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Hoa Fee Adjustments On Condo Form

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KYLECODY

Senior Member
Joined
Apr 26, 2003
Professional Status
Certified Residential Appraiser
State
Arizona
So I have a Downtown Condo with monthly hoa fees of $350. One sale is in the building whereas the other two are not. The other two have hoa fees of $240 and $475 per month. Via market extraction there is no clear line on if this effects value. Do most of you adjust for differences in HOA fees with condos, or what is the correct method??? Thanks
 

Walter Kirk

Senior Member
Joined
Jun 24, 2003
Professional Status
Licensed Appraiser
State
New Jersey
I don't think that I have ever adjusted for condo or hoa fees. I have, however commented on them several times. Some condo's in my area had rather low fees when the developer first converted them. The fees didn't create large enough reserves to pay for major maintence (roofs, windows,etc) and were later raised sharply. Another PUD in my area had a special assessment because they didn't have enough income to pay for extra snow removal. The bottom line is if the market doesn't react negatively to the fees and if the fees are sufficient to cover anticipated expenses no adjustment is necessary.
 

Bill_FL

Senior Member
Joined
Aug 23, 2002
Professional Status
Certified General Appraiser
State
Florida
The other thing to consider is what is being received for those fees? Does one project have a large pool, health club, etc, the other does not? Does one include water/sewer the other does not? Does one project have only 10 units (high fees) the other has 100? Is there a market reaction to having a small dvelopment? There are many considerations in the fees. Usually, I say something like, The HOA fees were considered to have little affect on the value or marketability. Based on the sales found from the subejct project and other competing projects, all seem to have a healthy demand for units. Since the fees include maintenance and upkeep for use of common elements and features of the projects, the appraiser made no adjustments for either of these items. The additional fees, or lack there of, would be offset by the additional amenities, or lack there of.
 

KYLECODY

Senior Member
Joined
Apr 26, 2003
Professional Status
Certified Residential Appraiser
State
Arizona
Good answer, I like that verbage.. Thanks!
 

Ken-NC

Sophomore Member
Joined
Feb 21, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
The HOA fees were considered to have little affect on the value or marketability. Based on the sales found from the subejct project and other competing projects, all seem to have a healthy demand for units. Since the fees include maintenance and upkeep for use of common elements and features of the projects, the appraiser made no adjustments for either of these items. The additional fees, or lack there of, would be offset by the additional amenities, or lack there of.

Y'know Bill, this supports my theory that appraiser's were lawyers in a past life! :D
 

Kelly S

Junior Member
Joined
Apr 25, 2003
Professional Status
Certified Residential Appraiser
State
California
I'm not sure where you are located, but here in California we often run into special assessments to the HOA dues for earthquake repairs (Loma Prieta '89, Northridge '94 - pick your fave)

Sometimes on MLS they include this assessment with the regular dues and sometimes it's shown separately. So it can be deceiving when just looking at the dues $$.
 
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