By Jeff Hammerberg, CondoZing.com : A how to tutorial about real estate, realtor, condominium, Home & Family with step by step guide from Jeff Hammerberg, CondoZing.com.
For most prospective Condominium / Townhome or Loft home buyers, one of the most important questions that will be on top of the list, is what is the HOA (Home Owners Association) fee? Many prospective condo buyers are not able to buy a condominium when the HOA fee goes beyond their fixed budget. Condo buyers expect fees around $200.00 to $350.00 per month depending on what is covered. Anything beyond that would require a close look into the HOA budget, expenditures and management.
When the economy was doing well, prior to 2007, condominium buyers paid less attention to HOA fees. But with the economy floundering in the last 3 years, people have really tightened their purses and they expect the HOA management team will do the same.
Most HOA fees are dependent on a number of items both maintenance and upgrades, required to keep the property in top shape to secure the value of the project and your individual unit.
Common Area Repairs and Maintenance
Roof ~ Boiler ~ Major System Escrows
Insurance ~ Parking Lot Repairs ~ Security ~ Doorman, etc.
You can see the list can go on and on. If there is a common swimming pool then HOA fees go up, as the HOA has to pay for the daily maintenance of the swimming pool, additional insurance and if there is a permanent person looking after the swimming pool, then the HOA has to also pay for their salaries, tools and equipment. In addition to the swimming pool, if there is a beautiful garden, providing fresh air to the condo dwellers and a medium for relaxation, the HOA has to pay for the person maintaining the garden.
Thus there are a number of factors which decide the HOA fees. Though all property values as a whole have come down as much as 30 to 40%, average HOA fees have been the same for the last 5 years. There is no government control over HOA fees and even Federal law doesn’t talk explicitly about Home Owner Association fees.
What is critical in this day and age is to ensure the HOA management team is experienced and all expenses are reviewed annually. Insurance policies, elevator maintenance contracts, security services and even the management team itself (if outside managed) should be put out to bid annually to keep costs under control.
If the property is managed “in-house”, make sure the board is balanced and has the experience and expertise necessary to make the decisions necessary to ensure the project and your individual units value is enhanced by the decisions made ~ as a homeowner, get involved, show up to the HOA meetings, ask questions and demand top performance.
Author Jeff Hammerberg is the Founding CEO of CondoZing.com.
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