One thing that no HOA community wants is empty homes. To attract potential homebuyers, HOA communities must project the image of a thriving neighborhood – something that only comes with having the community's properties mostly occupied. The foreclosure crisis that started in 2008 did not spare managed communities. Even today, many association-governed neighborhoods experience an unprecended loss of residents due to foreclosure. While the foreclosure of property does not deter buyers from investing in the real estate, it may make them think twice about wanting to live in the neighborhood where it is located.
News journalism shows like “Dateline” have spotlighted communities that foreclosure has especially into ghost towns. While privacy is always desirable, people move to HOA neighborhoods to be part of a community, not to drop off the social grid. If your community has been hit with a spate of empty homes due to foreclosure, you may fear that the community is headed for extinction, but there are practical steps you can take to improve the situation, steps that will help attract new homebuyers to the community in the wake of foreclosures.
Maintain foreclosed properties
It is common to see bank owned properties that have overgrown lawns, leaves grouped in chain-link gaps in the yard, and numerous newspapers piled near the mailbox. Although there is no one to pay fees on the properties, it is still important to keep them well maintained. If they are left unkempt, a community will begin to look like a ghost town, whether it becomes one or not. The last thing a homebuyer in an HOA community wants to see is a poorly maintained neighboring property that will stay that way until someone moves in.
Focus on community development
Managed communities that experience a series of foreclosures can be presented in one of two ways: as neighborhoods on the rebound, or communities that hope to survive challenging times. When prospective homebuyers tour your community, try to focus on why properties are in foreclosure. Instead, talk about what the community has to offer residents in the future. If someone is serious about buying a home in the community, chances are that her finances in order, which means that she is ready to hear about what she can look forward to from investing in the neighborhood.
Avoid inadvertently causing foreclosures
A decline in assessment fees is the inevitable result of losing residents. While the easiest solution for the problem is raising assessment fees, the board should be careful when making such a move. Raising fees could cause more foreclosures, and raising fees again to account for the additional loss of income could force even more residents to leave. Keeping the present financial structure in place while trying to attract new buyers is usually a better strategy than raising fees to account for lost tenants. Furthermore, the higher assessment fees get, the less attractive the community becomes to potential buyers.
Many HOA communities deal with the burden of foreclosed properties, but how they handle the problem can determine whether it improves or worsens. In most situations, the strategies above are helpful for sustaining and improving HOA communities in the wake of foreclosures.