HOAs, are they really necessary??

The good, the bad and the ugly about HOAs. Yes, they mainly have a bad rap, but there is a lot of good that come from them as well for your home values! 

Transcript

SPEAKER_00 0:00

Hello again and thank you for joining us. This is Bedbatten Banter, Arizona Real Estate Edition. I am your host, Amy Batten with Waterstone Mortgage.

SPEAKER_01 0:08

And I'm Ryan Batten with West USA and Batten Home Group.

SPEAKER_00 0:11

All right, Ryan. So when we get a brand new client, they reach out to us. Of course, I'm the one they start with because I'm the brain, so you're the beauty. And we get their pre-qualification all worked out. What is one of the first things they say to you on their home search?

SPEAKER_01 0:25

So we're going to correct a statement that you just made before we dive in. Are you the brain and the beauty? No, gosh, no. No, no, no. But they do talk to you because you're the money girl. That's really what it boils down to. Yes.

SPEAKER_00 0:35

I make money.

SPEAKER_01 0:36

Yeah, for sure. So uh without fail, everyone I talk to, the very first thing out of their mouth when I ask them what they're looking for, I don't want to live in an HOA.

SPEAKER_00 0:48

HOA. Those are not bad letters. It is, um, we've always had HOAs, and I firmly believe in the benefits of having one. Um, but we're gonna start from the beginning. HOA is a homeowners association, it is a third party, um, and in the uh community, it's volunteers of homeowners that live in the community, and then they farm out the management of that HOA to um a management company. Okay. So when you live in a community that's uh it's called a planned urban development, a PUD, um, they have a homeowners association fee. Their job is to, I'm gonna say police, police all of the homeowners to make sure that they're doing what they're supposed to be doing to to mat or I'm sorry, to follow all the uh C C and Rs of the community um with regards to like the aesthetics and just the proper use of the home.

SPEAKER_01 1:50

Yeah. Okay. Did I say that?

SPEAKER_00 1:52

Was that too confusing?

SPEAKER_01 1:52

No, that's that that is accurate. Yeah, no, and they are. They, you know, and it's weird too, because some HOAs um they're they're pretty chill, right? And other ones, super not chill.

SPEAKER_00 2:04

Oh my goodness. Right?

SPEAKER_01 2:04

Like it runs the gamut.

SPEAKER_00 2:06

Yeah, and unfortunately, just like with everything, you all you ever hear people do is complain. So HOAs have a really bad rap. Um, we're gonna talk today about, you know, the pros and cons of them. Um, I definitely believe in the benefits of a homeowners association. We personally were, I'm not gonna say victims, um, but when you purchase a home in a homeowners association, you agree to their terms and conditions. And we had a really our ourselves, we had a horror situation um about 20 years ago that led me to like, you know, I really don't love HOAs. Um they definitely in some cases abuse their power, but at the end of the day, it's for the good of the full full of the entire community.

SPEAKER_01 2:52

Um in this instance, it was not, but yes, a lot are so um, you know, there are some communities where you know you're you're you're paying uh a relatively lofty HOA fee. And and I think it's incumbent upon you as the individual when you're looking to looking at the potential of buying a home in a neighborhood, uh, to know what it is that you're actually receiving for all the money that you're paying. So just as an example, uh there's multiple neighborhoods up in Anthem up north, and they have one where it's it's they what do they call it behind the gate, right? They're they're they're extra special people. Um the homes are a little more expensive. They've got two HOAs, I think, totaling like six or seven hundred dollars per month. It's in the golf course community. The golf course community, right? Yeah. Um but there are but there are surrounding neighborhoods that aren't in that. And, you know, they I think when when we were living there, we were paying what, 70 bucks, somewhere thereabouts.

