In today’s economy, many buyers are embracing HOA-regulated neighborhoods. If you are buying or building in an HOA-regulated area, it’s important to know what an HOA is and why they exist.
What Is an HOA?
A homeowners’ association (HOA) is a private, non-profit organization that manages common areas in a residential community. Each HOA has its own set of rules and regulations that control the appearance of homes within the development and the health, safety, and welfare of residents living there.
How Much Are HOA Fees?
The amount of monthly HOA fees depends on the amenities provided by the community and the “lot value,” which is usually based on square footage. The average fee can range anywhere from $150 to $200 a month.
How Do HOAs Work?
An HOA works similarly to any other residential association. Staff members hired by the board of directors maintain the common areas and make repairs as needed.
They also enforce rules relating to safety codes, cleanliness, and appearance. Individual homeowners pay dues to the HOA monthly or annually, with those fees usually being passed along as part of their maintenance bills.
Pros and Cons of an HOA
Pros
- HOAs protect the property values of each individual home from external factors such as graffiti, burned-out streetlights, and broken fences.
- The HOA is responsible for making major repairs to common areas before they get out of hand or become a liability issue in case of injury; this helps reduce homeowner insurance premiums.
- Having an older home in an HOA-regulated development protects it from becoming run down and not selling at full market value.
Cons
- Homeowners in an HOA-regulated development must adhere to the governing documents’ rules and regulations, which may or may not fit with your personal preferences.
- HOAs may dictate what you can do to your home’s exterior, forcing you to remove attractive plants and fences if they clash with their preferred aesthetic.
- You’ll have to pay fees in addition to your monthly mortgage and home insurance payments.
HOAs offer benefits and drawbacks depending on the neighborhood and home. Want to learn more? Contact your local association to find out more.