Why Are My HOA Fees So High?

If you have just received your HOA fee bill and are wondering, Why are my HOA fees so high? You are not alone. Rising HOA costs are a concern of many condo owners, and many are at a loss to understand how their fees are worked out, what they pay for, and how they can discover the details behind the costs.

Why Are My HOA Fees So High?

The reasons why your HOA fees high vary. They could include:

  1. High cost, unnecessary, or out of date contracts are in place for maintenance and repair
  2. Excessive financial reserves are being built up.
  3. Some owners are in arrears, and others pay extra to cover the shortfall.
  4. The HOA board is mismanaging the funds

Some of these issues may be deliberate, such as awarding contracts on the basis of a personal connection instead of on cost and quality. Others can be accidental, like continuing to automatically pay for services no longer needed. My research has shown how you can identify these, and other issues, along with how you can address them to lower your high homeowner’s association fees.

Why Are My HOA Fees So High?

So you’ve just opened the email or the letter and are left speechless at the eye-wateringly high fees your HOA is expecting you to pay. After the shock has worn off, you might start to wonder how they came up with the extraordinary amount you see before you.

What Counts As High?

“High” is a subjective term. What is an excessive financial burden for one person can be pocket change to another so first of all, when considering high HOA fees we need a better way to grade them than “high” or “low.”

OK, but how?

Are Your HOA Fees In Proportion To The Services?

The first thing to consider is whether your HOA fees are high because you are receiving a great deal in return or if they are out of proportion to the services provided.

The best way to do this is to research other buildings in your area. Look for those condominiums which provide similar amenities and in which the units are of a comparable price to the one in which you live.

You cannot guarantee an exact match to your building or unit, but it is possible to get a rough idea of what is and is not a reasonable fee for your services, in the local market.

A word of caution.

Don’t take a quick look at random HOA fees, without ensuring they are roughly comparable. A recent study showed that the average HOA fee in the US was $331 per month when the entire country was averaged out. However, in Warren Michigan, $331 would be high because that city’s average was $218 per month. Meanwhile, in New York, they would be happy to pay the countries average of $331 because the New York,  city-wide average was $571.

What Else Affects Fees, Apart From Services?

Other elements which can affect fees are the:

  • Number of units in the condominium
  • Age of the building
  • Number of empty or foreclosed units
  • Amount of financial reserve maintained by the HOA
  • How ongoing maintenance is planned and managed.

As you can see, when you are comparing HOA fees there are a lot of variables to take into account. So, what do you do if you discover your costs are high when stacked against comparable properties?

What Should I Do If My Fees Are High?

If your research shows you are paying more than the average, don’t accept it as “just one of those things.” On the other hand, don’t assume there is dishonesty or ineptitude in play. The majority of HOAs are run by residents, like you, who have jobs and families, and are involved because they want to contribute. They may have no training or experience in finance, maintenance, or management and are doing the best they can.

What you can do is:

  • Ask For A Copy Of The Budget. As the owner of a condo in the development, you have a right to see the HOA budget and not just the current year. If you feel inclined, you could ask for several previous years and review how money has been spent, and the fee levels have been set.
  • Become A Board Member. This is a good move for a number of reasons:
    • It’s easy to find fault, but better to find solutions. Don’t complain about the way other people are handling things in the HOA if you aren’t willing to roll up your sleeve and become part of the fix.
    • Every condo owner has an equal right to propose changes to how the HOA is managed. However, as a board member, it is easier to gain quick and simple access to multiple documents, both current and historical.
    • Rightly or wrongly, board members are seen as having more “clout: and as such any recommendations, you make are likely to receive more consideration.

Once you have become a board member and obtained a copy of the budget(s) what’s next?

What Should I Look For In The Budget?

First things first. The budget should be looked at alongside other documents such as maintenance schedules and service contracts. For example, knowing that the HOA pays X amount each year to a landscaper is only half of the puzzle. You also need to know:

  • What services a contractor carries out.
  • When the contract was last renegotiated
  • If all of the services are still needed
  • If the agreement provides good value for money in your current local economy.

With that thought in mind, this is a reasonable, no prior knowledge needed, beginners checklist of what to look at.

Financial Reserves

There are no legal standards over the amount of money an HOA should hold in its reserves. The purpose of the reserve is to act as an emergency fund, which can be used in two ways. The first is for a temporary payment, for instance, if the roof is damaged in a storm the HOA might pay upfront for immediate repairs, claim the money back from the insurance company, and replenish the reserve with the payout. The second is for unexpected expenses such as the break-down of the hot-water system. The risk of the second type of event can be reduced by regular, timely maintenance of the building.

Ask how the HOA calculates the amount kept in the reserve fund and how the board reviews the fund levels. Consider whether the fund is large enough to cover a reasonable estimate of emergency costs. On the other hand, it may be larger than needed.

Some HOAs have a very healthy reserve fund. With a large reserve fund, you might safely reduce the amount each condo owner contributes each month via their fee.

Insurance Coverage

Next up you can review the insurance HOAs insurance policies. Look for:

  • Levels of coverage – Are they higher than needed? Are you paying for coverage of unnecessary items or events?
  • The amount of deductible and how that affects premiums
  • When the policy was last negotiated
  • Whether the policy is good value for money, especially in the current economic climate.

