How shoppers can vet homeowners associations when house hunting

Homebuyers are dealing with record-high costs this year amid interest rate hikes and shrinking supply.

While shopping for homes is increasingly competitive, prospective buyers should consider an additional factor when weighing the pros and cons of a given property: the homeowners association, or HOA.

Homeowners associations are run by community residents elected to be members of the board of directors, which govern the neighborhood by a set of rules and regulations. Homeowners pay the HOA fees to have common areas such as parks, roads and community pools maintained and repaired.

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Mandatory membership in an HOA can cost homeowners a pretty penny, with dues as high as $1,000 a month, according to the American National Bank of Texas.

If the board is running low on money or didn’t budget right, all they have to do is charge a special assessment, said Raelene Schifano, founder of the organization HOA Fightclub.

“Unless the association members have 51% of the majority voting power, they can’t outvote a budget,” she added. “I’ve seen budgets go from $300 a month to $800 a month.”

As 84% of newly built single-family homes sold in 2022 belonged to HOAs, per the U.S. Census Bureau, it will be important for prospective buyers to vet these organizations ideally before signing the deed.

Different types of homes can be affiliated with an HOA, from single-family homes to co-operatives.

Single-family homes are separate units where residents own both the plot of land and the house on it, said Clare Trapasso, executive news editor at Realtor.com. They have their own entrances and access to the street and don’t share utilities or other systems with other homes. 

Townhomes and rowhomes are somewhat similar; however, they do share walls with units next to them, although they are separated by a ground-to-roof wall, added Trapasso.

Meanwhile, condominiums, often called condos, and co-operatives, or co-ops, are units in a shared building where residences jointly own the common space, but their ownership structure is different. 

In a condo, residents own their individual units but jointly own the land and the common areas with other residents. Condos are run with a board of people on the homeowners association making decisions for the community, said Jaime Moore, a premier agent for Redfin.

In a co-op, residents own shares of a company that owns the building and will have a board made up of each member of each unit creating a community where all parties have a say, he added.

“Co-ops are popular in places like New York and Boston, but condos are generally more common throughout the rest of the country,” said Trapasso.

A high percentage of new homes built nationwide today are part of…