Questions to ask when your REALTOR is not at the showing in an HOA

Buying a home can take some time and throughout the home buying process you are bound to run into a few times where your agent can’t make an appointment or an open house with you. A good REALTOR will always gather this information before helping you write an offer but I believe in educated clients, so knowing why you are gathering certain information is important. The following questions will help you streamline your decision making process and educate your further about the property you may or may not buy. These questions are focused on buying in an HOA.

Question for Your Chicago REALTOR HOA's

Are there any special assessments levied on the building?
A special assessment is a project for the building to repair some common element that has been worn or broken over the years. These projects are funded by the unit owners of the building and are paid for by each owner, not from the building reserves. Typical special assessments include a new roof, brickwork or new plumbing for the building. If a special assessment has been brought through and is being applied to the building the other REALTOR must let you know. The reason we ask this is because the buyer doesn’t want to go through the offer and negotiations only to find out that you might owe a large sum of money and not want to proceed with the transaction. If you ask this question and the answer is yes, ask for approximations on the total budget plus an approximation on what the owner of the unit you are looking at buying would owe.

When was the roof last repaired?
Since special assessments are not desired it is good practice to get in the habit of understanding when you may have one levied against your unit. A very common special assessment is fixing the roof so always make sure to get an approximation of when the roof was last fixed. Typically, a roof will last 20-30 years, so if you are in the 25+ age you might be getting a special assessment soon. This may affect your buying decision so it is good to know this information.

What are the reserves?
The reserves are the dollar amount that the HOA keeps for management and operations of the building. These funds will be used for projects like gardening, snow removal, window cleaning and sometimes can be used for larger projects to avoid special assessments. It’s important to understand how big the reserves are so you get an all around understanding of how the association operates. Usually, we tend to look for $1,000 per unit on the absolute low end, however it would be better to see at least $2,500. If the monthly fees are low and the reserves are low this typically indicates that the association will levy special assessments regularly. This is okay since you don’t have to pay much out of pocket each month. If the HOA dues are high and the building reserves are also high then usually this indicates that the building saves money so as not to levy as many special assessments on you as possible. This situation is also okay. If the monthly dues are high and the reserves are low you may need to worry. This could indicate a building that is going through a lot of repair or a poorly run board. You may want to stay away from buying a unit in a building with this financial structure.

Why are the owners moving?
Although the answer to this question is generally very mundane, certain answers can indicate whether or not buying the property is a bad place to move. Sometimes you may hear the answer “the taxes are getting too high” or “he or she wasn’t happy with the board in the building”. This may not completely set your off of buying the home but it is good to know what problems the sellers are having and how those problems may affect you. 

Are there any rental caps?
This question will be important for you to ask in one way or another. If you are planning to buy this home live in it for multiple years and then sell it you will want to ensure there is a rental cap of less than 50%. Banks require additional equity when a building has over 50% rentals and when you go to sell, you want as many potential buyers as possible. If you are looking to buy this property to rent in the future, you will want to make sure that, if there is a rental cap, it is not near being met. If the rental cap is met before you intend to rent then you will have to adjust your plans and sell or stay in the unit longer than you had hoped. Look for a 2-3 unit cushion on a building less than 20 units large and a 8-10 unit cushion on building larger than that.

Any other rules?
Make sure to bring your own specific situation into the process. If you have a dog or plan on getting a dog, make sure the rules don’t prohibit that. If you plan on doing construction ask about the board and how they operate for home construction projects. In the process of buying a home it is always better to ask more questions. Make sure you know everything about the home you are about to buy.

Each property has its own set of characteristics and questions that need to be asked, however when you are looking at properties in an HOA these should be standard questions. Even when your agent can’t make it, ask these questions to give yourself the most knowledge before you move to the next step.


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