Repairs And Maintenance

Some condos have an onsite manager who carries out all routine work in the building or complex. Others farm out all of their repairs and maintenance to external contractors, and others have a hybrid of the two systems. Whatever the case in your condo, you should ask:

    • Is work being carried out too frequently? For example, you may find that the HOA pays for the grass to be mown every week when once every two weeks would be fine with all of the residents.
    • Is routine maintenance carried out according to recommended schedules? By skipping regular maintenance to save in the short term, an HOA risks higher long-term costs
  • Are repairs tackled quickly to avoid additional, costly damage?
  • Are the contractor suggested work or upgrades necessary? Is there a method in place to check that those recommended window replacements are really needed? How long will it take those new energy-efficient light fixtures to pay for themselves through electrical savings? Etc.
  • When was the last time contracts were reviewed? Could you negotiate the fees or get a better price elsewhere?
  • Are there detailed invoices? For instance, a single page that has a company name, a date, the words “Doors replaced” and a single payment figure is not an adequate record. When work is carried out, regular contractors should detail the work carried out, the time taken to do it, staff hours involved and the costs of any materials. You can then check to see if any charges are being inflated.
  • What are the procedures for awarding contracts?  When the need for a “one-off” or short term contract arises, how does the HOA choose with whom they contract? Is it the same person they’ve always used?  A friend or relative? A company with a good online review? Do they pick a name at random or is there a procedure? There should be a method for setting out what needs doing, asking a few businesses for quotes, and evaluating who offers the best value for money.


There are direct and indirect ways of making savings on the utility costs in a condo building. Savings that can then be passed on through reduced HOA fees. For example:

  • When was the last time the utility contracts were reviewed? Are there alternative providers who offer the service needed at a lower cost?
  • Has an energy efficiency audit ever been carried out? A review could highlight both short and long-term strategies to reduce energy use throughout the building.
  • Could we provide incentives to residents for reduced energy use? A common problem in condos occurs when utilities are included in HOA fees. As residents do not receive specific utility bills, they tend to be less careful with their energy and water use. This is because there isn’t any direct correlation between their use and their payment.

HOAs could evaluate the cost vs. the benefits of funding energy-saving items for individual units. Not only could there be long term savings but the reputation as a green building could be a huge draw for potential buyers.

  • Are there any conservation programs available? Depending on where you live there may be government, charitable, business, or utility company energy efficiency programs. The range of possibilities varies but can range from energy efficiency audits for the entire building or for individual unit audits, cashback programs for residents who purchase their own energy-efficient appliances, partial payments for major systems upgrades, subsidies for updates, and more.
  • Can we save money in communal areas? Could landscaping be replaced with a less water-hungry alternative? Would residents mind if the light in common areas was changed to motion-sensitive fixtures? Do we need so much light outside?

Your Fellow Condo Dwellers

Surprisingly enough, your fellow residents can have an impact on the level of your HOA dues. When you are reviewing documents look to see:

  • Are any residents behind in their HOA fees? What happens if people fall behind? Is there a provision to help those with temporary financial problems or is money wasted on legal fees? On the other hand, are there residents who don’t pay their HOA fees because they know nothing is going to happen about it?
  • Are units charged fees according to there size and their amenities? It may be that all condo owners pay the same despite some of them being twice the size of others, having additional amenities such as a patio, or having better internet service. If so, is there a way of assessing fees more fairly?

Why Should I Be Concerned About High HOA Fees?

Even if you are happy with your condo fees, it is important to be aware that costs that are out of proportion to the services or the area can have a negative impact when it comes time to sell.  

Unless you can show potential buyers that the fees represent value for money, you may find it difficult to sell your condo.

Not only that.

Even if a would-be buyer loves the condo and could live with the fees, their lender might say no to the mortgage application. There are two reasons for this:

  • Mortgage companies want to be sure they can sell without too much difficulty if a borrower should default and excessive HOA fees are definitely a negative in this situation.
  • HOA fees are taken into account when evaluating a mortgage application. As a result, higher HOA fees result in a smaller approved amount to spend on the condo itself. This means buyers with a preapproval for X amount may no longer qualify for that once high HOA fees are taken into account. As a consequence, they may be unable to buy your condo no matter how much they want to.

Final Thoughts

When it feels like your HOA fees are too high, take the time to research what other owners in similar local buildings are paying. If it turns out that you are paying more than the average, investigate why.

Join the HOA board and review the budget, contracts, insurance, and other documentation related to costs. Identify areas of waste and bring potential solutions to your fellow board members and residents.

Most of all, remember that as an owner in the condominium, you have just as much right to be involved in how your fee rates are set, and money is spent, as anyone else in the complex.



Geoff Southworth is the creator of RealEstateInfoGuide.com, the site that helps new homeowners, investors, and homeowners-to-be successfully navigate the complex world of property ownership. Geoff is a real estate investor of 8 years has had experience as a manager of a debt-free, private real estate equity fund, as well as a Registered Nurse in Emergency Trauma and Cardiac Cath Lab Care. As a result, he has developed a unique “people first, business second” approach to real estate.

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