Buyers Say "No" to HOAs

By
Real Estate Agent with The Boulevard Company SC 66445

This was the feedback from an agent who showed one of my listings this week:

Stephanie, we ended up not looking at this home. Buyers don't want to be in a neighborhood with HOA where they have to pay the fee and are so restricted.

Surprising? Not really. Lately I'm hearing the same thing from the buyers I'm working with.

Whether they've had a firsthand negative experience with a neighborhood HOA (Home Owner's Association) or they've heard horror stories at work and from friends, HOAs are fast becoming the least desirable "feature" for today's home buyers. What once seemed like a good idea to prevent "eye sores" from cropping up in the neighborhood has become a pestering bureaucracy that keeps people from enjoying home ownership.

HOAs have a tendency to transform would-be neighbor-friends into tattle tellers. Rules are enforced by someone the organization designates to ride through the neighborhood looking for infractions (who wants that job?), or neighbors report each other for breaking the rules. Doesn't sound very friendly, does it?

Because of the way the system works, some home owners say there doesn't seem to be any rhyme or reason to who gets fined. Houses full of tenants might get overlooked as the grass grows out of control and the garbage can sits for days on the side of the road, while owner-occupied properties receive letter after letter that demand they power wash their home, remove a parked car from the street, or change the color of their window coverings.

Maybe the HOAs target owner-occupants because they think they have a better chance of collecting the fines they send out? It's possible, but if an HOA fines a home owner for an infraction and the fine is not paid, the HOA can - and often does - place a lien on the property, which means the owner can't sell the property without paying the fine. The HOA knows they may not get their money today, but they'll get it eventually.

The original purpose of HOAs was to preserve property values; however if what I'm hearing continues the way it's going, I'm predicting they will start to have the opposite affect. Which do you prefer? HOA or no?

Posted by

Stephanie Davis REALTOR® ABR, GRI, SFR
© Carolina One Real Estate

843-870-0890

Serving Goose Creek and the Greater Charleston, SC area
www.agentinthecreek.com

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Show All Comments
Rainmaker
638,072
Don Sabinske
Don Sabinske, Sabinske & Associates Inc. - Zimmerman, MN
Sabinske & Associates Inc.

I agree that HOAs can be run as little tyrants run countries sometimes.  I have seen it before.  And, then, there are others that have much better "forms of government".  My advice is to check with some homeowners in the neighborhood for their take on how the HOA is working or not working.

Jul 30, 2011 03:28 PM #1
Rainer
30,097
Virginia Gingras
West USA Revelation - Gilbert, AZ

I wish HOAs were on their way out..they are a costly political action committee with very little interest in helping a homeowner.

Jul 30, 2011 04:01 PM #2
Rainer
59,174
Kym Wright
Prudential California Realty - Olivenhain, CA

My last two buyers refused to look at homes with HOA.   We originally looked at a few homes with HOA, but my buyer commented to a prospective neighbor he would like to re stucco (the house needed some serious stucco repair) the neighbor immediately mentioned the process to get a color accepted by the HOA.   My buyer was horrified.  I live in the land of HOA in Carlsbad and Encinitas so finding a home without HOA for a buyer can be a little tricky.  We did manage but it was challenging.  The very sad part is some of the HOA fees are so high that they are constricting the buyer market in those areas even worse.  So many REO and Short Sales come from HOA communities, as people find that they can afford less, they do not want to lose any amount of their buying power to an overpriced HOA.  Also have you seen the fees they charge when homes do sell?  It is absolutely outrageous!  Hundreds of dollars to get a package of papers and a one page questionnare completed.  You would think they would at least be quick about getting the paperwork back to the lender.  In short sales and REO the buyer is on the hook to pay for both sides!!  Just crazy. 

Jul 30, 2011 04:36 PM #3
Rainer
107,987
Ted J. Macy
Top Agents Atlanta Metro - Milton, GA

I personally live in the middle of 8 acres in serenity and peacefulness.  I work with people all day and need that retreat to silence and peace at the end of the day.  To each their own, many people prefer a busy neighborhood.  HOA s that are run by homeowners and not a management company tend to have many of the same problems that Harry Reid and John Boehner are having this week, agreement on who is in charge and the politics.

Jul 30, 2011 04:43 PM #4
Rainer
65,917
Anthony Gilbert
Issaquah, WA
Real Estate SEO

Hmmm... perhaps I'll be the only opposing opinion on this.  :)  I'm only speaking based upon my experiences in Texas, and every neighborhood I've lived in has had an active HOA.

Yes... I completely agree that some HOA's can be absurdly bureaucratic and seem to yield power for the sake of it. But, I believe that they are indeed necessary. Unfortunately, we just don't live in a world where "everyone" takes the time to consider the impact their actions, or in-actions, may have on their neighbors... particularly in an environment where a large number of homeowners don't even know their own neighbors.

