Chicago real estate, living and neighborhood perspective

Association Allocation

Sherwin Sucaldito, @properties Sales & Marketing

I have recently met with several past clients and associations to help consult on financial issues regarding their condos.  It’s not just homeowners themselves who are feeling the strain of the current economy, but HOAs (homeowners’ associations) as well.  One of the main factors is due to distressed properties who may owe pass due amounts that can total into the thousands.

With a thinning budget, and common area issues to address, many HOAs are becoming frugal with what is available.

Some associations usually raise assessments each year, but many recently are raising it higher than before and sometimes even reaching their cap on the maximum amount assessments can be raised.  This, however, may strain homeowners as well and lead to other difficulties.

In most instances, effective budget analysis and cost cutting can help associations greatly address their financial situation.  Expense items such as insurance and utilities should be thoroughly reviewed and prices compared to other vendors.

Building amenities such as personnel (on-site engineer or manager), cable / internet, can weigh heavily into the associations budget.  Reducing chargeable hours or even having personnel off-site can cut costs significantly.  They may not be happy with the reduction in pay, but it’s a lot better than being unemployed.  Amenities such as cable, internet, exercise rooms and pools should be thoroughly discussed at association meetings to see how costs can be cut and if these services are desired by residents.

Capital projects, such as new roofs, should come with a warranty.  Review what the warranty covers and for how long as this could save thousands in having work redone or repaired in the future.

Some management companies are even waiving yearly contracts in favor of month-to-month “trial.”  They may discount fees paid in advance for the year, but like other prepaid expenses, unless you absolutely know what you are getting into, it can be expensive or not even possible to break contract.

Potential buyers of a condo in the association will most likely do a financial review of the HOA (22.1 disclosure).  Poor performing associations can be unattractive to buyers causing units on the market to experience even longer market times and or price adjustments.

Sherwin is a REALTOR® in the Chicago & Suburban area with @properties. Questions can be forwarded to Sherwin Sucaldito

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