SPEAKER_00 3:53

And we got a lot for that. So I'm very thankful for all of my experiences there. Um, but you know, I do feel like we got on someone's radar and we were a little bit um, I'm not gonna say not treated fairly, because we probably were. I was just really upset at the time. Um, but I agreed to CC and R's and we did some improvements in our backyard, and they did an aerial uh view from satellites and saw that we had made some changes. And this is after five years of living there, mind you. Um, and because we did not get prior approval, they made us rip it all out. And I decided I couldn't live in Anthem anymore because I was really upset about that. It was very expensive. But to be honest, shame on me, I didn't follow the rules. I didn't get approval first, and this was right after the market crashed, you know, 2008, 9, 10. Um, half of the homes in our community had dirt backyards. So I, you know, we we really did a beautiful job improving our backyard. Um, but their problem with it was we did not get prior approval. So they made us rip out uh a $12,000 improvement that we had done because we didn't get prior approval and they would not go back and give us approval. So uh we did rip it out, and then uh about six months later we moved and sold the house. Yeah. But but you know, at the end of the day, they weren't in the wrong. Um, but it didn't need to be handled like that.

SPEAKER_01 5:18

So just know just know this. I think the average person thinks that, hey, uh HOAs are gonna make sure that you're not painting your house fluorescent pink, that you don't have car on blocks in the front yard, um, that if you have weeds, they're gonna tell you to pick them, don't leave your garbage cans out at the road, like that kind of stuff, right? Um, I don't think the average person understands that in some instances with some HOAs, they can 100% dictate what goes in your backyard as well. Yeah, which in our instance, that's what it was. Yeah.

SPEAKER_00 5:46

So, and it was a time when um, you know, half the homes on our block were foreclosed. Um, and they probably just need, and we had a bunch of fines, they probably just needed to generate something. And it is what it is. Um, you know, I I'm not thankful I went through that process, but I'm thankful that I see the other side of it as well. Um, but I do believe in the value of HOAs. I do love the fact, you know, we live right now in a community of it's no HOA. We're on a county island, which means that, you know, we're not really annexed part of the city, if you will, for property tax purposes, which I do not hate. Um, but you know, there's we live in, you know, really nice homes, and there's a purple home caddy corner to us, you know. So they're nice old.

SPEAKER_01 6:33

He looks like Barney, kind of.

SPEAKER_00 6:35

Yeah, kind of. Yeah. Um, and then there's a pink one, and but then there's a lot of beautiful homes that that's not an issue for. So, you know, every time I drive by that house, I'm like, oh, it'd be nice if we were in an HOA right now. But I don't really care that much. I love not having that policing over me. But we, you know, all of our rental properties, all the homes we've ever lived in prior to this current one has always had an HOA and we've almost never had a problem with it. So when someone contacts us and says, I want a home with no HOA, well, we talk about the area they're looking in and their price point, and we're like, okay, it's probably not going to be avoidable unless you want to go really far out or buy something that's a lot older because HOAs really only became a thing in the mid-1990s. So anything older than that, unless it's a condo or a townhouse or a patio home, anything older than that would not have an HOA.

SPEAKER_01 7:26

Yeah, and I don't know the specific uh stat. I didn't look it up, but uh my guess is probably 80% of homes for resale are in HOAs.

SPEAKER_00 7:35

Oh, I would say so, because we have a lot of new new built communities here in Maricopa County.

SPEAKER_01 7:39

Yeah, so four out of five homes that are even available are gonna have an HOA. So knowing that when I talk to clients, uh you know, I let them know, hey, yeah, I absolutely if that's what you want, right? I mean, I might have some questions, kind of understand, want to understand why that's what you want. Yes. Um, but if that's what you want, just know that your your potential home pool is significantly shrunk.

SPEAKER_00 8:00

Yeah.

SPEAKER_01 8:00

Right? You're not gonna have as many options.

SPEAKER_00 8:02

Yeah, and you know, unless you purchase a home that's kind of like like we said before, way on the outskirts, um, and then some developer just built a couple homes, um, you're not gonna be able to get a newer home that doesn't have an HOA either. They exist, but just they're not as common as homes with HOAs.

