How is the current wave of REO activity impacting home owners associations?
THEY ARE NOT GETTING PAID
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
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,
You will also want to ask about assessments? Already approved or in the process!