Is Your HOA Destroying The Value of Your Home?

Real Estate Agent with Keller Williams Realty Louisville East (502) 664-7827

Homeowners should make a point to understand what their Home Owners Association (HOA) is doing, especially in arena of dealing with salvaging fees from homeowners in foreclosure.

ZERO Recovery Forever Instead Of Thousands Now

Some Homeowner Associations prefer to get ZERO dollars if the house goes to foreclosure rather than thousands of dollars NOW in a short sale.

As a short sale Realtor, I have gotten foreclosing lenders to pay thousands of dollars to cover settlements on large delinquent HOA balances. However, some HOA's have all-or-nothing "no-settlement" policies. The HOA wants every cent including legal fees or let the house go to foreclosure where they get ZERO.

In addition, a successful short sale gets a new paying resident in the house NOW. A foreclosure can cause a house to sit vacant for a year or longer.

Push Your Neighbors Over The Cliff Then Slip And Fall Over With Them

By refusing to accept multi-thousand dollar settlements, HOA's are putting the final nail in the foreclosure coffin of houses in their subdivision.

These HOA "no-settlement" policies cause;

  1. More vacant houses in the subdivision, thereby diminishing property values even more.
  2. Hurts the reputation of the subdivision because of higher frequency of foreclosure.
  3. The HOA and the other homeowners recoup ZERO instead of thousands, thereby denying extra funds to the HOA treasury that could help lower dues for the other homeowners or increase services.
  4. More foreclosures in the subdivision, which usually sell for far less than short sales, thereby further lowering property values for the remaining residents. This also hurts the board members who make the no-settlement rules. Board members eventually have to sell, too, unless they are outsiders that somehow are appointed to the job.
  5. Keeping the foreclosure process alive often causes the HOA to run up avoidable additional attorneys fees that result in ZERO recovery.

As a short sale Realtor, I can only help those who are willing to be helped. I have helped HOA's and their constituent residents recover thousands. I cannot help HOA's that refuse to be helped and who turn down thousands of dollars.

Do you think the other residents in the subdivision know that their HOA Board or management company is turning down thousands of dollars in their name?


Posted by



Dave Halpern, Realtor

The Dave Halpern Real Estate Group

Keller Williams Realty Louisville East


(502) 664-7827



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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Lyn Sims 03/18/2012 02:18 AM
Club Chaos
Short Sales
Voice of Reason
homeowner association
short sale
vacant houses
no settlement

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Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

Dave - The HOAs can be such a frustrating part of trying to settle a short sale for just the reasons you've stated.

Mar 17, 2012 03:28 PM #9
Angie Nwanodi
Evergreen Realty & Associates, Inc. - Rancho Cucamonga, CA
The ACG Group, Realtors®|Standard, Short, HUD, REO

Excellent, timely and pertinent post.  Thank you for highlighting this little-discussed, though frequently experienced issue.

Mar 17, 2012 04:54 PM #10
Tom Branch
RE/MAX Dallas Suburbs - Plano, TX
Broker, CDPE, SFR, ACRE, Plano TX Ambassador

I sit on the Board of Directors of our HOA. We typically work out a settlement. 50 percent of something is better than 100 percent of nothing.


Mar 17, 2012 09:22 PM #11
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

Great post. I've seen property values eroded when a condo fee nearly triples and your logical buyer pool now doesn't qualify(or as easily).

Mar 17, 2012 10:27 PM #12
Karen Crowson
Coldwell Banker Residential Brokerage - Rancho Bernardo, CA
Your Agent for Change
You bring up such valid points. Occasomally you find HOA boards who have power-humgry members who just like to take a stance. I've met more than one homeowner who absolutely hates the way there HOA is run, and are often unable to unseat these folks. This short-sightedness just makes a bad situation worse.
Mar 17, 2012 11:22 PM #13
Pamela Seley
West Coast Realty Division - Murrieta, CA
Residential Real Estate Agent serving SW RivCo CA

I won't work with short sale sellers who have huge HOA delinquent dues/fees. HOA's are worse than lenders when it comes to short sales.

Mar 17, 2012 11:37 PM #14
Sandy Johnston ABR, e-PRO
Maverick Properties - Boerne, TX

I too sit on a HOA Board and we haven't had any of these tyoes of issues but it is unfair to expect others to pay full price every year and a person who gets away with not paying his/her full share while the rest of us struggle to get things done in the neighborhood with a smaller budget.  With that being said I would rather have something than nothing.  Not sure that I necessarily agree with that it makes an HOA greedy.   We have a HOA park that requires lots of upkeep and when people don't pay it makes it extremely hard to get what needs to be done properly.  Great topic and a new perspective.