SPEAKER_01 8:18

Yeah, you know, and it's it's interesting. So we and we've learned a lot, right, being in the business, but but there are actually, believe it or not, and I know you probably would believe it, you probably feel like this is happening in your HOA. Uh there are HOAs that hire private investigators, and that's what they do. They drive around the neighborhood the entire day just looking for violations. It's kind of wild, but they absolutely do. Um and then there's, you know, there's I I on the other side of it, there's I I've talked to lots of folks who live in communities who have HOAs, and they're like, our HOA doesn't do anything, they don't enforce anything, they don't make the people clean the weeds or do this or do that. Um so it it kind of runs a gamut. So we uh at the end of the day, it's incumbent upon you if you're the person looking to buy the home to do the research and and really be comfortable with the management style of the HOA, um the the trade off, right, and in terms of what you get for what you're paying. Uh like you know, when we lived in Anthem, they had a full gym we could have access to. They had a water park we had access to. It was awesome. Yeah, like you felt like you were really actually getting something for the fee that you were paying. Whereas, you know, the the overwhelming majority of HOAs in my experience, they said they just maintain the common areas.

SPEAKER_00 9:32

Aaron Powell, yeah, but you always have a little bit of a park maybe here or there, that kind of stuff, right?

SPEAKER_01 9:37

Um but I mean, I don't know, there's other ones like gosh, and some in some of like the condos and the townhouses, uh, those communities, those HOAs are really expensive.

SPEAKER_00 9:47

Aaron Powell Well, they are, but they cover a lot more and they offer a lot more. So really, it's um once we get into the nitty-gritty of why someone thinks they don't want an HOA, uh, they usually end up purchasing in an HOA. Generally, just because I think there's just so much misinformation out there. At the end of the day, their job is to make sure that your community stays looking nice and your homes, you know, hold their value because they don't allow your neighbors to uh let their home fall in disrepair.

SPEAKER_01 10:14

Right. That's really truly the reason for it.

SPEAKER_00 10:16

Yeah, I absolutely love it. You don't have uh streets that are cluttered with cars, you don't have trash cans that are sitting out for a week. Um, you know, I definitely see a lot of value in HOAs. I am not an HOA hater, even though I had a situation. But again, I take full responsibility for that. You know, I was even in the business, I knew better. Um, it was just post-crash, and and you know, a lot of people weren't following any rules. And I figured it's my backyard. What does it matter? We had already lived there for so long, and no, it mattered. Oh, yeah, shame on me.

SPEAKER_01 10:47

Yeah, yeah.

SPEAKER_00 10:48

So I definitely think that um if that's something that is a sticking point for you, you know, do a little bit of research and you kind of need to determine is that seriously something that is uh a property you're not gonna want to purchase if it's in an HOA. Um it's just it's really difficult to avoid it in a lot of the outskirts where all the newer homes are, especially.

SPEAKER_01 11:10

Yeah, I mean, any new build community, any of them have HOA. It's a guarantee they're gonna have.

SPEAKER_00 11:15

Absolutely, yeah.

SPEAKER_01 11:16

Um so you know, the other thing is when you are looking, so yeah, if you're looking for a home with no HOA, like Amy said earlier, you're either way out on the fringe, right, of town.

SPEAKER_00 11:25

Which sounds great.

SPEAKER_01 11:27

I mean, the older we get, the more I that sounds like a really exciting idea. Um or you're looking at, you know, a home really quite frankly, pre-90s. Yeah. You know, and so it'll be an older home. So then when you're looking at homes like that, then there's a whole nother uh thing. slew of concerns. Slew of concerns, right? Uh how the sewer lines, is there x amount of years old, has the roof been replaced, on and on is all kinds of other issues too that can come in. So there is no unfortunately panacea, right? No option where this is clearly the best way to go. Um it and really the the gist of of this is just understand and know all of the rules that go into whatever the HOA and their C C N R whatever they provide. So that you you can look and you do it, you know, it's in digital format, it's easy. You can search what topics you might be interested in and worried if you can or can't do this. You can find it relatively quickly. Um, you know, if you were trying to, you know, it is daunting a lot of the C C N Rs. I mean, there's what 50, 60, 70, 100 pages sometimes. Let's really easily a lot of legal ease. Um but if you have a couple of topics like, hey, I want to have an RV and is it is it okay if it's taller than the the fence line? Or hey, I was thinking about maybe adding a pergola in the backyard. Is it taller than the fence line? And if it is, can I do that? And if I can do that, what do I have to do to make it comply? Like you can find all that out before you actually sign on the dotted line and actually close and buy the home.

