Understanding that this is a complicated question, what is considered a fair per square foot condo dues range

Asked by Michelle Harden, Kirkland, WA Thu Jan 15, 2009

when the condo has limited amenities?

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Ardell Della…, Agent, Kirkland, WA
Fri Jan 16, 2009
Hello Michelle, this is an excellent question with a complex answer :)

1) New construction, by design, usually has an understated monthly that has to be adjusted upward after the HOA is turned over from the builder to the residents. The low amount helps the builder sell them, and then the HOA of residents determines the real amount by the method shown below. If they do not do this within the first year or two, then there is sure to be a special assessment somewhere down the line.

Note that until recently, WA Law did not require part of this method, and recently changed the law to some extent, but expect to see the laws draw all HOAs toward better accuracy using the method below.

2) For an existing complex, once all units are sold, the monthly dues are calculated annually using this method.

a) Annual expenses divided by # of units or total square footage, equals Part 1 of monthly dues
b) A Reserve Study is done to determine the replacement cost of all "major components". Cost per item is divided by the life expectancy of each Major Component, and then divided by the number of units or total square footage and that equals Part 2 of the monthly dues

Monthly dues equals the total of Part 1 plus the total of Part 2 . A ballpark might be \$150 a month for annual maintenance and \$100 for reserves, equals \$250 a month in annual dues.

Some that you see up at \$375 are a result of the owners not changing the dues from the \$.79 the builder placed, as soon as the HOA was turned over to the residents. The longer they wait to make that change, the higher the monthly will be, as they are playing "catch up". If they wait until something needs to be replaced, then there will be a large special assessment AND a dues increase, both.

>From a value perspective, people like the dues to be no higher than \$299. When they see \$300+, they want more amenities. It's psychological, of course, but many buyers will balk at \$315 vs. \$295. It's not about the twenty dollar difference. Seeing that \$300 + just feels like "too much" and does impact property values.

For larger complexes with more amenities that are already \$300 something...going to \$405 is a killer. Same psychological reaction. Boards should always manage complexes to keep the number within the same first number as much as possible, knowing that going to \$315 from \$295 will impact property values.

Still, a special assessment can push values down much further than a higher monthly...so following the formula regarding Part 1 an Part 2 is the best method.

As to per unit or per sf, that will be determined in the CC&Rs. In my experience, properties in Downtown Bellevue and Downtown Seattle will be different than interior complexes. Many of the high rises with views have much larger units at the top, and the units vary in size dramatically as you approach the lowest of floors. That is why they use square footage. A complex in Kirkland on 7th Ave that have only 2 or 3 sizes of units, will likely have three fees that are "tied" to the size of the unit, but not specifically square footage driven.

The problem with being square footage driven is the "as built" does not come out exactly as planned for each unit. The HOA inherits a huge headache if they use square footage...so best to adjust dues by size of unit...but not pin it to specific square footage numbers. That becomes a nightmare.

The builder may say \$.79 per square foot, but usually that says (approximate) and when implemented at closing, the dues are a set monthly and not a square footage quote.

If that confuses you more than it helps you :), please feel free to call me
Anna Novikoff, Agent, Kirkland, WA
Mon Mar 1, 2010
Hi Michelle,
One thing to keep in mind when comparing \$ p/sf in new construction vs resale condos is that many times, the developer tries to quote the lowest HOD amounts possible to make the homes seem more saleable than the competition. Once the HOA takes over (usually at about 75% sold), they may revisit the items included in the dues and add to them. This may include items like funding the reserves based on a reserve study (which costs money to do as well), changing management companies, adding or eliminating onsite workers, ie: gardeners, concierges, etc. Within 1-2 years from a project being turned over to the HOA, most complexes experience adjustments to their dues - usually in the form of an increase.

Julie Hall, Agent, Kirkland, WA
Thu Jan 15, 2009
Michelle, I saw your second post. I will say that Bellevue Towers (I've shown several units in that building) is a phenomenal value in DT Bellevue! It seems that the new and resale high-rise, luxury buildings in Downtown Seattle & Bellevue all have dues of about \$500-\$600/month from what I've noticed when showing clients in the 1,300-1,700 SF size. There are also some great common amenities available in these buildings - guest suites, gym's, parks, green design, conference rooms, concierge, valet parking, wine caves, etc. Escala is a pretty outrageous project! They raised prices when others were reducing prices and people were still buying...it's a pretty posh building for sure! I showed that building too...it was a lot of fun to tour. How large is your unit and what are your dues? Let me know if I can help further ~ have a great weekend!
Web Reference:  http://www.JulieAHall.com
Mary Sunde, Agent, Bellevue, WA
Thu Jan 15, 2009
Michelle
In my experience a well run complex averages about 1% of the fair market value. I know that assoc base their individual dues of the sq ft of each unit with larger units obviously paying a higher share. Now that being said dues depend on the amenities that are available in and with the buildings (is the underground parking, a gym/sauna/pool, rec room, outside gardens); how old the building is and if properly scheduled
maintainence is planned for like exterior painting, roof repair/replacement, cleaning and maintainence of
common areas, whether complex pays for water/sewer/garbaqge or if it is billed invidually to unit, is building staffed with on-site management personnel. You should pay particular attention to the building's budget
to see what actual costs are or are projected to be and what the association is budgeting not only for the present but for the long term.

The reason they are assessing dues per square foot of unit space is to determjine the appropriate % share
of each owner in the building.
Mary
Michelle Har…, , Kirkland, WA
Thu Jan 15, 2009
Maybe I didn't ask the question properly, but in looking at new high rise condos in Bellevue and downtown Seattle, they all quoted their expected dues in terms of \$xx per square foot. Examples are Bellevue Towers, who were proud of their \$.50 per square foot rate, and defensive Escala, at \$.79 per square foot. Perhaps the actual charge per unit isn't precisely calculated, but it's clearly a form a measurement being used by new developers. Many others seemed to do it as well ( I just don't recall the rates. ) I hadn't shopped around enough to know whether this was common for existing condos as well. ( I live in one and we're debating whether our rates are "above market" and make the units unattractive. Just curious.
Meredith Laws, Agent, Redmond, WA
Thu Jan 15, 2009
Hi Michelle,

I have never seen condo dues based on square footage. They are typically based on amenities provided or maintained by the condo association - insurance, some utilities, common areas, landscaping, etc. - and are paid for equally by each condo owner. Perhaps the dues might be prorated in some condo associations based on the size of your unit or the number of units owned by one person, but otherwise, square footage shouldn't really factor in.

Hope that helps!
Julie Hall, Agent, Kirkland, WA
Thu Jan 15, 2009
Hi Michelle,
This is a complicated question because we usually don't relate condo dues to the price per square foot. These are 2 separate topics that don't relate to one another. However, often when you're talking about HOA dues in the City, the larger units will be assessed more money than the smaller units. As far as condo dues, this is complex in itself because the amount that each building charges for dues depends on A LOT of factors; primarily the financial strength of the complex and whether there are assessments or whether the building needs a lot of monthly maintenance repairs because it may be older. I would say that ON AVERAGE, if this helps, I've noted that condos in Seattle that are an average of 600-750 SF seem to have dues of about \$250-\$350/month. If it's much higher than that we start to investigate why the dues are higher. I live in Maple Valley (S. King County) and my town home has dues of \$275 for every unit regardless of size. About the amenities, the dues do seem to be higher if you have high-upkeep items like elevators and swimming pools, but sometimes are not related to the common amenities at all. So, I tried to answer your question! Hope some of what I said helps you.

Have a great day!
Web Reference:  http://www.JulieAHall.com
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