If I'm Buying a Condo, How Can I Tell If the HOA Is Financially Stable? What Should I Look For?

Buying a condo comes with a different set of considerations than buying a single-family home. Along with evaluating the property itself, I always encourage buyers to understand the financial health of the homeowners association (HOA). As a top real estate agents Seattle WA, I've seen how reviewing the right documents can help buyers make informed decisions before closing. Whether you're purchasing in Seattle, Bothell, Redmond, or Kirkland, knowing what to look for can help you avoid unexpected costs later. In this blog, I'll explain how to evaluate an HOA's financial stability and the documents that deserve your attention.

Start With the HOA Resale Documents

If you're buying a condo in Washington State, the seller is required to provide HOA resale documents. These documents offer valuable insight into how the association manages its finances and plans for future expenses.

Instead of relying on monthly HOA dues alone, I recommend looking at the full financial picture. The resale package typically includes important records that reveal whether the association is prepared for long-term maintenance and repairs.

Some of the key documents include:

• Past HOA budgets

• Current financial assets

• HOA board meeting minutes

• The reserve report

Each document tells part of the story, but the reserve report is often the most important.

Why the Reserve Report Matters

The reserve report outlines the condition of major shared components within the community and estimates how much they'll cost to replace in the future. This may include items such as roofs, siding, parking areas, or private roads that the HOA is responsible for maintaining.

Buying into an HOA also means sharing responsibility for these future expenses. That's why I encourage buyers to review this report carefully instead of assuming the monthly dues tell the whole story.

A well-prepared reserve report helps you understand whether the HOA has been saving enough money to cover upcoming repairs without placing a significant financial burden on homeowners.

Understand the "Percent Funded" Number

One of the first figures I review in a reserve report is the Percent Funded.

This percentage measures how financially prepared the HOA is for future repairs based on the amount it has already saved.

For example, if the reserve study estimates that roof repairs would cost $30,000 today and the HOA has $15,000 in reserves, the association is 50% funded.

That number gives buyers a practical way to understand the HOA's current financial position. While a higher percentage generally reflects stronger reserve savings, it's important to evaluate it within the context of the community rather than viewing it as a standalone number.

Don't Overlook the Reserve Deficit Per Unit

Another number worth reviewing is the Reserve Deficit or (Surplus) Per Unit.

This figure provides an estimate of what each owner could potentially owe if the HOA needed to fund major repairs immediately. While it doesn't predict future assessments, it offers a realistic picture of the financial exposure each homeowner could face under the worst-case scenario.

I believe this number helps buyers understand their level of financial responsibility beyond the purchase price of the condo.

What Is Considered Normal in the Seattle Area?

One question I hear often is whether an HOA with lower reserve funding should be avoided.

The answer isn't always straightforward.

Many HOA communities throughout Seattle and the surrounding areas operate with reserve funding between 30% and 50%. That isn't automatically a warning sign. Reserve studies often use conservative assumptions when estimating future repair costs, and many homeowners prefer paying lower monthly dues today rather than contributing larger amounts for projects that may not happen for many years.

However, lower reserve funding can increase the possibility of special assessments if significant repairs become necessary before enough money has been accumulated.

That's why I recommend reviewing the reserve report instead of making assumptions based solely on the funding percentage.

Board Meeting Minutes Can Reveal Future Expenses

Financial statements are important, but board meeting minutes often provide additional context.

These records may reveal ongoing maintenance discussions, upcoming repair projects, contractor evaluations, or concerns raised by homeowners. They can help you understand whether the HOA is actively planning for future improvements or responding to unexpected maintenance issues.

When reviewing a condo purchase, I look at both the numbers and the conversations behind those numbers.

Buying a Condo Means Sharing Future Costs

Every condo owner benefits from shared amenities and common area maintenance, but that also means sharing future expenses.

Before moving forward with a purchase, I recommend taking the time to understand:

• How much money the HOA has saved

• Whether reserve funding appears reasonable

• What major repairs are expected in the coming years

• Whether there is any indication that special assessments could become necessary

Looking beyond the listing price helps you make a more informed investment decision.

Buying a condo is about more than finding the right floor plan or location. It's also about understanding the financial condition of the HOA you'll become part of. Whether I'm helping buyers purchase in Seattle, Bothell, Redmond, or Kirkland, I encourage them to review the HOA resale documents carefully, pay close attention to the reserve report, and understand what the numbers actually mean before making a commitment.

If you're looking for guidance from an experienced real estate agent Kirkland WA, Sankari Realty can help you evaluate every aspect of a condo purchase so you can move forward with greater confidence and a clearer understanding of what to expect.