Home Selling in McHenry>Question Details

Kkozma, Home Seller in Illinois

Do HOA's increase or decrease residential home property values?

Asked by Kkozma, Illinois Mon Aug 27, 2007

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Vet69729’s answer
Home buyers will run for the hills if they even hear the word Associations or Covenants. Most communities will try and hide the facts about an association. HOA will dragged the value of a home down as most have heard all the stories about how most usually end beely up and into bankruptcy. There is no need for builder to have these attached to single family homes, as it does not protect property values. There are plenty and enough city codes to protect your property from your neighbor. The majority of the builders start these Covenants and HOA as a cash Cow so they can have a personal slush fund, nothing more that corrupt builder trying to squeeze every dine they can from a home buyer. Pools are high maintenance and have a short life span, so if you think your getting a special bonus. Your not. Most of these are in bankruptcy as the builder is long since gone.
1 vote Thank Flag Link Tue Nov 1, 2011
My brother's neighborhood (less than a mile from mine) has homes that list and sell in a short period of time. Empty houses in my neighborhood stay empty. Prices on houses are comparable. The houses are the same size. His neighborhood is older by 10 years. The difference...he has no HOA. My neighborhood does not. Any "maintenance" issues are handed by the City of Glendale (Arizona). The lack of an HOA has given him peace of mind and allowed him to pay more to his mortgage. Mine is all on HOA fees and monthly maintenance and landscaping. Right now I am facing a fee of over $2000 for missing a twig (so did the landscaper and my neighbors). My answer HOAs have in general a lousy reputation. I certainly will never purchase in one again.
2 votes Thank Flag Link Tue Nov 1, 2011
The only people that would agree that HOA's increase home values are the agents and brokers that posted such idiocy. There are no true stats that HOA's increase home values, so these agents are typically simply not telling the truth. The majority of people given all the facts about what the HOA's operation would not have them. Most are incorporated, so there is a Protective Covenant involved. That is usually hidden from the Purchaser. Breaking any of the rules of the Covenant or HOA could mean they will forclose on your property at their whim. Getting behind on the fees is also in some Associations by-laws to forclose. These covenants are nothing more than slush funds that the majority of builder skim money from. So it you builder is still running things, make sure he is being audited and accounbt for all money. Also make darn sure the money from dues is not controlled by the development company and should have a separate accounts. Get rid of all lights and water meters, as this is a way the developers raise the revenue for their funds. No one will buy your home if your in a HOA. Plan on making it a rental property as it won't be worth what you paid for it. It will be a community of rental property sooner than later.
2 votes Thank Flag Link Wed Sep 21, 2011
They bring the values down. Why? Becuase they reduce the market for people who are willing to buy your home. When I was a realtor most people I met refused to look at homes that had HOAs, if they aren't going to look at your home they aren't going to buy your home. The reducuction of the prospective market, subsequently reduces your asking price. Several homes in my area of PA that have HOAs also have JUST REDUCED signs attached to their FOR SALE signs and take months before they are sold. And it is a shame the houses are really nice, but people don't want to deal with the HOAs and who can blame them, this is America and not Germany throughout the 1930s.
2 votes Thank Flag Link Tue Aug 5, 2008
I am 62 and have lived in HOAs my adult life, and until 2013, I thought they were great. Then I ran into a corrupt Board President, and have spent $4500+ (with more on an upcoming bill). My HOA has failed to enforce the CC&Rs, and since I'm paying healthy HOA dues, I decided to seek legal action, as indeed property values in this neighborhood are depreciating. The very idea of living in a PUD to to make sure that all CC&Rs are fairly and equitably enforced.

You simply MUST know your CC&Rs + ByLaws. And, if you are a person who follows the governing documents, you also need to watch and make sure that the CC&Rs are being enforced thru out the neighborhood. Boards are made up for the most part of lazy people who want to control others rather than enforce the governing docs. In my association, guess who's in violation of the CC&Rs? Almost the entire Board. They have done everything possible to hide docs from me and I had to seek legal action to get them. Hopefully, but not likely, I'll be able to recover those costs thru the legal system. BUT WHAT A HASSLE.

I am with the many HOs here who are speaking up against HOAs. I love my home, but should I sell, buying in a PUD for me is an absolute NO NO. They are lovely until corrupt management gets in and you can't get them out, or they simply recirculate their positions. All of us believe we are good people and we don't want to step on anyone's toes. If you are an extremely subservient person, get into an HOA and you'll likely love it. If you have the tiniest streak of independence, I suggest you find a home outside of a PUD.
1 vote Thank Flag Link Thu May 1, 2014
IMHO, HOA;s are dangerous. As others have pointed out, they begin in the shadows and allocate capital assets that would normally fall to the City or Town to the Home Owner. In our community, I recently discovered the fine print of the dedication for the property made the homeowners responsible for the retaining walls that support the road base. All 6 were poorly constructed and now, ten years later, they need to be replaced at an astronomical cost. This is something anyone with common sense would have presumed was the responsibility of the Town while shopping the neighborhood.

