What's the difference? When one house sells for $25k more than others

By
Real Estate Broker/Owner with Kristen Correa Real Estate & Reedy Creek Realty Services 0514644

Surprise!  Same house style, same updates and maintenance, and on the same street, but one house sold for $25,000 less than the other.  How does that happen?  It might surprise you to discover that one poorly kept home on a street can adversely affect the price of all the homes on the street.  Or it might affect only the home sitting next to the Frankenpatch with its 3 foot high weeds, untended garden and automotive cemetery.  

This is often the strongest argument for a neighborhood Home Owner Association to enforce methodical conformity to covenants on all its residents.  Once found mainly in Condominium complexes, more and more single family home developments are instituting Home Owners Associations.

First gaining popularity in the neighborhoods of America in the 1960’s, the concept of covenants administered by a self-governing Association was implemented with a main view toward providing protection of home values within a specific development.  But are covenants, restricting every home in a given area to uniformity, the answer to protecting value?

Maybe.  Maybe not.

Covenants may not be everyone’s cup of tea, but they may well be the path to sustained home values, creation of harmony in the neighborhood and champion for peace of mind to the residents.  Here are some of the Pros and Cons as shared by homeowners who lived with covenants or continue to live in neighborhoods governed by covenants.

PROS

Protection of home values

Maintenance of common areas, such as playground or parks

Sense of security and safety; with use of speed bumps or security patrols

Uniformly pleasing views throughout the neighborhood

May foster a sense of community and camaraderie among residents

May eliminate problem areas such as pet control issues

Provides services such as trash and snow removal and possibly provide certain routine maintenance for the homeowner 

CONS

Additional fees above mortgage payments; possibility of increased fees in the future

Restrictions may feel too controlling; additional restrictions added after purchase

Lack of individual expression leading to cookie cutter design; limits in house colors or style changes

Limits on personal activity – pools, play equipment in the yard, ability to fence, landscaping obligations or limitations, outdoor furniture restrictions, parking situations for your vehicles

Pet restrictions may be viewed as too harsh and controlling

Possibly narrows sales options which could result in lower resale values

The decision to purchase in a covenanted neighborhood will be a highly personal one.  While some will love and thrive on the uniformity; others may grow to dislike the lack of personal expression allowed in things like home colors or renovations they’d like to make.  

I recommend a careful consideration of CC & R’s – Covenants, Conditions & Restrictions that govern any home you are contemplating purchasing, along with being certain you understand all the decision making policies of the Home Owners Association Board.  It may be that the loss in one area may gain something more valuable to you in another area.  

If you're looking to buy or sell a home in Keller or the surrounding areas, call me. I have been dabbling in real estate since I was legal to do it! And it's been a passion ever since. It would be my pleasure to go over the pros and cons of your real estate decisions with you. Anytime.

Posted by

Kristen Correa Real Estate

Comments (44)

Suzanne Otto
Six Twenty Designs - Lansdale, PA
Your Montgomery County PA home stager

Even if you live in an HOA, you're still not fully cleared from having a bad neighboring house. Yes HOAs can keep up the outside maintenance (where disclosed) but in my community there is still a portion of our "backyards" that's not included. I currently have a neighbor whose patio is littered with children's toys, a broken screen door, garbage bags and the Christmas tree stand.

Aug 26, 2013 01:00 AM
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

I'm all for the uniformity issue because there is always some nut that decides that pepto bismol pink is a great color for the exterior!

 

 

Aug 26, 2013 01:29 AM
Anthony Rollins
Keller Williams Realty-Overland Park - Overland Park, KS
The Adam Butler Team

Kristen,

In Overland Park, KS and surrounding neighborhoods of Johnson county KS, there are HUNDREDS of subdivisions which are all run under HOA's.  For all of their potential pitfalls, I am a believer in HOA's and there ability to maintain and sustain both neighborhoods and the  property values within.  Curb appeal...amenities and a governing board, all go to strengthen a community and the home values.

Cheers!

Aug 26, 2013 01:55 AM
Travis "the SOLD man" Parker; Broker/Owner
Travis Realty - Enterprise, AL
email: Travis@theSOLDman.me / cell: 334-494-7846

I love your term"Frankenpatch". Gonna hafta steal USE it sometime! CC & R are pains, but generally worth it in re-selling a property!

Aug 26, 2013 02:10 AM
Juan Jimenez
A House on a Rock Home Inspections LLC - Richmond, VA
The Richmond Home Inspector

Its always a tough decision. In the past we have opted to avoid HOA's. As we get older we are more open to the idea.

Aug 26, 2013 02:33 AM
Christi Farrington
Dagny's Real Estate - Wilton, CT
~ Your representative in Fairfield County, CT

Thanks for the insight and information.  Super.  As Travis #28 sys, your term "Frankenpatch" is perfect.  Laughs plus information.  Great combination!  