While I do think HOA's can go overboard, I would never live in a neighborhood without one.

Jul 30, 2011 04:50 PM #5
Rainer
179,212
Rosalie Evans
Meritus Group Real Estate - Sioux Falls, SD
The Evans Group, Sioux Falls, SD Homes For Sale

I could certainly do without them. To much power can be abused in the wrong hands. I am sure they are great for the people who really require them but for the people who have the choice or not...I say not!

Jul 30, 2011 06:17 PM #6
Rainmaker
34,438
Stephanie Davis
The Boulevard Company - Charleston, SC
Broker Associate and REALTOR®

HOAs have an absolute monopoly on their neighborhoods. I think there should be some oversight by another organization. Residents don't have any recourse or defense against them.

Don - Your advice is great, though not always realistic. Many buyers won't go knocking on doors... and if not, should the buyer's agent take on that responsibility?

Virginia - I agree with you for the most part; however, what about communities with pools, playgrounds and parks? Will city governments agree to take on the maintenance of them? We have a community here where the city has taken over the golf course and pool because they weren't profitable. It seems to be working for now, and an added plus is that those of us without HOA communities can golf and swim.

Kym - I know exactly what you're talking about. Those fees are out of control and make no sense. I've had a few buyers purchase the house they were living in - and in one case they had been renting from Mom and already had the HOA account in their name, had been paying the fees for years. The HOA still charged an arm and a leg for capital investment and transferring the account. The homeowner gets no benefit from that.

Ted - Now that sounds like paradise!

Anthony - I think the best defense against having neighbors who take the time to consider the impact of their actions is to let a neighborhood get "seasoned" before moving in. If you purchase new construction, you have no idea who you're going to end up sharing your street with; however, if you give the neighborhood 5-10 years to see how it turns out, you can be more confident in your investment to live there. This is the advice I give my buyers, and what I follow for myself. When home owners take care of their homes and property because it's in their nature and not because Big Brother is making them do it, home buyers find the neighborhood more desirable.

Rosalie - What I don't understand is WHY the people who really require them choose to live in neighborhoods that have them? Why wouldn't the people who don't want to maintain their property live somewhere else?

 

Jul 31, 2011 01:28 AM #7
Rainer
65,917
Anthony Gilbert
Issaquah, WA
Real Estate SEO

I agree that oversight of HOA's is needed where there isn't any. In Texas, the legislature recently passed many new laws regarding HOA's which take care of most of the major issues.

RE: "When home owners take care of their homes and property because it's in their nature and not because Big Brother is making them do it, home buyers find the neighborhood more desirable."

Yes... it would be ideal if it was in everyone's nature to take care of their properties and respect their neighbors. But I've never personally seen, or lived in a neighborhood where this is the case. People move in and out, lives change, finances change, etc. No neighborhood is immune from people doing some pretty distasteful or irresponsible things which negatively impact their community - most of all, those adjacent to them. Without an HOA, and assuming a neighbor isn't in clear violation of any local ordinances, the affected neighbor/homeowner would have no option but to go to court, which could take years, and cost great sums of money. With an HOA, it can be as simple as a phone call.

YES... there have been (and still are) some that go beyond their original intent. But in general, I think they are vital, and serve their intended purpose. I consider them an asset, not a nuisance, particularly in newer developments.

It always peaks my curiosity when I see arguments against HOA's. Obviously, buyers have a choice. If they do not wish to be forced to mow their yard, or seek approval before painting their home fluorescent orange, then they can choose to buy elsewhere. But, local city/county ordinances exist as well, many of which are much more stringent than HOA restrictions. So, perhaps those same buyers should be concerned about those "laws" as well.

 

Jul 31, 2011 03:50 AM #8
Rainmaker
34,438
Stephanie Davis
The Boulevard Company - Charleston, SC
Broker Associate and REALTOR®

Thanks Anthony. The problem I'm seeing is that if you are a buyer looking for new construction and you want a neighborhood with sidewalks and maybe a city park, it doesn't exist. At this point if you're wanting to skip the HOA you have to buy something built in the 1990s and before, or you have to purchase an acre lot and have your house built in the country. It would be nice to see a few new non-HOA neighborhoods in the mix for new home buyers.

Aug 03, 2011 03:20 AM #9
Anonymous
Milyn

You are so right! I lived in Talega (San Clemente) for a few years. They have a pretty bad HOA. I recently bought a new house and you'd better believe my most important search criteria was NO HOA! I'm don't paying people to fine me, tell me what to do, and just be general pains in the a$$!Never again will I buy a house with an HOA.

Nov 01, 2015 03:39 AM #10
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Rainmaker
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Stephanie Davis

Broker Associate and REALTOR®
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