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The Myth of HOA Self Management

Written by on Tuesday, 22 January 2002 6:00 pm
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There is a myth that has survived since the 1960s that the business of a homeowner association (HOA) should be handled solely by the Board without assistance from professional management. That myth is anchored in the belief that money is saved and that there is better control.

Curiously, the myth was hatched by HOA developers who had a clear conflict of interest and profit motive: If the Board does the work for free, monthly fees can be reduced. If the fees are lower, the developer can command higher home prices. So, developers profited from the myth and there was nothing in the law to stop them from doing it.

The myth of self management is just that...a myth. The reality is that managing an HOA demands a high degree of expertise. Property management is very difficult even under ideal circumstances when there is an iron clad lease with strong enforcement provisions to control the tenants. But HOAs are populated with owners, not tenants. Owners can't be evicted for breaking the rules (and even for nonpayment in many states). Owner standards and demands are much higher than the typical tenant's. And an HOA manager needs the diplomacy skills of Henry Kissinger and skin thick as a rhino's.

Sooner or later, many Boards discover that they've been bamboozled by the myth and that self management is neither easy or fun. But changing to professional management seems next to impossible as the non-Board owners chant "We've never done it that-a way" and "Management will cost money!" The longer an HOA practices self management, the harder it is to go pro. It's like turning an oil tanker...but turn you should.

Consider that the Board is entrusted with the maintenance of most owners' biggest asset, their home. To properly maintain this cherished property requires effective long range planning and broad knowledge of construction and building maintenance. This expertise is rarely found on a volunteer board. Lack of planning inevitably leads to lack of money which leads to lack of maintenance which leads to eroding market value and livability.

Consider the two most emotional reasons that even the smallest HOAs should be professionally managed: Money and Rules. No neighbor should have to collect money from or enforce rules on another neighbor since the actions are predictably confrontational. Yet in every HOA, both of those situations will eventually become a reality. What then?

When it comes to professional HOA managers, the list is usually short. So it's important to carefully pre-screen the candidates. The kinds of tasks they perform are many so prepare your task list before you interview. The workload directly drives the cost. For more on this subject, see www.regenesis.net .

While professional management clearly costs money, it will reduce internal conflicts and improve maintenance which will be returned in increased market value. Many HOA management companies offer different levels and costs of management to allow all HOAs to participate at some level. Equally important, all owners, including the board, will come closer to that "carefree living" the developers marketed.

Look into it and make self (mis)management a thing of the past.


For more information on this subject, see www.Regenesis.net .

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  About the author, Richard Thompson

Individual news stories are based upon the opinions of the writer and does not reflect the opinion of Realty Times.