When it’s time to list their home, many sellers don’t think about the impact high fees will have on resale.
It is important to keep in mind what buyers will consider when shopping for a home in Maricopa, including homeowners association fees.
It’s also important for buyers to research costs associated with nearby HOAs and how they may affect purchasing power. (See chart at bottom of this column.)
Let’s take a look at an example: At a 4% interest rate over 30 years, $50 a month in HOA fees equates to about $10,000 in purchasing power. We’ll say a buyer is qualified for up to a maximum of $260,000 and the lender estimated the HOA at $50 per month. The buyer could make a purchase in Homestead North, where the HOA is $48.50 a month at $260,000.
But, if he purchases in Desert Passage where the HOA fee is a bit more than double in Homestead, he will only be able to afford a home up to $250,000, assuming taxes and interest are the same.
Another overlooked cost is HOA fees that must be paid at closing. Palo Brea, for example, has more than $1,500 in disclosure and capital improvement fees, compared to Rancho El Dorado’s $400 disclosure and transfer fees.
While these can be negotiated to be paid by either buyer or seller, in this seller’s market they usually end up as an additional expense for the buyer, who may want a lower price.
Even worse, the buyer could walk away altogether at the thought of paying the HOA over $1,500 in a future buyer’s market.
This column appears in the March issue of InMaricopa magazine.