There isn’t a homeowner more dependent on their HOA than the townhome owner. The success or failure of an entire community rests in the hands of the few who call the shots. When proposing townhomes to their clients, agents know they need to research the HOA. Its critical buyers know exactly what’s in store for them. Failure to consider the HOA when buying a townhome can lead to significant losses in equity. So, be careful out there.
Why so dramatic? Because the townhome owner is so exposed. Suburban sprawl of single family homes in any community can easily number in the hundreds. Hi-rises aren’t really “high” if they have less than a 100 units. But, the Townhome community has been historically small. Sometimes, David to Goliath small. Subdivisions survive if a few of its homeowners aren’t maintaining their property. The townhome community can’t do that.
There is no better example of how critical an HOA is to a community than what is currently being built on North Avenue in downtown Atlanta. Newly constructed townhomes with skyline rooftop decks from the $600’s. That sounds almost too good to be true? Turns out, it is. What’s not mentioned in the sales brochure is this property literally overlooks a Dairy Queen. It’s also kitty-corner to a Burger King and down wind, if you know what I mean. Generally speaking, if you can walk from your house to a Family Dollar store, you haven’t spent $600K on that house.
Clearly this is a transitional neighborhood. Equally clear, it’s not transitioning anytime soon. But, considering its North Avenue location, gentrification will inevitably come. Do you have ten years? If you do, you will own a property worth well over a $1M dollars. The bigger the gamble, the bigger the return. The keystone to making all that happen? The HOA.
Success for these new homeowners on North Avenue will be in their unity. They all need to drink from the same Kool-Aid and have the same vision. Their very survival, over the next decade of transitional turmoil, depends on each homeowner being in lock-step with each other. Us against them. The HOA obviously plays a critical role in this regard.
Given the HOAs role, it seems foolish to turn over the Community’s resale activity to a disinterested 3rd party. Or worse yet, several disinterested parties. In our last blog we discussed developing a sales efficiency and creating a revenue stream in the condominium market. Same principals apply.
Marketing 101 teaches us consistent sales messaging over time creates brands. All townhome Communities are brands. Often expensive and exclusive brands. Who knows more about the Community’s messaging than the HOA? Who has more interest in everyone’s greater good than the HOA.
While it is not practical for an HOA to be in the realty business, it must decide how best its message gets carried out. And best way, would be an "exclusive way". One sales agent or team being awarded to represent the Community. (And yes, I know this hurts competition and forces choice—see previous blog) The only way an agent can lower their cost to you, is if you help them lower their own overall cost. Exclusivity gives an agent a zero cost for client acquisition. This gives HOAs a lot of operating room from which they can create some sort of revenue stream back to the Community.
As we noted last week, the 6% commission is toast. Agents need to figure out a ways to operate for less. Exclusivity has been a dirty word in our industry for a long time. But if you really want change in the condominium and townhome markets, it may be the only way to go.
So ask every HOA member this question:
Would you trade Listing exclusivity for a re-occurring revenue stream for the Community?
Would you trade Listing exclusivity for lower monthly dues?
My guess is you will get yes to both questions. Is protecting the dated franchise sales system really that important to homeowners?