All my life I listened to adults who had nothing but resentment for their HOAs. My parents’ second house was in an HOA managed community that had $175 in yearly (yes, yearly!) fees, most of which went toward the upkeep of the signage at the front of the cul-de-sac neighborhood. And my parents and adult neighbors would gripe about how much they were dreading the annual board meeting, and how they hated having to pay fees for a sign they didn’t care about and how their dollars were spent on tacky American 4th of July flags, and pumpkin banners for Halloween. Basically, the HOA was evil and nothing would convince them otherwise.
When I first started the homebuying process, I had just accepted that I would be paying an extra $200 a year for association fees. No big deal, that’s less than $20/mo. I can swing an extra $20 a month.
Oh man, the look on my face when I saw my first listing with Condo fees.
$350 a month?! On top of the principle mortgage, this seemed completely unreasonable to me—that adds up to more than what I’m paying in rent without factoring in things like home insurance, property taxes, electric, cable, or my problematic addiction to Amazon prime deal day specials! I was blown away that any entity could justify asking for that much money for cheap party decorations.
Looking back, that home was way out of my price range to begin with, as were any and all condos, but that's another story for another day. It also doesn't help that the primary resources tools available to prospective home buyers will very rarely list any association fees. Unless the seller or seller’s agent has intentionally added that information to the listing or to the listing description, it is on the buyer to verify any possible HOA fees. And of the few that DO state that the listing is in an HOA-restricted area, even fewer will spell out exactly what those fees are, or what they mean for prospective homeowners. This leaves you looking at a very hefty price tag with nothing tangible attached to it as justification.
Because of this, I spent the first three weeks of my search completely writing off any homes with associations that exceeded $100/mo in fees. Why would I spend $200 - $450+ per month (on average, that’s what I saw while house hunting) for cheesy lawn and sign décor that I wouldn’t even buy for my own home? My outside perspective of community associations led me to believe that they exist to take your money and provide minimal output, and that’s simply not true. Association fees aren't just collections levied, they're an investment into your future.
Protecting the Future
Hands-down the most important outcome the money generates is protection for the future. Specifically, making sure that money is put aside to be able to make major improvements and replacements when the time comes. Some of the things included in the reserve savings are:
- Central Heating and AC Units
Maintained Community Value
Ever hear the phrase, “guilty by association?” Homeowners Associations are put in place to prevent that from happening. The developers who constructed the community had a certain image in mind, and they used that image to create rules and regulations that work to maintain that image. Those rules are enforced by the association. That way, when you want to sell your house somewhere down the line, there isn’t a home four doors up the road with neon pink and green paint, a duck-shaped cement mailbox, and a bright orange driveway. No one wants to move in next to that, so when houses like that pop up, the value of the houses around them (like yours) drops drastically.
To combat this, many Communities have rules dictating seemingly innocuous things like how tall your grass can be, the variety of colors you can and cannot paint your exterior with, and fence height to name a few. Rules for living in a restricted neighborhood differ from community to community depending on the needs of the properties, and the originally specified desires of the developers. Now a home like the one I grew up in that sits in a neighborhood of around 40 doors doesn’t need very much money to maintain the property value in their community. There isn’t a necessity for a $300/mo price tag, because the funds collected will often benefit the internal functions of the HOA and board. Things like:
- Accounting Services
- Legal Fees
- Maintenance of common areas (like lawn care and that omnipresent sign)
- Trash Services
Now I mentioned before that the condo I looked at charged $350/mo in HOA fees. What I left out was the immacculately kept sidewalks, the gate at the entrance to the community, and the feeling of luxury and safety I got being in the neighborhood. This is also something your association fees provide for you. No, the board members aren't there stopping muggings or vandalism—they instead enforce rules to do that for them. Things like:
- Gates and gate attendants
- Property security
- Property uniformity
- Grounds maintenance
Feeling secure in your own neighborhood is a necessity that you don't quite realize the importance of until you're touring a house in a neighborhood that gives you bad vibes. The very first house I toured was listed as being in a "low crime" area, had a newly-renovated kitchen (complete with a wine fridge and new appliances!) an open floorplan, brand new carpets, and a semi-fenced yard. But it also was a complete anomaly. That "low crime" rating was pretty much only for the exact space the house itself existed on. Everything for a three-block radius around it was full of muggings, vandalism, car break-ins and home invasions. I remember very clearly being uncomfortable leaving my purse in the car as we went inside to see the house. Association fees go toward making neighborhoods not only look safe, but feel safe as well. There is something to be said about seeing a row of houses that all look the same. Sure, it's cookie-cutter and a little cheesy, but when you compare that side-by-side with a row of houses that look nothing alike and are in various degrees of decay, cookie-cutter is pretty nice. Associations are what best provide that.
Some community associations offer recreation features, and HOA fees will go toward any maintenance or repair of these shared amenities. Things like:
- Swimming pools
- Tennis Courts
- Baseball fields
- Community gardens
- Gym/Workout rooms
- Recreation or game rooms
- Community clubhouses
- Parking spaces and lots
- RV or marina parking
Most communities offer standard shared utilities, such as garbage pickup, but other communities go much farther with shared utilities, such as:
- Cable TV
- High-Speed Internet
- Gas (for stoves & heaters)
- Water and Sewage
- Laundry Facilities
- Concierge Desk (package delivery)
- Concierge Garbage Pickup (door to door, often in condos)
These are more common in condos and co-ops, but can also be found in some exclusive gated communities as well.
Personal Property Upkeep
Occasionally you will find HOAs that have discounts worked out with specific contractors in the area. Their services can range from
- Lawn care
- Pest control
- Dry Cleaning
- Pool services (for personal pools)
Obviously association fees deliver so much more than tacky sign decorations. If your future community offers any of these services, the fees you pay monthly or annually are what contribute to keeping them well-maintained and functioning. If tree roots start breaking through stone walkways in community areas, the funds will have already been allocated to make the necessary repairs, and the board will take care of it.
The homebuying process is always a (very worthwhile) headache. There’s no need to add on to that by writing off great housing opportunities just because they come with association fees.
The best thing you can do for yourself as a prospective new homeowner is research! A quick online search can tell you what average HOA rates are like in the area(s) you’re searching in. When considering a home in an HOA community, request a copy of the community's governing documents: what they provide, what the rules are, etc. Find out in advance if the benefits the HOA can offer align with what you are looking for, especially because typically these things will not be provided to you by the seller, it will be the burden of the buyer to verify all things relating to association fees and provisions. Know what you're signing up for, be aware of your budget, and embrace the potential that HOAs can bring to your life as a new home owner.