With home prices continuing to rise, more people are looking for affordable housing alternatives. That has led many buyers to consider homes in communities with homeowner associations, or HOAs. These organizations have been around for decades, but most recent buyers might not understand how they operate and what it means for them as homeowners. If you’re thinking about buying a home that’s part of an HOA, then you should know what you’re getting into—and what kind of impact it will have on your property value. If you’re buying a home within an HOA community, there are some things that you need to know beforehand so that you can make an informed decision about your purchase and its long-term implications. Let’s take a look at why you should be on the lookout for homeowner associations if you’re buying a home and how they affect your home value…
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Why You Should Be on the Lookout for HOAs
The best homeowners are those who are well-informed about the communities they live in and the purchase they are making. This is especially true if you’re buying a home in an HOA community. The people who live in an HOA community are responsible for maintaining the common areas—everything that isn’t someone’s private property, like the street, the park, and the swimming pool. This means that homeowners have to chip in with regular monthly HOA dues in order to maintain the upkeep of these areas. Some buyers might not be aware of this before making a purchase, and it could create some unexpected financial obligations for homeowners in the future. If you’re looking to buy a home in an HOA community, then it’s important that you make sure beforehand that you understand the terms of your purchase and what they mean for the long-term value of your home.
What is a Homeowner Association?
A homeowner association is a group of people who have come together to manage and maintain the common areas of a neighborhood. If you own a home within an HOA community, then you are a member of the HOA. Most homeowner associations are nonprofit organizations that are governed by a board of directors. The board of directors is made up of volunteers who are chosen by the members of the HOA. As a homeowner within an HOA community, you are responsible for paying monthly dues to cover the cost of the upkeep of common areas. This typically means lawn care and landscaping, but it could also include cleaning up litter and graffiti, snow removal, and more.
How HOAs Affect Property Value
Before you consider buying a property in an HOA community, it’s important that you understand how your monthly HOA dues impact the value of your home. The first thing to understand is that most buyers look at the monthly HOA dues when they’re evaluating a property and trying to figure out its value. If you have a home with a $100 monthly HOA dues, and you’re trying to sell that home, then you’ll have one less potential buyer than if you had a $0 monthly HOA dues home. That’s because buyers are going to take a look at the expenses of homeownership as part of their buying decision.
Pros of Living in an HOA Community
Above, we’ve talked about the potential downsides of buying a home in an HOA community, but what are the upsides? If you’re someone who really values consistency in your neighborhood, having an HOA could give you exactly that. Most HOA communities have rules that outline what homeowners can and cannot do with their property. These rules can help curb some of the more annoying aspects of neighborhood living, like loud music and frequent parties.
Cons of Living in an HOA Community
If you’re someone who values the freedom of choice and the ability to make your own decisions, then living in an HOA community could be a major downside. Most homeowners associations have strict rules about what can and cannot be done with your property. An HOA could compel you to repaint your home every year or keep your lawn mowed in a very specific way. They could also prevent you from making changes or additions to your home that you’d like to make. As a homeowner in an HOA community, you’re essentially signing a contract to abide by the governing rules of the HOA. If you disobey the rules or don’t pay your HOA dues, the HOA could take legal action against you and foreclose on your property.
Final Words: Is a Home in an HOA Worth it?
Homeowners associations are a common part of homeownership, but that doesn’t mean that they’re right for every homebuyer. Before you purchase a home in an HOA community, you should ask yourself if you’re someone who values consistency in your neighborhood. If so, living in an HOA community could be a great fit for you. If you’re someone who values the freedom to make your own decisions, then an HOA could be a major drawback for you. It’s important that you educate yourself about the terms of an HOA before you make a purchase in a HOA community so that you can make a fully informed decision.
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