Eli Report.

Rather than looking through hundreds of pages yourself, Eli Report reviews HOA documents, like meeting minutes and annual budgets, and compiles the most important information into an interactive report that’s easy to scroll through and understand. Findings are presented in reverse chronological order, so you can review the most recent events first.

Eli Reports are typically purchased by real estate agents on behalf of their clients, but homebuyers can order them, too. The first report is free and additional reports are $40 each for U.S. customers.

Below are a few takeaways from our chat with Thomas Beattie, Chief Operating Officer at Eli Report, about things to keep in mind when scoping out an HOA.

A thorough understanding can help you make the right decisions as a homebuyer — and resources like Eli Report, along with Framework® Homebuyer Education, can make that process a whole lot easier.

Benefits of living in an HOA

The first question that comes to mind for most homebuyers is, “Why should I live in an HOA?”

Like any other type of housing, whether it be in a city, a rural area, an apartment building, or a private home, HOAs aren’t for everyone. However, they can be ideal for those who want consistency and reliability in the appearance of their neighborhood or complex, for example.

“You generally have a uniform, nice-looking community and the goal is to preserve the value of the community as a whole,” Beattie explains. “It’s supposed to look and feel harmonious.”

Living in an HOA is also a great way to share the responsibilities, stresses, and successes of homeownership, adds Suzanne Brendle, our Director of UX Content Strategy, who lives in a condo building in Boston.

“It’s not just you, so you don’t have to know (or pay for) everything on your own,” Brendle says. “Someone will know something about a problem. You’re not alone.”

Plus, some HOAs can offer amenities that may be out of your budget in a private home — like a swimming pool.

Things to look for in an HOA

In a recent survey, some Framework learners said not researching their HOA thoroughly enough is their biggest regret from their homebuying journey. That’s not to say that this will be your experience, but it demonstrates the importance of taking the time to investigate and ask questions before buying into one.

Here are a few key things to keep an eye out for when considering an HOA:

  • Harmonious membership – For the most part, you want to see that members of an HOA agree on issues they vote on, like when to raise their monthly dues or whether to allow short-term rentals. If an HOA often has members not paying their monthly dues, meanwhile, that could be a red flag.
  • Timely repairs – Repairs and maintenance in a community should be prioritized appropriately.
  • Population of renters – When the full-time residents of an HOA are mostly the homeowners, it can be a good indicator that the people who live in it are involved in and care about the community.

An Eli Report outlines this information and helps homebuyers understand when something is a red flag, Beattie notes.

But you can do your own due diligence, too. When you visit an HOA, look around at whether it’s clean and well-kept, as that can demonstrate how responsibly its finances and other factors are managed.

Reviewing an HOA’s finances

Learners we surveyed said one of their biggest takeaways from Framework Homebuyer Ed was being prepared to include their HOA fees in their monthly expenses.

When you live in an HOA, you’ll need to pay dues each month. It’s a requirement right along with your mortgage payment. Your dues will go toward the HOA’s overall budget, so you’ll likely want a thorough understanding of how that budget is spent and managed.

Things to pay attention to include:

  • What the dues pay for – What do you want to be included in your HOA dues? Snow removal? Trash pickup? See if the services included in the monthly fee match your needs as a homeowner.
  • Adequate reserve funds – Just like a homeowner is wise to have emergency savings, an HOA should have a healthy amount of reserve funds to handle the unexpected.
  • Dues increases – How often does an HOA raise its dues? And by how much? Do members agree on fee increases in meeting votes, or do they tend to fight over the issue? These are all things you’ll want to consider before buying a home in one.

For more guidance to help you make the right choices as a homebuyer, try these posts:

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