Foreclosure in Phoenix>Question Details

Jackson, Home Buyer in Phoenix, AZ

How is the current wave of REO activity impacting home owners associations?

Asked by Jackson, Phoenix, AZ Sat Nov 24, 2007

What are the right questions to be asking in this type of environment?

Help the community by answering this question:


How is the current wave of REO activity impacting home owners associations?


Some HOA`s in Maricopa and Queen Creek are in a cash crisis

I would be wary of any HOA`s that are not professionally managed.

"What are the right questions to be asking in this type of environment?"

Besides calling the HOA.
It may seem unorthodox, but I go knock`n on the neighbors doors. I tend to find more honest answers.

The standard REO addendum gives you a 7 day inspection. This is the time for you to check out the house, neighbors, and HOA. Plus all of your inspections. Have all your ducks in a row, and be ready to close.
After 7 days if you do not close you will loose your escrow.

Now is not the time to be using a inexperienced Realtor. Find a Realtor who has closed REO`s before.

I hope this helps

Patrick Mahony
2 votes Thank Flag Link Sat Nov 24, 2007
Mr.P, Other/Just Looking in Arizona

Only neighborhoods full of REO's are having a serious impact. Outlying areas are definitely more suseptible to the effects on their HOA. With regard to infill, the more serious problems are condominium developments. The HOA's in many of the complexes take care of insurances, roof maintenance/replacement, some or all utilities, and pool/common facilities maintenance. The long term effect is big as this can really impact their reserves when large maintenance items arise.

I would suggest trying to speak with a couple HOA Board Members if at all possible in addition to reviewing the financials. Reviewing the financials isn't always easy as a guide to uncover problems ahead unless you understand the full financial picture in addition to the maintenance items on the horizon. You can also look at the full roster of owners of a complex and check for banks and financial institution owners. You may also want to run a check on whether their are many notices of trustee's sale within the community as these are people who already have an auction date set for their property.

Ultimately, the impact is currently upon a small percentage of HOA's. It's even more important to note that this due dilligence with HOA stability be performed in this environment and ALL others. Just because their are good financial times happening doesn't necessarity mean a HOA Board has made the right financial decisions for reserves and maintenance.

Ask how many owners are delinquent? Ask what percentage are greater than 90 days behind? Ask what the top two maintenance items are on the horizon? What percentage of fees go to the reserve? What is the reserve balance? When were the last two times the reserve was tapped into and what were the reasons? There are many more questions I ask as well.

All the best,

Lloyd Fox
1 vote Thank Flag Link Sun Nov 25, 2007
This is a good question but you would have to determine how many REO's in a market. It is my understanding that the lender pays the HOA fees since they loaned with the HOA as part of the deed or title, otherwise the HOA becomes owner of the property as well.
0 votes Thank Flag Link Sun Apr 26, 2009
Some of the HOAs are having difficulty. In addition to getting copies of fiancial records and reserves, take a look at a minimum of one years worth of meeting minutes. See if foreclosures have been a concern. See if there is any upcoming long term maintenance issues that might trigger a special assessment. Your Realtor should be able to guide you through this process.
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0 votes Thank Flag Link Sat Nov 24, 2007
Cindi Hagley,…, Real Estate Pro in San Ramon, CA
You need to ask for a copy of the most recent financial records which the HOA can provide to you as they are provided to the homeowners. You want to make sure the HOA finances are stable and that there are plenty of reserves for emergencies. The reserves also help cover the losses of foreclosures.

You will also want to ask about assessments? Already approved or in the process!
0 votes Thank Flag Link Sat Nov 24, 2007
We lose a few dollars when the underlying obligation is wiped out. We only get paid from the time the bank takes over, or in the case of a short sale, when a paying owner takes over the home.
0 votes Thank Flag Link Sat Nov 24, 2007
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