Educate Your Homebuyers
DORA’s HOA Information and Resource Center has many helpful training guides and videos addressing a homebuyer’s due diligence when buying in an HOA.
What Does a Seller Need to Know?
Understand HOA Closing Fees
HOAs charge fees for transaction data and other services related to property sales. Some of the fees must be paid before closing, and others at the closing table.
Unfortunately, these fees can add up quickly, leaving sellers with unexpected costs. KNOW the expected total HOA fees on your property early, so you can prepare for them, and even include them in your contract negotiations.
Understand Your HOA Disclosure Risk
Colorado requires the seller to provide the buyer 24 disclosure items by the stated-contract date. The buyer may cancel the contract for a period of time (as stated in the contract) if they don’t like what they learn from this HOA information.
The seller is liable to ensure that the disclosure information they provide is compliant with Colorado law. At AO, we find 85% of the time that homeowner portals or purchased document packages do not meet the Colorado contract requirements! And, the buyer has up to four years to file a lawsuit regarding improper disclosures.
The seller does not have to hold this liability. At AO, we will carry the risk and ensure the CIC document package that we deliver on your behalf is compliant.
What About Metro Districts?
Sellers do not have the same document disclosure requirements with metro districts as they do with HOAs. However, the closing costs in a metro district can be just as significant and often a status letter is still required. We recommend following the same disclosure process so your seller is not left holding the bill. Ensure the expected costs are clear and can be included in your contract negotiations. Reduce your risks by providing the buyer thorough disclosure information.
Tips to Reduce Out-of-Pocket Expenses
Colorado has some of the highest HOA fees in the nation for real estate transactions. Upfront HOA fees for a closing often exceed $1000, and total fees including upfront and at-the-closing-table fees can exceed $2500.
Practices that can save substantial costs include:
Fill out the Seller Association Authorization (SAA) at the listing.
- You can find the SAA form in your agent document set, or on the Department of Regulatory Agencies (DORA) website.
- With the SAA in hand, you have proof of your seller’s authorization to help them obtain their HOA documents, or you can authorize another party such as Association Online as their agent to help!
- Seller’s potential cost savings is significant! CIC document packages can cost over $700 and the necessary rush fees to meet your deadline can exceed $600; it is not uncommon for sellers to pay over $1,000 on the CIC package alone without the SAA!
- Association Online has saved Colorado residents over $14,000,000 since 2019 by using the SAA.
Choose your title company carefully.
- Obtaining the correct HOA information in a timely fashion is not easy. Make sure your title company has the expertise needed to ensure your sellers don’t overpay.
- CO sales can have up to FOUR HOAs on a single property. Assure your trusted advisor locates and manages ALL of the required data, delivering complete information on time.
- Untrained processors can add costly and unnecessary HOA rush fees to your transaction and create closing delays; missed HOAs or incomplete data can result in high costs and even lawsuits after the close.
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