WORSE YET, these are shadow governments with NO OVER SITE. There is no government agency that regulates their actions or operations. If the board and management company choose to operate as a banana republic, as many do, your only recourse is a private lawsuit. In many HOA documents you'll also find that bringing such a suit and losing leaves you liable for the entirety of the legal fees for the HOA as well.

HOA's sound good on paper but why do we need another level of government, especially one with no recourse once you've bought in? Remember, anytime someone says, "I'm from the builder and I'm here to help you", RUN :)
1 vote Thank Flag Link Sun Sep 23, 2012
There is certainly pros and cons of living in HOA governed communities versus no HOA. The best advice to any buyer looking to purchase a home is do your homework. Does the monthly dues make sense to the maintenance of the property versus owning a stand alone single family house and maintenance costs of the house?

My experience as a treasurer related to an HOA board was interesting and shocking. Few home owners would get involved and even fewer attended the meetings as requested by the board. Quarterly financials sent to the home owners were either tossed in the trash or never reviewed by the owners. Some home owners even ordered the financial records to be audited at the expense of all home owners---the audit was clean of course. Then another home owner in the construction business did his own evaluation on maintenance/repairs---both home owners quickly realized the HOA was not difficient in its records or recommendations related to costs. The needed repairs were put on hold for nearly a year due to this and no properties were sold during this time. If HOA records are not made available to potentially new home owners run like the wind! Otherwise, be accountable and take responsibilty as a home owner in shared expenses and be part of the solution not the problem.
1 vote Thank Flag Link Wed Nov 2, 2011
Don't all of agents and broker see the irony here within these few posts, that you are the only ones with positive comments. Maintenance costs normally have to increase as with inflation. If the maintenance to getting out of hand it should be looked at, and asked is the higher cost justified? Pools are high maintenance. If your trying to keep it going you may as well fill it in as many have done and pour a slab over it and create a picnic area. If you have common areas, get rid of the water meters and lights. Mowing the grass and having the lawn doctor bandits spray the small areas can be flipped over to colored rock. Each smal area is a separate contract and your being ripped off. The community that take care of the essentails like weeds and such, or a bottle of weed-b-gone. Most of the covenants are way too restrictive and when you make a sizable investment, people don'tg want to be told that they can not do anythink to upgrade their investment. That all a lot of BS.
1 vote Thank Flag Link Thu Sep 22, 2011
i believe HOA dues and the status of the financial position of an HOA will indeed make or break a deal. In my area majority of HOA governed communities are trying to recoup funds from years of no substaintial monthly due increases to meet short and long term maintenance needs of communities. A shocking moment for me was while working with a buyer and showing the buyer an HOA's financial records indicating only $1.34 in reserves, the buyer bought the unit anyway? Although special assessments and large due increases would be passed down to a new buyer, this seem to make no difference to the buyer.
1 vote Thank Flag Link Thu Sep 22, 2011
That depends on whether a sufficient amount of money is being budgeted to maintain the community and an adequate amount in reserves and how that money is being spent.

If fees are too low, the look of the community could suffer and periodic assessments may become necessary. That would not help property values.

If fees are higher than other similar communities, but the community is not well maintained, the wrong vendors are being used and the fees are not being appropriated properly. This too will harm property values.

If fees are in line with similar communities and the community is well maintained and there are adequate reserves, property values will benefit.
Web Reference: http://www.golftobeach.com
1 vote Thank Flag Link Wed Sep 21, 2011
You responce tells this system engineer that HOAs are of limited if any benifit as it's not just fees but feefdoms that matter
Flag Wed Mar 2, 2016
If you had 2 identical homes in the same location and one had monthly fees that keep going up and the other had no fees, the one with the lower expenses would sell for more-at least in Northern Illinois.
0 votes Thank Flag Link Tue Mar 8, 2016
HOA's definately increase the properties values. We are a deed restricted coastal community. Our homes sell for approximately 40% higher than a coastal community 20 minutes north with no restrictions. That neighborhood looks run down, there are trailers and disabled vehicles on front lawns. Junk piled along the side of the homes, mobile homes in driveways that are almost as big as the home. Fences that block the neighbors views of the water.

Most people do not like being told what they can or can't do on their property but appreciate that their neighbor does not have 6 cars on their front lawn. There is a fine line between HOA control and a neighborhood with no controls in place. That is why when we are buying a home we need to know what we are comfortable with.
0 votes Thank Flag Link Mon Mar 7, 2016
I've had a decent side business buying and selling homes.

