If you ever sell a home is that belongs to a Homeowner's Association, one of the most common, and yet unexpected surprises you and your buyer may have when conducting that transaction, is that you find out there may be 2 closing costs you didn't anticipate.

 

They are the Foundation Fee and Capitalization Fee.

 

In 20 seconds you're going to understand both.

 

Depending on the bylaws of the Homeowner's Association, The Foundation fee is a .25%-1% deduction from the sales price of the home that gets deposited in an HOA Account that is dedicated to improving and elevating the community.

 

So on a $600,000 home sale, at .25%, you're looking at a deduction of $1,500 from the seller's proceeds that's going to the HOA account.

 

The Capitalization fee is typically an up front buyer side closing cost that is equal to one year's HOA dues. So the buyer has to bring an extra $1,200-1,400 to closing depending on the neighborhood bylaws.

 

This helps the developer keep enough cash on hand to keep the community looking great and offer events and activities.

 

These two costs can be frustrating to discover, but in a high end neighborhood these are one of the commonplace rules of the game.

 

The most annoying part of these fees is not necessarily that they exist, but that no one typically informs a new construction customer about them in a memorable way when they buy the home, and even if they did... most people plan to stay for years so they don't think it will be an issue. That's a problem for future you, not present day, thrilled to be buying a house, you.

 

But at $1,000-1,500 per buyer and $1,000-2,000 per seller....multiplied by 100-200 transactions per year in a large community, this becomes quite a sum.

 

This money ensures the common community areas should be world class and make it a neighborhood that holds and increases its value over time.

 

There could be a case that paying these very fees is part of what allows the values to stay so strong and stable.

 

Check out homes for sale in Cross Creek.

 

Give us a call to help you find or sell your home.

 

Cross Creek Clubhouse and Activity Center by Johnson Development