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HOA: Self Managed or Management Company

By
Real Estate Agent with Prudential C Dan Joyner and Young Realtors

We are having a major dilemma in our subdivision. Our subdivision has just been completed and the developer/builder has turned the HOA over to the community. We have elected our Board Members, who have agreed to handle this very time consuming and sometimes grueling task.  After much research, the Board Members decided it was in the best interest of the subdivision to have the HOA managed by an outside source. Our by-laws allow the Board Members to make these decisions and that is why we elected them.  The Board Members will remain active and the management company will handle the business end of running a HOA and report to our Board.  The catch is our dues will go up $5 per month.  Well as you may have guessed, the uproar is ridiculous.  There are "For Sale By Owner: signs in several yards, threats have been made, rumors are spreading like wildfire and total chaos. This is all over $5 per month.

I think most people don't understand the purpose of an HOA and legality of running an HOA. They all want their community to be in top shape and they want their neigbors to follow the rules but they don't understand the process to achieve these things.

From a realtor's perspective, the subdivisions in our area that have been managed by an outside source have been more desirable for buyers and the listings have been easier to sell. Does anybody have any thoughts on Management Company versus Self Managed HOA?  

 

Have a Great Day!

Ginger Ryals

Keller Williams Realty

 

Comments (5)

Steve Homer
The HBH Group (Keller Williams affiliate) - Round Rock, TX

Ginger:  In my area, the management companies have done a good job of selling their services but in my experience once they take over they get power mad.  As a result, I see a wholesale revolution coming over HOA's.  There is already legislation in the Texas House of Representations to begin regulations of all HOA's due much in part (in my opinion), to the insensitive and brash way that management companies handle enforcement and interfacing with the home owners.  My personal feeling is that HOA's were designed to be owner run and maintained organizations for the betterment of the community.  The whole idea gets obliterated when you put a "for profit" company in charge...

Aug 28, 2008 08:51 AM
Matt Humphrey
HOAleader.com - Alameda, CA

Hi, Ginger. I just emailed you a link to an article with a few thougths about this decision (mostly from an HOA board's perspective). It's interesting that you have found the outside-managed HOAs more desirable to buyers.

Aug 28, 2008 05:26 PM
Rick Bunzel
Pacific Crest Inspections - Anacortes, WA

Ginger:

As always it depends. What assets does the association own?, How many members?

$60 per year per member to management all the issues may be very reasonable if the association have a pool, clubhouse etc. On the other hand if you just have some common areas and park, $60 per member just for management seems excessive.

Matt, are there any known level of assets / annual expenses where it makes sense to have a professional manager?

 

Pacific Crest Reserves

wwww.paccrestreserves.com

1-866618-7764

 

Aug 30, 2008 04:51 AM
Matt Humphrey
HOAleader.com - Alameda, CA

Rick,

Unfortunately, I agree with your answer when you said "it depends". I don't have a heuristic to offer. There are so many variables: services required, willingness/ability of members to take on duties like bookkeeping, landscaping, etc., type of association, etc.

One tip is a basic one -- be sure to put out an RFP and get multiple bids if you are considering moving from self-managed to managed. Don't simply "make things easy" and go with the management company recommended by your attorney or by a friend, etc. Those references may be on the up and up -- in fact they most likely are -- but you'll only know if you test them against other bids. Simply by going about the search process in an organized and professional way, you are putting your management candidates on notice that you are not going to fall for bogus costs, unnecessary services, etc.

Then, once you have the proposals in hand, you can best judge whether the services would be worth the cost to your association.

Aug 30, 2008 07:44 AM
Anonymous
George

Our HOA in Delaware is thinking of self management.  We are currently paying $5.00 a mouth for each household.  We have 83 houses in our development.  Your thoughts.

 

    George

Oct 13, 2012 01:51 AM
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