Selling a House in an HOA
You’ve got this great property that you’re eager to sell, but it’s in a neighborhood that has an HOA. What does this mean for your sale? Does this add or take away from the property value? What is an HOA anyway? Here are a few things to know about selling a house that’s part of an HOA that might answer your questions.
What is an HOA?
HOA stands for Homeowners Association, and they’re the organization that determines the rules of the community that it manages. They ensure that everyone in the community follows those rules, collect community fees, resolve conflicts between neighbors, and are responsible for repairs and upkeep of communal buildings.
They are, on paper, a good thing to have as they ideally set neighborhood-wide standards that benefit everyone. However, they also have something of a reputation. There have been plenty of horror stories about HOAs that have ridiculous standards or whose members are on a power trip. But there are good HOAs out there that do their best to keep everyone in the community happy. So really, they can be just as appealing for some as they can be a dealbreaker for others.
Make Sure the House is Compliant with HOA Rules
If you’re going to be selling a house that’s located within an HOA, you’re going to want to make sure the house is compliant with their rules. Otherwise, your new buyers could move in to find themselves already paying fines, or you could be on the hook for the bill if the house hasn’t been sold yet. If they require that the lawn is regularly mowed, make sure to get that done.
HOA expectations can also affect how you plan your open house. For example, if the HOA doesn’t allow street parking, potential buyers could find themselves soured to the neighborhood when they get a parking ticket.
The biggest thing to keep in mind is that an HOA may require an inspection before resale so they can be sure the property is compliant with the rules. Talk to the local HOA early to get that set up if it’s needed so you won’t find yourself blocked from selling the property.
Disclose HOA Information to the Buyer
Legally, you aren’t required to disclose that the property is part of an HOA or what their expectations are, but ethically, it’s better that you’re forthcoming. There may even still be disclosure documents that you’ll be expected to prepare. Check in with the HOA to see what required documentation they expect your buyers to receive.
You should also have a list of rules that the new owners will be expected to follow. Most HOAs have them listed online. This way potential buyers can make an informed decision about whether or not they’ll be allowed to do certain things. If your buyer has been dreaming of owning a house so they could own a dog or plant a garden, only to find these aren’t allowed under HOA rules.
That doesn’t necessarily mean they’ll be a dealbreaker. In fact, some people might prefer a pet-free neighborhood or have severe allergies that would do better with fewer plants outside. So don’t feel like you need to hide the rules to ensure a sale.
Another reason to disclose that the neighborhood has an HOA is that they usually require monthly or yearly fees. Nobody likes an unexpected bill, especially when they’ve just paid a lot of money for their new home. So be sure to disclose HOA fees so the buyers can factor that into their budget.
HOAs can be beneficial and for some homeowners even be a massive draw to a particular neighborhood. However, they can also make the selling process more complicated, so you should make sure you talk to the HOA board members and get your house in order, as they say.