Today’s Buyer Tip: Gauge the health of your HOA
Are you looking for homes for sale in Fort Collins or elsewhere in Northern Colorado? Here’s a tip you won’t want to neglect.
A few months ago, we had some buyers considering a townhome in central Fort Collins. The unit and complex were both beautiful and they decided to write an offer despite a small water leak that was being repaired as we walked through. The seller said the cause of the leak had been addressed and there was nothing to worry about. I noticed, however, that the roof looked little worn was missing shingles in multiple locations in the complex. This seemed a bit odd, home owner’s associations are typically quick to repair exterior issues, especially roof issues that could lead to water intrusion. We walked around the complex and found a homeowner to talk to. The owner was very nice and welcomed us into her unit for coffee. She told us that there has been water intrusion in multiple units due to a roof design defect and while the HOA had taken steps to address the design issue and the cause of the leaks, she also told us that they had received multiple bids to replace the roof but there was some dispute as to whether the roof actually needed to be fully replaced, or just repaired.
Once we dug deeper and started going through the financials, we found that the reserve fund held about $110,000 and bids for the roof were $115,000. We also knew that by law, the reserve fund must have adequate funds to pay the insurance deductible, in this case $20,000. The numbers didn’t add up and the writing was on the wall: a special assessment was on the way. We estimated the assessment would be around $2,000 per homeowner and while this would not be catastrophic for most homeowners, this reserve fund issue wasn’t going to go away and we wondered if an increase in monthly dues was also on the horizon. Ultimately, the buyers walked away from the deal and received a full earnest money refund.
Studying the health of your HOA is one of the most important parts of due diligence on a real estate purchase. Let us help you navigate this important process. Call us at 970-672-0775.