If you are a buying a home for the first time, or you are looking into buying a home in a community that has an HOA, it’s a good idea to get acquainted with the way the HOA works.
In general, an Homeowner’s Association is put in place with the intent of protecting property values. This means keeping the common areas clean and landscaped, enforcing certain rules, and collecting fees for the costs that are incurred in these efforts. For instance, if your neighbor is a mechanic and keeps bringing cars home and letting them rust in the yard, the HOA will begin to pressure him to get rid of the cars, and can even take legal action against him. As a result, your property value stays up.
But, knowing what the HOA wants from you is vital to making your decision. Some associations are very finicky, even fining you if your garbage bin is out on the curb for one day too long. Some associations check your backyard to ensure that you have landscaping installed within a certain period, or that you aren’t storing things back there. The HOA can really get invasive, and if you aren’t OK with that, you should pass on the house. Maybe the benefit of having manicured common areas and neighbors who keep their home looking nice is not enough to outweigh the headache of dealing with your HOA.
Get a copy of the community’s HOA manual, like this manual from the City of Tempe. Your real estate agent should be able to get one for you. It might be lengthy, so just skim through it, looking for the major points. Know your rights. The laws vary from state to state, but check online resources in your state to know what the HOA really can and can’t do.
Understanding What Your HOA Fee Includes
HOA fees cover a variety of things, and differ according to your community. It’s possible that the fees pay for
- Landscaping and general weed control in common areas and on sidewalks
- Sewer and garbage removal
- Security systems and entry gate maintenance
- Upkeep of playground equipment or swimming pools
- Pest Control
- Road and sidewalk repair
Considering the Average HOA Fee in the Monthly Mortgage
Fees are highly variable. If your community has a clubhouse with a gym and pools, you may have to pay a clubhouse fee along with your general HOA fee. This can be upwards of $250 a month. If you are moving into a building that has multiple units, for example in an urban area, this could mean much higher fees since they maintain everything outside your door, even the hallways, roof, and parking areas. Some HOA’s cover all the utilities, even electricity.
Your real estate agent should be able to help you track down the HOA conditions of a property, even before you make an offer. This includes your monthly fees. After you own the home, the HOA can’t raise rates without approval from the neighborhood.
Use this calculator to determine what you would be paying per month, including your HOA fees.