A reserve study protects the value of your property in several ways. A San Diego reserve study predicts maintenance to common areas in an Association governed community. It is a financial plan that ensures all property owners make equal contributions to the upkeep.
Curb appeal is always important in maintaining property value. A property deteriorating physically also deteriorates in financial value. If a well-established Reserve Fund is in place, maintenance of your community’s common areas can proceed without delay. This means your property is always kept in great condition, preventing long-term damage. Yet, there is something worse than the deterioration of physical appearance. This is the possibility of unattended maintenance causing safety concerns. Both are significant factors which can affect curb appeal, and thus your property’s value.
Reserve Studies and lending institutions
If your Home Owners Association has established a strong Reserve Fund, it will not increase your property’s value. But it does help to ensure that your property will sell at the market value. This is as lending institutions consider the reserve study when deciding to lend to prospective buyers. If there isn’t a Reserve Study in place and the amount of funds in the reserve isn’t adequate, bank loans can be declined. So, your property value is affected if prospective buyers aren’t granted the loan to buy it.
Reserve Fund offsets property deterioration
The Reserve Study acts as an offset once your property starts to age. The Reserve Fund balances out the reduction in property value from any deterioration. Consider that prospective buyers are buying all that the common interest community can offer. They are not only buying your individual property.
Strong reserves appeal to prospective buyers
Even if your property is in great condition now, prospective owners will look to the future. They are legally entitled to obtain financial records of the Reserve Fund. If your property is in perfect condition but without a Reserve Study, the value decreases. Without an adequate Reserve Fund, your HOA may need to resort to Special Assessment. This has a large impact on every owner. A prospective owner can see these costs falling heavily on them. Prospective buyers are likely to see your property as worth less because of large impending maintenance costs. This will be reflected in their offer. It makes your property less attractive than one with a Reserve Study.
A strong Reserve Fund increases prospective buyer confidence. By strong, this means the amount of funds and the consistency of fund contributions over time. Steady amounts contributed consistently over time reassure prospective buyers that fees are predictable. Clear records from a professionally-produced Reserve Study do this. Prospective buyers can be confident there won’t be any sudden fee hikes. A Reserve Study completes the picture for a prospective buyer to your common-interest community. It provides clarity on financial obligations, which can make the decision to buy your property much easier.
If you’re wondering whether the reserve study undertaken by your HOA is necessary, it is. Rest assured, it is protecting your property’s value.