The Value of Your Condo or Home Owner Association
Establishing the value of an Association, whether a Condo or Home Owners, can be a complex dilemma for home buyers. Associations are proven to maintain/improve home values due to consistency of home condition and an assurance that continuity of style and condition will be maintained. It is very easy during the home search process to point out to buyers the higher values of similar age homes found in an Association versus a nearby neighborhood that has no Association.
Though this be a truth in Hampton Roads and through out the country (as reported by NAR(National Association of Realtors), the value of such Associations will vary by buyer. This is true for the following reasons:
1. Association Monthly Fee reduces Buyer's price point
2. Amenities may be limited in given Associations
3. Condition of homes may call into question the proper use
of Association Funds(Condo Associations)
4. Exterior work requires Association Approval
5. Association can censure/fine home owner for non-compliance
to Association guidelines
6. Association Fees are not capped thus increase are inevitable.
7. Rental Factor in Neighborhood
8. Mortgage Restrictions
Of these value "adjusters", items 4 and 5 are very easy for the home buyer turned home owner to see as a "value add" element of an Association. By simply knowing the factors that can provide censure or fine or needing Association approval and avoiding these infractions will make these non factors as relates to living in an Association. This is normally quite easy: the infractions are outlined in the Condo or Home Owner Association documents provided to a buyer prior to purchase of the property. In Virginia, the buyer is permitted three days to read and to accept or reject the documents, resulting in the transaction continuing or being canceled.
The other six evaluation points range in meaningfulness to each individual buyer. For example, a first time home buyer may find a $150 condo fee restricts his/her purchasing power by $30,000 even in the present 4.5% interest rate market. For a first time home buyer, this is a significant challenge many times. To this first time home buyer as well as other buyers, the strong possibility of fees increasing over time can be a challenge especially in Condo neighborhoods, especially if the fees have stayed constant and the properties are in need of repair.
The rental factor and mortgage restrictions can play a part in a given neighborhood. As most condo and home owner association bylaws and restrictions tend to have a limit the number of rented homes allowed in given neighborhood. In addition, Condo and Town Home Neighborhoods must be approved by the VA and Dept of Housing Development(meet reporting guidelines related to a given association). As I tell buyers, though no issues are present now whether the buyer wants the condo or town home sold or rented in the future, changed parameters of the neighborhood could impact their ability to sell or rent down the road.
Even with the challenges present in a condo or town home or a single family home, an Association may be the right choice for a home buyer.
Yet a fair and impartial evaluation is required to make the right decision for a given buyer.
Questions on what are the benefits of a Condo/town home or a single family in a Association neighborhood? Please comment and let me know!!!