In real estate "Perception of Value" is anything that could materially affect one's perception of value, and that must be disclosed.  Which leads us to the following story where a newly installed Homeowner Association's Management Company in Southern Marin for a condominium complex felt repairs and upgrades would improve the complexes perception of value, and some of the Homeowners did not. Those Homeowners that had their homes on the market, or were considering listing their home for sale, we're very upset.

       The new management company, shortly after taking over, proposed an Assessment for repairs and upgrades throughout the large complex. The previous management had felt there was no need to rush ahead with the work, or assessment, especially in this economy.  Within this complex the ratio of rentals versus owner occupied homes had become so rental heavy many lenders were hesitant to make new loans here.  The Homeowners reacted by initiating a moratorium on purchases here that could be converted to rentals. That, with the proposed forthcoming assessment, have mades sales here (and the perception of value within this community) very difficult.

      So, how does a forthcoming assessment affect people's perception of value?  If you're trying to sell your home it's seen as an encumbrance. If you're a buyer it's a significant negative. 

      Assessments within Homeowner's Associations are normal. If you're considering buying into a community that has a Homeowner's Association you have to carefully review their existing reserves, and projected budget.  Some Associations have been very well managed, and have healthy reserves for any forthcoming issues.  As an Association ages issues arise, and over time the Association will have to address them.  Similarly, as a house ages over time various systems will need to be repaired or upgraded and maintained to properly take care of the property.  A Homeowner's Association has similar responsibilities.

     Theoretically an assessment could be negotiated between a buyer and seller.  However it has been my experience that most buyers are unwilling to.  I've learned that the seller is better off in this context by remedying the assessment issue themselves.  One way might be to pay off the assessment in Escrow at closing .

     In the current marketplace, where sales have slowed, these kinds of issues can have a profound negative impact. Taking a proactive position here as a seller is your best bet for addressing these issues.