Mar 17, 2012 11:39 PM #15
Melissa Zavala
Broadpoint Properties - Escondido, CA
Broker, Escondido Real Estate, San Diego County

The HOAs have taken a hard line. It seems to vary a bit from state to state, but it is certainly a huge pain in the a%^ for short sale agents and short sale sellers.

Mar 17, 2012 11:50 PM #16
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Dave, you would think they would settle rather than not get a cent. It only hurts the other properties in the Association and will probably cause their fees to increase for the families who are left holding the bag.

Mar 17, 2012 11:55 PM #17
Bill Gillhespy
16 Sunview Blvd - Fort Myers Beach, FL
Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos

Morning Dave,  Just doesn't make any sense for the HOA to do this.  Makes me wonder where the ret of the owners are on this issue .

Mar 18, 2012 12:27 AM #18
Rob Spinosa
Guaranteed Rate, Marin County, CA - San Anselmo, CA
SVP of Mortgage Lending, Marin County

Great post.  To me, it hightlights yet another challenge facing HOAs.  And I totally agree that most associations would benefit from additional participation.  I think once owners realize they really are all in it together, it turns up the motivation to get involved a bit more.

Mar 18, 2012 12:57 AM #19
Sandy Acevedo
951-290-8588 - Chino Hills, CA
RE/MAX Masters, Inland Empire Homes for Sale

Hi Dave, make some very valid and really good points. You are right that the neighbors are not even aware of what is happening.

Mar 18, 2012 01:09 AM #20
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

This really is a great suggestion if we could just get this type of info into the correct hands it might be helpful for the bottom line.

Mar 18, 2012 02:10 AM #21
Adrian Willanger
206 909-7536 - Seattle, WA
Profit from my two decades of experience

Dave-Excellent points, I had several buyers turn their backs on short-sales because of this very problem, a non-negotiable HOA.

Mar 18, 2012 02:22 AM #22
Jon Kolsky
Kolsky Realty & Management - Long Beach, CA
Licensed California Real Estate Broker

I think your condo is only as good as its association! Great blog, big problem!

Mar 18, 2012 04:48 AM #23
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

Thanks everyone for your great comments!

Dick #1 - Yup. Some HOA's have such a bad reputation that buyers look elsewhere.

Gene #2 - Thanks for featuring in Bananatude!

Sharkey #3 - Thanks!

Mryl #4 - Most residents just give up and don't take action, otherwise there would be lawsuits.

Cal #5 - Yup. We had one like that, too. They didn't want to go through the FHA certification paperwork. That alone knocked tens of thousands off the market value. You should write a blog post about that issue.

Frank #7 - Foreclosure attorneys love HOA's

Tim #8 - If I ever live in a subdivision controlled by an HOA, I will definitely get involved.




Mar 18, 2012 10:29 AM #25
1~Judi Barrett
Integrity Real Estate Services 118 SE AVE N, Idabel, OK 74745 - Idabel, OK
BS Ed, Integrity Real Estate Services -IDABEL OK

We do not have any HOAs in the areas where I work... I read a lot about them but we don't have to deal with them.

Mar 18, 2012 10:50 AM #26
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

Christine #10 - I am now screening out short sales based on certain HOA's.

Angie #11 - HOA board members need to understand the consequences of their policy.

Tom #12 - Very prudent!

Michael #13 - Which in turn reduces the value of the condo dramatically

Karen #14 - Exactly. Some simply cannot be unseated.

Pamela #15 - LOL. I'm figuring out what you have known for a while.

Sandy #16 - The stark reality is that this economic downturn is hurting subdivisions with HOA fees. Many of the amenities are no longer sustainable.

Melissa #17 - which is why particular HOA's don't pass my vetting process anymore.

Michael #18 - they just don't see that far down the road

Bill #19 - If the residents were short sale Realtors they may understand that change is required. The problem is to multi-step and complex for non-specialists to understand without a detailed orientation.

Rob #20 - Getting the residents to realize the problem is the challenge.

Sandy #21 - Right, and who would tell them?

Lyn #22 - There should be short sale training for HOA board members

Adrian #23 - I don't blame them!

Erica #25 - They justify themselves by budgeting for the loss, but they don't understand how they are diminishing the values of the houses, including their own!

Mar 18, 2012 11:34 AM #27
Joni Bailey
101 Main St. Realty - Huntsville, TX
Your Huntsville / Lake Livingston Area REALTOR®

If this is what is going on, they are cutting off their nose to spite their face. :(

Mar 18, 2012 12:07 PM #28
Charles Stallions
Charles Stallions Real Estate Services - Pensacola, FL
800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl.

I personally like HOAs haven't always but they work, hopefully they will learn from their mistake

Apr 03, 2012 11:08 AM #29
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