Over the years I've found that a HOA is perceived as an advantage (worth more money) *only* to buyers who have never owned property in an HOA area.

Those buyers with a direct experience are rarely impressed with the fact that there is a HOA associated with a given property.

One potential buyer told me 'That anyone who believes you can't cheat an honest man has never had to deal with a HOA.
0 votes Thank Flag Link Wed Mar 2, 2016
NO!!!!! They don't! IN FACT, More and More they are becoming a deal breaker! They've done this to themselves! HOAs will be a major contributor to near coming real estate crash because they have become such a nuisance! I, myself am being pushed out of my current neighborhood because of HOA's abuses and crooked ways. Most of the neighbors that I have had for several years have gone, or are leaving to find homes in areas that are not HOA. Therefore to try to sell a home thats already in an HOA has become quite difficult. Just look at apartment and condominium buildings. Look whats happening there! You have to be crazy these days to want to live in an association. There is no peace!
0 votes Thank Flag Link Mon Jun 1, 2015
Found all my HOA answers at HOA Member Services

http://www.hoamemberservices.com

They would probably be able to answer your HOA questions best, but I would say it really depends on the market and the HOA monthly dues.
0 votes Thank Flag Link Tue Oct 28, 2014
Member service companies make their living managing HOAs and trust is no one of their strong suits. dues are a very small part of the equation.
Flag Wed Mar 2, 2016
In many cases yes, higher the HOA fees the less desirable the area.
0 votes Thank Flag Link Sat Oct 25, 2014
It depends on your location.
0 votes Thank Flag Link Sat Aug 9, 2014
Yes, HOAs can protect property values when they are willing to actively enforce the CC&Rs. But they RARELY do. The only things they enforce are collecting community dues. When solar panels are left unscreened, when the uniform colors of homes are not enforced, when trees are not replaced and when paint deteriorates on the Club House and homes, the BODs are not doing their jobs. Too often the BODs are bullies who want all of the glory. Thank gawd they pat themselves on the back, b/c after attending many HOs quarterly meetings I fail to see what they do outside of keeping the books.

At 62, when I decide my next move, it will not be to another HOA. even when a condo might seem like the perfect spot for an old gal. Check title reports before you buy. If, in a condo, some HOs own several condos you'll be able to spot right away who controls the Board. Remember, if the economy tanks again, investors who own several properties often have their properties in condos foreclosed on first. Same w/second and third HOs..

If your HOA is made up of SFRs and TH, the President sets the tone. When his/her home is not maintained, or a tree comes down and is not replaced, then others will follow. A HOA is no guarantee that property values will be maintained, but it is a guarantee that you'll be ruled by thugs. The mentality of the Board is no different than a union or gov't that selectively enforces rules.

Better to be independent and live as free as you can live.
0 votes Thank Flag Link Sat Aug 9, 2014
Why put the value of your property in the hands of the HOA? That's the bottom line. All sunk costs in improving or modernizing your home goes to waste if your HOA is not performing as promised.
0 votes Thank Flag Link Thu May 22, 2014
For more information on HOA's visit http://www.hoamemberservices.com

(Helpful Links/Education/Resources)
0 votes Thank Flag Link Tue May 13, 2014
I guess this depends on what state your house is in.
In Florida, it does not effect the value one way or the other.
Some buyers prefer an HOA, others do not.

Hope this helps,

Irina Karan
Beachfront Realty, Inc.
IrinaKaran@gmail.com
0 votes Thank Flag Link Thu May 1, 2014
This question is over 5 years old.
0 votes Thank Flag Link Sat Feb 16, 2013
We live in a non-HOA community and are adjacent to an HOA one. When we were shopping we found the property values in the HOA one were less due to simple math. The bank counts the monthly cost of the HOA dollar for dollar against when you can qualify for per month. Let's face it, most buyers want the most home they can get for their money. So, if HOA dues are $100.00 per month, that's about $20,000.00 less you can afford to pay for the same home not in HOA.