Aug 26, 2013 03:07 AM
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

I like your objective overview. This is something every home buyer should consider carefully before buying into a neighborhood with a HOA. 

Personally, I'm with Andrew (#13), and would never consider living where my neighbors could dictate activity on my property. We have enough rules without asking for more. 

But then, I don't ever want to have to live where I can even see into my neighbor's yard, so I'm in the minority. 

Aug 26, 2013 04:22 AM
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

Sometimes there are CC&R's that have fallen by the wayside and are out of use.  But they can still be enforced if you dig them up.

Aug 26, 2013 04:31 AM
Jack O'Neal
HomeSmart Elite Group - Gilbert, AZ

Great post, HOA's can be an issue

Aug 26, 2013 04:32 AM
Bob Miller
Keller Williams Cornerstone Realty - Ocala, FL
The Ocala Dream Team

Hi Kristen, it is an emotional decision to buy or sell a home.  That can easily sway a value $25k.

Aug 26, 2013 05:07 AM
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

That's why selling neighborhoods is more important than selling the property. Regardless, L3 is the primary reason homes sell for more and not less, for example, same model backing up to a busy street or located on the ingress or egress to the main street corridor or other unsightly conditions. Great post.

Aug 26, 2013 05:24 AM
Tammie White, Broker
Franklin Homes Realty LLC - Franklin, TN
Franklin TN Homes for Sale

We usually only find a vehicle cemetary on rural properties. Many neighborhoods here are governed by HOAs.

Aug 26, 2013 06:27 AM
Bahman Davani, CM at Texas Five Star Realty, Plano, TX (214) 457-7055
Texas Five Star Realty, Plano Texas - Frisco, TX
Homes for Sale in Plano, Frisco, Prosper, Allen TX

I have seen HOAs have gotten so much power and they are abusing it. Many times they go too far in restrictions and bylaws.

Aug 26, 2013 06:32 AM
Chris Miller Nevada Land with Water Rights
Vegas Grand Realty and Property Management - Mesquite, NV
Land with Water Rights For Sale

We have neighborhoods which are shunned by buyers because of overly militant HOA boards, they have developed bad reputations, walking the area armed with clip boards and cameras. It has actually hurt sales and prices.

Aug 26, 2013 07:36 AM
Sylvia Jonathan
Coldwell Banker Platinum Properties - Irvine, CA
Broker Associate, SFR

PeptoBismol on your neighbor's house is not the worst that can happen to your property value. Try a front yard view of a compost heap, rusted trikes and a pile of lumber with cobwebs on it. Need an HOA? Yes!

HOAs are only as good as the board members who sit on them and the management companies who take care of the property. Some of the egregious missteps of HOAs and their property managers is enforcing rules with some but not other homeowners, and spending over budget without good cause.

Buyers contemplating purchasing a home in a HOA controlled tract should look carefully at all the amenities and the homes and figure out if the monthly or yearly dues seem well spent.

Aug 26, 2013 08:57 AM
Marnie Matarese
DWELL REAL ESTATE - Sarasota, FL
Showing you the best of Sarasota!

Florida is notorious for having areas that had no zoning of any type during build out, putting multi-million dollar homes on the water directly across the street from small bungalows that look like Jeb Clampett resides in them.  But, Florida also has a diverse population that does not seem to really care and it is not uncommon to have large areas with no HOA's at all.

Aug 26, 2013 11:07 AM
Dorte Engel
RE/MAX Leading Edge - Bowie, MD
ABC - Annapolis, Bowie, Crofton & rest of Maryland

Dear Kristen,

Not a huge fan of H.OAs for single family homes, because they add a layer of administration to what should be naturally good neighborly behavior, but some areas seem to require them, because owners are not inclined towards being nice.

Aug 26, 2013 11:47 AM
Kenrick Gleckler
McBride Kelly & Associates Realty - Tampa, FL
Top-Notch Tampa Real Estate

Great post Kristen! More people need to be aware of the negative reach of a poorly kept home.

Aug 26, 2013 11:43 PM
Brad MacKenzie
Brad MacKenzie - Duxbury, MA
Turning Houses into Homes on the South Shore

Those aren't all the issues with HOAs in single-family neighborhoods, but it's a good list. An HOA could impose restrictions without imposing fees, too.

Aug 27, 2013 08:28 AM
Joetta Fort
The DiGiorgio Group - Arvada, CO
Independent Broker, Homes Denver to Boulder

Your point is sound - there are two neighborhoods in my town across the street from each other, built at the same time with comparable homes.  One has an HOA and one does not.  The one that does, routinely fetches ten thousand or more in higher prices.

Aug 28, 2013 09:19 AM