SPEAKER_00 12:55

Absolutely. And another thing, you know, you uh you've heard a couple stories about people, you know, shooting up their HOA board meetings. Oh, gosh. Um, because people like homeowners just get so frustrated that, you know, it's my home and I want to do what I what I want to with it. Um, what I am gonna say is there is a 99% chance you will never win against an HOA.

SPEAKER_01 13:14

Oh no.

SPEAKER_00 13:16

Their pockets are deeper. Um, you know, I've had people who have gone to court and every single one of them have lost against the HOA. So do not move into an HOA unless, like Ryan said, you're really aware of their CC and Rs. You know what you're allowed to do and not allowed to do. Um, if there's a violation, I would say just, you know, ask for the fee to be waived and that you're gonna fix it. Um, I would not go to war with an HOA. I have yet to see someone win against a homeowners association. And, you know, and regardless of the topic.

SPEAKER_01 13:44

Another thing that you could potentially do is cozy up to the president, the vice president, have them over for drinks, have them. Yeah, there you go. Get on the board, yeah. Yeah, so I mean, there's another alternative. You know, there's more than you know, one way to skin a cat. There really is, yeah. Um I know uh your sister, I think she did that. She's done she she's got friends in the HOA that she's living in that she's they're on the board, so she kind of helps.

SPEAKER_00 14:10

Anytime she gets a notice or a fine notification for you know, weeds or whatever, she'll just text her friend and say, hey, I'm pulling the weeds right now, please remove this from my account. And I'm like, I love I love that you have that option. Um, but they are not the evil that everybody says they are. Um again, there's a lot of reasons to have an HOA. And I do love a lot of things that they stand for. Um you just you just gotta be totally aware of what you're getting into.

SPEAKER_01 14:36

There's good, there's bad, there's ugly, there's all kinds of different, you know, positive and and and negatives when it comes to HOAs. But again, like we were saying, just you have to you have to know the rules. Especially if especially if there are things that are pertinent to you, right? That that you specifically want to know if you can do or can't do.

SPEAKER_00 14:54

Have a work truck in your driveway.

SPEAKER_01 14:55

Yeah.

SPEAKER_00 14:56

That is a big HOA thing. So if you are uh, you know, we have a billion entrepreneurs. Yes, if you have a AC business and you have your truck in the driveway, some HOAs don't allow that. So it's not uh, you know, across the board, but that's like that's a big one. You need to make sure that that's something that you can have on your property. Um, so you want to make sure that you find a community that that's not gonna be restrictive. If in the future you want to turn your property into a short-term rental, check the C C and Rs. Now they can change from time to time based on developments in, you know, real estate or in the community. But if that's a sticking point for you, then you don't want to buy in a community that won't allow that. And they they can they can police that as well.

SPEAKER_01 15:38

They can. We run into people all the time that are looking to do that, that are looking specifically to buy a home that to then have it turn into an Airbnb. And you better believe that's the first thing you should check. That's your whole soul and purpose for buying the home. Um, because there's a fair amount that won't allow for it. Right now, there are others that have no problems and they will allow for it. Um, you know, that's that's uh something that again, it's just do a little bit of homework.

SPEAKER_00 16:02

Yeah.

SPEAKER_01 16:02

Right. Uh I think that alone would alleviate a lot of the issues and a lot of the kind of the negative feelings when it comes to HOAs. Agreed. Um, you know, it's in my opinion, it's kind of tough when you sign your name onto a contract and then you want to renege on the contract.

SPEAKER_00 16:16

Yeah.

SPEAKER_01 16:16

Right? Like that's not good.

SPEAKER_00 16:18

So well, and you won't win, so it doesn't matter. Um, and that's I think a lot of the frustrations come from, again, you just not knowing what you agreed to. And, you know, shame on the real estate agent, shame on the buyer, shame on all of us for not doing our due diligence up front if something like that is a concern. Like obviously, we've been through all of this, so we know what to look for when it comes to the communities and we know how to educate people up front of this is what's included in your HOA fee. This is what you can expect to get from them, and this is what you can expect to be uh how be a potential problem in the future. So just make sure you don't do any of these items. Um and I know condos and townhouses are are a lot more strict because you share walls and you share keep common areas. So they just want to make sure that ultimately your home holds its value and they're gonna hold everybody accountable to the same terms. I I just I I think there's a lot of positive in that.