Throw in the fact that HOA's have a terrible reputation. For all the people you hear who won't live in one, you never hear someone who demands to live in one. We wouldn't touch one with a 10-foot pole.
0 votes Thank Flag Link Wed Feb 13, 2013
Bad managment companies, unqualified egotistical homeowner directors and " committees" will cause dimunitiion of values to home prices in an association.
0 votes Thank Flag Link Wed May 23, 2012
My experience is that volunteer Directors do not have the property management skills or knowledge. I was HOA president and it was a full time job which no one wants. Neighbors never want to confront neighbors when their property does not conform to the covenants. They are quick to send emails to complain and the last to volunteer. Goal setting to increase values in the community is most important.
Flag Tue Feb 24, 2015
Vet69729,

I received your email and appreciate your additional comments. As Sergio wrote below, before purchasing a property governed by an HOA the buyer should see it as a priority to obtain the necessary financial information before buying in to one these communities. In my limited authority as an agent, it is my duty to inform and obtain records for my buyer clients related to the associations. Cash cow or not, in the end it is always up to the buyer to purchase or not after reveiwing the records. If there is no disclosure law that would not stop me from obtaining the information for my clients. Common sense would certainly come in to play here. Thanks!
0 votes Thank Flag Link Wed Nov 2, 2011
They are meant to increase or at least protect the property values from decreasing, however it depends on the HOA and how they operate.
0 votes Thank Flag Link Wed Sep 21, 2011
I had this very question a few years ago. To answer the question I did an analysis of 12 subdivisions with HOA's and adjoining housing without an HOA.

We found that the subdivions with HOA's outperformed the adjoining developments by an average of 12%.

In today's market, HOA's may be of greater importance because they, if well managed, can enforce maintainace standards. With more and more homes going to rental, this can be important as one can often tell a rental by the lack of upkeep.

On the flip side, HOA fees associated with Condo developments and some subdivisions can be so high as to make the subdivision too costly. I've seen some developments where the HOA fees are in the 50-60 cent per square foot range. this can add monthly payment upwards of $1000/month and make the units unaffordable.

As with most real estate questions, the answer would be dependant on the specific property in question.
0 votes Thank Flag Link Mon Feb 16, 2009
I am a social scientist and can tell you that if you just looked at 12 subdivisons then you do not have any reliable findings. You can not have controlled for a lot of the factors that you would have had to control to know if the HOA is correlated to higher prices. I have looked for a peer-review article on this and have found none. So I am skecptical about these claims that HOA increase housing values.
Flag Wed May 2, 2012
There are diferent types of homes for different types of buyers. Empty nesters or individuals who work alot or travel alot (not in today's market maby) like the idea of having the common elements maintanied automatically. While nobody like the idea of an additional monthly expense as Art pointed out a well run association usually leads to well maintained properties & grounds which are attractive to like minded buyers.
0 votes Thank Flag Link Tue Aug 5, 2008
I think it really depends on how the HOA fee for a certain HOA compare to comparable properties and what the fee covers.

For similar HOAs with similar properties where most of the features for the properties are the same, the one with higher HOA will not be able to attract as many buyers as the other one. It also depends on how high a percentage is the HOA fee compares to the price of the house. .

Having said that, when we do com parables, we may look at HOA fees, but it will not affect the property that much.

Keep in mind that in addition to compare HOA fees, you really want to read the CC&R and also look at their meeting minutes (at least 12 months) to make sure you understand how the HOA is run and their financial situation. Sometimes a poor managed HOA will have special assessment for homeowners or it will raise the HOA fee. You don't want to find that out after you bought the house.

Best,
Sylvia
0 votes Thank Flag Link Mon Aug 27, 2007
Sylvia Barry,…, Real Estate Pro in Marin, CA
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A well run HOA can be an asset. In addition to taking responsibility for particular tasks, they maintain the standards of the community. Here's a counter-intuitive fact about HOA's. The association with the lowest fees might be one to avoid. It could be an indicator of low reserves, deferred maintenance, and an inactive board. Read over the financial reports and minutes. Has there been a reserve study? Are there sufficient reserves to cover the repair and replacement of big price tag items like a roof?
0 votes Thank Flag Link Mon Aug 27, 2007
Most HOA's protect property values. It is important they have a good reserve and budget and their dues are kept in check. If repairs and dues get out of hand it could be a deterrent for a potential buyer.
Web Reference: http://pamwinterbauer.com
0 votes Thank Flag Link Mon Aug 27, 2007
Pam Winterba…, Real Estate Pro in Danville, VA
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Generally increase. They mandate standards of care and maintenance that bring values up. Ulitmately, it can vary according to how good of a job a particular HOA does.

For those that manage budgets well and keep things going well, it will have a postive effect on valuations.
0 votes Thank Flag Link Mon Aug 27, 2007
If you all ignore the need for management of common facilities/amenities then all of you answers are anecdotal. If you live in a neighborhood where your neighbors don't care and don't paint or take care of their homes/property the you will lose value as I did twice (total = -$40,000). if you live in an HOA where you don't control your Board then you will have a bad reputation and lose value. Except for the one case of 12 communities I have not seen any other objective info in this thread. So I will stay in my HOA controlled home which is valued at more than 20% higher than other similar properties in my neighborhood - by the County tax assessor.
Flag Mon Aug 4, 2014
Deborah Madey, Real Estate Pro in Brick, NJ
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