How to Reduce HOA Fees

Buying a home is something to be proud of, and in many cases, it can save you money over time. But if your home is in a neighborhood or development with a homeowners association (HOA), you might be disappointed to find that required fees can drain your bank account.

How high the fee varies. The national median HOA or condo fee is $135 a month, according to the U.S. Census Bureau, but where you live matters most: Nearly 65% of New York homeowners with fees pay over $500 a month, and about half of homeowners in Hawaii and D.C. do too.

Depending on your circumstances, you may be able to lower the amount you pay each month.

Can you actually reduce your HOA fees?

Lowering HOA fees is possible, but there’s no guaranteed way to do it. HOAs almost never let you negotiate an individual discount, so if you want to change the fees, you’ll probably need to change the budget of the HOA itself.

HOAs are governed by established bylaws, but that doesn’t mean existing homeowners can’t make changes. Here’s a quick overview of some strategies that may help lower your fees:

• Reviewing the HOA budget and challenging unnecessary expenses
• Running for the HOA board
• Requesting a reserve fund audit
• Organizing with other homeowners

Put one or more of these strategies into action when you want to reduce your HOA fees.

How to lower HOA fees

If you’re annoyed by too-high HOA fees, you probably aren’t eager to get involved with your HOA. However, certain steps may make it possible for you and your neighbors to pay less every month.

Review the HOA budget and challenge unnecessary expenses

You may not be required to go to HOA board meetings, but this is where budget decisions are made. Take your time to carefully review the budget and identify areas where your HOA could afford to cut back. These are some common examples:

• Reducing community events and activities
• Postponing unnecessary renovations or repairs
• Finding less expensive landscapers or other service providers
• Switching from paper to digital communications

After you’ve found a few areas where your HOA could spend less, present your findings at the next board meeting. If the members of your HOA are hoping to reduce spending already, they might welcome your suggestions.

Run for the HOA board

This option isn’t realistic for everyone, but if you want to have more of a say in how funds are spent and how monthly fees are assessed, you might consider running for an HOA board position.

Request a reserve study

If your community’s reserve is overfunded, you might be giving your HOA more money each month than needed. Each time you pay HOA fees, a portion of your money goes toward a reserve fund earmarked for major expenses. That way, if the community pool needs an expensive repair or the HOA runs into some other financial liability, it can pay for it from reserves instead of billing homeowners on top of regular dues.

With a reserve study, a specialist conducts an inventory of major issues the HOA is planning to address, when they’ll address them, and how much it’s expected to cost. With those results, the HOA then calculates whether current contributions are too high or too low.

Some states require associations to commission a reserve study on a set schedule, so there may be one you can see. If not, it may be worth suggesting one.

Organize with other homeowners

Taking steps like those above is something you can do on your own. However, there’s strength in numbers, and getting together with other homeowners may help convince the board to take meaningful action.

If your HOA board seems unwilling to revisit the budget or make other changes, you and other homeowners could create a petition, present your case at the next board meeting, or both.

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What to do if your HOA fees keep increasing

If your HOA fees are high but not unmanageable, you might not be overly concerned with trying to reduce them. But if they seem to just keep going up, you might worry about your budget.

In itself, seeing fees rise every year isn’t unreasonable. An HOA may have plenty of legitimate reasons for increasing fees, including:

• Inflation
• Increased landscaping and other vendor fees
• An underfunded reserve fund
• Increasing utility costs
• Maintenance costs for aging buildings

However, fees can also increase as a result of poor budgeting or mismanagement of funds. If you think that’s the case, consider taking steps to increase your chances of lowering monthly costs.

Whatever you do, don’t withhold HOA fees in an effort to protest too-high costs. HOAs have far more power than many people realize. Your HOA could take actions like these if your HOA fees go unpaid for a significant period of time:

• File a lawsuit against you
• Put a lien on your home
• Foreclose on your home through the lien

Some HOAs choose to send your account to a third-party debt collection agency. If a collection account appears on your credit report, it can damage your credit. Collections and other negative marks stay on your credit report for up to seven years.

Consider talking with a financial advisor, nonprofit credit counselor, or other professional for personalized guidance.

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Put HOA savings to work with Kikoff

Trimming your HOA fees frees up money every month, and where that money goes matters. If your credit needs work, that’s one of the highest places of return to send it.

Kikoff’s Credit Account reports your on-time payments to all three credit bureaus, helping you build the payment history that carries the most weight in your score. No hard credit check required.