SPEAKER_01 17:08

There is, yeah.

SPEAKER_00 17:09

I can tell you without an HOA, I wouldn't have picked a lot of my weeds in the past. I I appreciate it.

SPEAKER_01 17:15

I have my and I know growing up, uh so we grew up in uh South Peoria, uh 75th Avenue, between Cactus and Peoria there, and we didn't uh live in an HOA.

SPEAKER_00 17:26

Yeah. That was before they were a thing.

SPEAKER_01 17:29

It was wild from house to house to house where you see like I and when I said fluorescent pink, I'm not kidding. There are people who are painting their houses fluorescent pink, fluorescent green, like just all kinds of crazy obnoxious colors. Yeah. Um, you know, they they took the natural landscaping a bit far where they just never did anything and let everything just grow up all in the front yard. Um and then right next to it, you'd have a really nice home where everything's manicured and taken care of. You really can tell.

SPEAKER_00 17:54

And I don't say this like in any condescending way, but you can tell when you drive through your neighborhood, the renters versus the homeowners. You can tell.

SPEAKER_01 18:00

Oh, yeah.

SPEAKER_00 18:01

There's so much more pride taken. A lot of renters do take pride in their properties, but it's just not as common. Homeowners, you can tell, like, oh yeah, they've been here for a long time. They love their home. Oh, that's a rental. HOA did eliminate that.

SPEAKER_01 18:15

Yeah, no, I definitely helped it.

SPEAKER_00 18:17

Everyone looks like homeowners now.

SPEAKER_01 18:18

Um, are there are there any other uh important factors with regards to HOA specifically, situations maybe that you've come across?

SPEAKER_00 18:27

No, I mean, just communicate is my number one thing. You know, we have uh several properties in HOAs, and when I get a fine as a or I'm sorry, a notice or a fine as a result of my tenant, I communicate with the HOA. And most of the time they take the fine off. Um, or I or I just pay it if it's legitimate. Um, but typically just communicate with them. Don't let it build up and be frustrated and hate your community as a result of someone that who's really there to be your advocate for your home values. So just communicate is all I can say, and and follow the rules. And uh, you know, if you get a fine, just correct it, fix it, pay it, and move forward. Um, because fighting anything it just doesn't get you anything.

SPEAKER_01 19:09

No, it's it's really bad.

SPEAKER_00 19:10

Yeah.

SPEAKER_01 19:10

Yeah, no, like in our situation, we spent a couple of years right uh by going back and forth with them.

SPEAKER_00 19:16

We did, yes. And we still lost.

SPEAKER_01 19:18

And we still lost and still had to pay. And it was, you know, it's honestly you you save yourself a ton of grief just before you do anything, even if you're not sure and you can't find anything in the CCNRs for your community, call the HOA. Yeah. And just say, hey, I'm like she goes back to communicating. I'm thinking about doing this. Is there anything special you guys require of me? Right, before I get started on it. And they could say, you absolutely can't do that at all. It's not even an option. Or they could say, hey, yeah, you know, submit these plans, we'll approve them. Here's the kind of the parameters that's got to fit within. Um, and you can save yourself thousands and thousands of dollars, thousands, or I'm not thousands, but tons of time in uh not being stressed out, not being anxious, not being frustrated. Um yeah, at the end of the day, like most things in life, communication is key.

SPEAKER_00 20:06

Absolutely it is. Well, thank you so much for joining us. We hope you learned something valuable about HOAs. Um, and again, when you're looking at home shopping, uh, don't just automatically cut something out because of something you've heard once. Do your research, ask your professionals, you know, your lender and your real estate professional, this is what they do for a living, and they will give you their honest opinion. Um, you can always reach out to us. You can find us online at keeping at real estate with amebee.com. Um, and uh all of our contact information is on our website and tune in to our show, Keeping It Real Estate with Amy B, every Saturday at 5 p.m. on 92 3 FM KTAR News.