Hi Carrie:

Think twice about buying anything, especially something as big an investment as a house, is always the prudent thing to do.

There is a varieties of reasons why HOA fees are high. It might depend on the type of things the HOA fee includes, location of the HOA, how efficient/effective the property management company is, any defaults on HOA fees, any repairs/improvements that are not budgeted, ..,, the list goes on and on.

The best way for you to tell whether the HOA fee is justifiable is by getting HOA documentations and read through them carefully. The set of document will reveal the financial health, the management, future scheduled or none scheduled repairs/upgrades to the HOA, ..etc.

I will not rule out all HOAs but will strongly recommend you to get the service of a reputable and knowledgable Realtor to help you through the purchae process, incluing reviewing HOA documents with you. Also, make sure you look at different condos/homes in your price range - I always encourage my clients to look at a lot of properties before they buy - so that you will know you are buying the right house and that you have mde the right decision in doing so!

Best,
Sylvia Barry
Frank Howard Allen Realtors

Dear Carrie,
Grace's answer was excellent, and I'd add one other item particular to our foreclosure environment today. If a number of property owners in the complex have stopped paying, either due to financial distress or because the property has been foreclosed, the HOA board increases the fees of the remaining owners to cover the deficit. So, you'll want to find out the percentage of property owners who are delinquent on their payments, as well as the HOA dues amount history. All lenders now require this type of information before they'll loan on the project.
Also, once a property has been foreclosed on by a lender, the lender will start making the HOA payments. However, they usually will not pay the back dues, which can be up to a couple of years delinquent. This then becomes a point of negotiation between the buyer and the bank and can mean that the buyer has to bring thousands of additional dollars to the closing.
Good luck with your house hunt!
Anne

Hello Carrie and thanks for your question.

It's interesting, isn't it, that two identical homeowners associations can have such largely diverse assessments or HOA dues? I can point to three HOAs in Campbell--all very near to one another--that have fees as low as $200 and as high as $500, and yet, there is very little, other than the dues, that differentiates these three HOAs? So I'm often asked, "why" are the fees so different?

To be frank, the HOA dues are influenced by: 1) age of the association; 2) type of Association--condominium or planned development; 3) size and complexity of the common areas (including the building components), 4) amenities within the community; 5) number of homes in the community; 6) the maintenance and deferred maintenance over the years; 7) the reserve funding; 8) current level of maintenance and contract pricing; 9) insurance coverages including whether or not earthquake insurance is included; and 10) actions of the Board or Association that may have increased the association's financial responsibilities.

So while $400 per month may seem extra high to you, if the Board has, for example, delayed maintenance in the past, which resulted in additional damages to the building OR the reserves were inadequate and now need to be superfunded to meet the requirements, then the assessments can quick escalate to meet those needs. To learn more about the specific components of the assessments at this association, take the time to review the operating budget and reserves for the Association.

Good luck!!

Sincerely,
Grace Morioka, SRES, e-Pro
Area Pro Realty
Co-Author: Homeowners Associations: A Guide to Leadership and Participation
Co-Host: Naked Real Estate on http://www.blogtalkradio.com