What to know when selling your home in an HOA

What to know when selling your home in an HOA

September 29, 2022

So you decided to make the big leap and sell your home! Congratulations! Now that you’ve come to this life-changing decision, you may be thinking, “what’s next?” A real estate agent, packing, hiring a mover, refurbishing the house — the list goes on! But let’s not forget one important thing — you live in an HOA. Not only will your real estate agent and all the other key essential parts of moving make a large impact on the sale of your home, but your HOA will also be a big part of the process. To better explain, let’s take a look at some important factors on what to know when selling your home in an HOA. 

The housing market - Is it a good time to sell? 

The status of the housing market this year is mostly uncertain due to the drastic changes happening in the economy. Some influences on these changes may include but are not limited to, the war in Ukraine, inflation, and Covid-19. While experts in the housing market stay attentive to the economy, buyers and sellers are much more worried about the climbing interest rates — not to mention the constant fluctuation in prices. For example, “Existing-home sales dropped 5.4% from May to June, marking the fifth consecutive month of declining sales, according to the National Association of Realtors (NAR). However, the median sales price of these homes reached a record high of $416,000 in June, up 13.4% from a year ago.” The good news is that selling your home in an HOA may actually benefit you. In fact, a study conducted at George Mason University, found that, on average, a house within an HOA community sells for about 5% to 6% higher than a house that does not belong to one.

In the end, whether or it’s a good time to sell or not depends on what the seller wants to accomplish. Ultimately, selling your home stems down to the personal motivation to sell, along with what the alternative investment may cost. For instance, does the seller have a different investment lined up? How does the cost of their current situation compare to the new investment?

Do you have to pay a fee to your HOA association if you sell your home?

While some states protect homeowners from paying transfer fees, others require a flat fee, referred to as a “transfer fee” or, in some situations, an “enhancement” or “foundation fee.”  This usually occurs during the transferring of home ownership — when the buyer's name is replaced as the new homeowner. 

Depending on the HOA, fees can either come as a flat fee or a percentage that ranges from .5 - 1 percent. In Texas, for example, flat fees can cost as much as $275. Keep in mind that some associations can also charge both — a flat fee, plus a percentage of the home sale. 

In addition to fees, another important financial obligation is to make sure all HOA dues and fines are paid off before selling your home. This is to help prevent the HOA from having to hire a collection agency to collect past-due fees and dues. For additional information regarding fees and requirements for selling your home, be sure to reference your association's bylaws and governing documents. 

5 Steps to Selling your Home in an HOA


1. Communicate

Communicating to your HOA about the selling of your home is an important step in the selling process — this will help eliminate any miscommunication down the road. How so? Primarily because your HOA will most likely have a set of guidelines that you must follow before you are able to sell your home. One of these may include informing your HOA board before and during the closing of your home. Other important information may include transfers, payments, inspection reports, and open fees.

2. Resale documents

Another important step to selling your home is by providing a resale package to your potential buyer. Generally speaking, either the buyer, seller, or agents will request the package. “The primary purpose of having a resale package is to ensure that all necessary information is provided to the buyer by the seller before closing — it also protects both the buyer and the seller in multiple ways.A resale document package may include but is not limited to annual financials, articles of incorporation, bylaws, a resale certificate, and an insurance certificate. “Most states' laws will require the seller to disclose this information to the buyer. This may include a title or escrow company representing the seller to request the statement from the management office.

3. Do your research

Research is a vital step in ensuring a successful sale. Before listing your home, we suggest researching your HOAs requirements and guidelines for selling your home. In most cases, an HOA will require a certain set of paperwork, such as your resale documents. Some may even require that you move during specific hours or days of the week. This is where researching your HOA bylaws comes into play — this will help prevent any fees or miscommunication down the road.

  • Bylaws -HOA bylaws are the specific rules designed to enforce how a respective HOA is run, usually on a day-to-day basis.Communication with your HOA can help make sure that all bylaws are adhered to, along with making the move-out a lot easier down the road. In most cases, an association's bylaws will include a seller's requirements for selling their home. If you find yourself unsure of which documents to provide your potential buyers and HOA, consider reaching out to your board of directors or real estate broker. In most cases, a broker will often be aware of what paperwork will be required for both your HOA and potential buyer.

4. Outstanding fees and dues

Another important step to selling your home is to pay off any outstanding fees or dues. In the event that you may owe money to your HOA, you may find that your home has a lien attached to it. “A lien is a legal claim or a right against a property.” A lien works as a sense of security that allows a person or organization to take property or take other legal action to satisfy debts and obligations. It becomes part of the public record that informs creditors about existing debts. This can highly affect the selling of a home and even cause difficulties when it comes time to move out. Keep in mind that a homeowner may still be able to sell their home regardless of whether or not they have open dues and fees. The process could just be more difficult — any unpaid fines or dues will likely be deducted from what you earn from selling your home. 

5. Schedule an Inspection

Most associations will require that you schedule a home inspection or otherwise known as a compliance inspection, before moving out or transferring ownership of the home. This is an important part of the seller's responsibility — it ensures that the home adheres to the association's bylaws and CC&R (Covenants, Conditions, and Restrictions). Most inspections will be conducted by an HOA property management company or the architectural review committee.