When a community decides to create a homeowner’s association, self-management may seem like the obvious first choice. After all, why would homeowners want strangers to dictate how they run their communities or have to pay hefty fees? While it does make sense at a first glance, many HOAs have decided to hire professionals to manage the association. Ultimately, communities need to weigh the pros and cons to determine which option may better suit their needs. It is fairly common for communities to manage their own association, especially small HOAs. Are the benefits enough to make HOA self-management a worthwhile option for you?
An obvious advantage of self-management of HOAs is that communities get to set their own rules and determine how to enforce them. When rules emerge, while not everyone will agree with them, the rules may better reflect the general consensus. Association self-management also provides an opportunity for community members to use their skills to better improve the neighborhood by serving on the board. Communities that are concerned about exclusivity and privacy may prefer this option most of all.
In most cases, community-run HOAs tend to have fewer rules than those managed by property management companies. This is because professionals tend to make determinations based on community suggestions and what it takes to keep property prices high. Subsequent decisions often lead to tone-deaf policies that create more problems than they solve. These are some of the stricter rules you tend to find at professionally managed communities:
- Restrictions on where to park cars or how many can occupy a driveway
- Bans on subletting and short-terms rentals
- Restrictions on animal types/pets per household
- Limits on how quickly a buyer may sell the home
- Rules dictating who homeowners can sell properties to
- Restrictions on landscaping, exterior home colors and even garage doors
Paying professional property managers to take over an HOA can be pricey. These professionals need to make a profit for this to be a viable business. Profits then go back to the business. In contrast, HOAs focus more on breaking even and maintaining enough funds to tackle large projects over time. Managers tend to volunteer for the position and profiting is not a focus. For these and other reasons, self-management may lead to lower costs and more affordable dues for community members. You could see a monthly membership price variance as wide as $250 per month versus more than $1,000.
When professionals manage HOAs, community members feel less compelled to work together to achieve common goals. Community-run HOAs have no choice but to pull from local talent to get things done. This creates a stronger sense of community, where people are more likely to know each other by name. Familiarity happens naturally while working together in the office, negotiating contracts, voting on bylaws and resolving disputes.
Unfortunately, self-managed HOAs have developed a bad reputation, over time. Are these disadvantages enough to deter you from community-run associations? Many of the cons listed can be addressed by using software made for self-managed HOAs.
Laws regarding HOAs differ by state. In general, these bodies do have legal rights and can enforce them. When people purchase properties within an HOA-regulated area, they also become party to these laws. Even so, HOA leaders must follow specific guidelines when enforcing rules. There are also laws regarding the formation of HOAs and the creation of bylaws and other documentation. When professionals do not handle these processes, it can lead to compliance issues. Self-managed HOAs may mitigate this by keeping an attorney on retainer.
When professionals manage HOAs, this is their full-time job. In some communities, retirees and stay-at-home spouses are able to dedicate their full attention to the management of the association. However, for the most part, the people volunteering at HOAs have full-time jobs elsewhere. This can lead to sloppy management. Deadlines may pass by, missed payments may go unnoticed, receipts may go unaccounted for and phone calls often go unanswered. When disputes arise within the community, it may also become more difficult or take longer for community members to find a solution.
Unfortunately, when community members work closely together and get to know each other, there are some downsides. Most people may get along well, but rivalries can also develop. Some individuals may either begin to compete with each other or make complaints against each other. Rivalries may become especially prevalent when electing people to serve on the board. This may lead to personal problems filtering into the management of the HOA. Hiring professionals eliminates this problem because property managers rarely live within the actual community.
The issues already outlined often causes buyers to feel wary of communities with self-managed HOAs. When HOAs are disorganized and no one is available to pick up the phone or respond to emails in a timely manner, that distrust intensifies. Because of this, homeowners trying to move out of the community may have a more difficult time selling their properties. In some cases, they may feel so desperate to sell that they accept far less than the actual worth of the property. Self-managed HOAs may reduce this problem by hiring professional secretaries to man the office and by ensuring they have up-to-date information for prospective buyers.
The Bottom Line
There is no one prescription that works best for all situations. HOA members need to take some time to determine what their priorities are and what pain points they hope to address. From there, it becomes much easier to choose an appropriate course of action. Regardless of which option you choose, PayHOA provides a software solution that makes life easier for managers and members. Try it risk-free for 30 days.