The Hidden HOA Problem in Transactions
As a real estate agent, you might have witnessed a promising deal nearly fall apart due to one pesky factor: the homeowners association (HOA). Imagine you’re selling a condo in an older building with only a few thousand dollars in its reserve fund. The buyers love the property, but they’re nervous – what if the roof needs replacing next year or the elevator breaks down?
With the HOA’s savings so low, any big repair would mean a special assessment, i.e. an unexpected bill that each owner has to pay. That fear of a surprise HOA fee can send buyers running or lead them to demand hefty concessions from the seller.
Sellers, on the other hand, understandably hate the idea of slashing their price or holding thousands in escrow for a “just in case” scenario. This standoff over HOA uncertainties is more common than you’d think, and it can derail otherwise solid transactions.
Why HOAs Can Spook Buyers (and Stall Deals)
HOAs are meant to maintain common areas and save up for big repairs via reserve funds, but in reality, many fall short. In fact, roughly 70% of HOAs don’t have sufficient reserves set aside. That means a lot of communities are one leaky roof or cracked foundation away from a budget shortfall.
When an expensive repair or emergency hits and the HOA’s coffers can’t cover it, the board issues a special assessment – a one-time fee that every homeowner in the association must pay to fund the project. These surprise bills can run into the thousands (or even tens of thousands) of dollars per homeowner, and they’re not as rare as we’d hope.
It’s no wonder buyers get cold feet when they learn an HOA’s reserve fund is low. They picture themselves moving in and promptly being hit with a huge bill for an issue they didn’t see coming.
Even if the concern is just theoretical, it creates major friction in the sale. Buyers tend to imagine the worst-case scenario, while sellers tend to insist everything will be fine. The gap between those viewpoints can be wide – wide enough to kill a deal.
For agents, this is a tricky situation: you need to address the buyer’s valid worries without making your seller absorb an excessive loss. Until recently, there weren’t many options besides negotiating price or hoping for the best.
Introducing HOA Warranty – A New Solution
HOA Warranty is a startup that launched in early 2025 with a mission to bridge this exact gap. It's essentially a special assessment insurance (branded as a warranty) that provides a financial safety net for buyers and sellers in HOA communities.
It was created by Rhett Graves, a second-generation real estate agent who had grown frustrated seeing sales stall over HOA budget worries. His idea was to give everyone a bit more certainty – in a cost-effective way – so that “HOA surprises” don’t have to torpedo deals.
So, How Does HOA Warranty Work?
In simple terms, it’s a policy you purchase during the home sale that will cover up to $10,000 of a special assessment fee if one occurs within a set time after closing. The coverage periods currently available are one, two, or three years.
For example, a seller might buy a 3-year HOA Warranty for $800 and hand it over to the buyer as part of the sale. If the HOA slaps a $9,000 special assessment on each unit a year later to fix the roof – no problem. The warranty would pay up to $10,000 of that bill for the new homeowner, potentially saving them a huge unexpected expense. Essentially, it guarantees that for the first few years of ownership, the buyer won’t be blindsided by a massive HOA fee.
Cost
The cost of these policies ranges from about $380 (for a 1-year plan) to $800 (for a 3-year plan). Importantly, HOA Warranty is only available at the point of sale – meaning it’s something to arrange during the transaction (you can’t typically buy it long after closing).
It’s designed to be a transaction tool that agents, buyers, or sellers can deploy while the deal is coming together. The warranty can be negotiated into the contract (for instance, a buyer requests the seller to provide it, much like they might ask for a home warranty), or the buyer can purchase it themselves at closing if it’s not already part of the deal.
HOA Warranty covers properties that are part of an HOA or condo association with 5 or more units. (As of now, self-managed HOAs are eligible only for a 1-year policy, whereas professionally managed associations can get up to 3-year coverage.)
How HOA Warranty Benefits Buyers, Sellers, and Agents
The beauty of HOA Warranty is that it tackles the HOA issue in a way that offers something to everyone involved in the sale.
Peace of Mind for Buyers
First and foremost, buyers get reassurance. Knowing there’s a safety net for surprise HOA fees means they can proceed with confidence even if the HOA’s financials aren’t perfect.
Instead of lying awake worrying that, say, the condo building’s aging elevator will result in a $5,000 bill next year, the buyer can take comfort that they’re covered.
This peace of mind can make a buyer more willing to go through with a purchase in a community they love, rather than walking away or second-guessing.
A Selling Tool for Homeowners
For sellers (and listing agents), offering an HOA Warranty can be a smart strategy to attract and calm jittery buyers. It’s a relatively small investment that can prevent larger costs.
Consider a seller’s perspective: rather than knocking $10,000 off the price or holding a large sum in escrow for a year or two, spending a few hundred dollars on an HOA Warranty addresses the buyer’s concern directly.
It shows goodwill and confidence in the property’s future, effectively saying, “We don’t expect any nasty surprises, but if something does happen, you’re protected.” This can set a listing apart and speed up the sale, especially in buildings or neighborhoods known to have low reserves or upcoming repairs.
Smoother Deals for Agents
From an agent’s standpoint, HOA Warranty is a new deal-saving tool in the toolkit. How many times have you had to mediate stand-offs over an HOA disclosure that revealed outdated roofs, old HVAC systems, or other potential time bombs?
Now you have an alternative to offer: rather than re-negotiating the price dollar-for-dollar over a maybe-it’ll-happen issue, you can propose a warranty solution that satisfies the concern. It reduces friction and builds trust. Buyers feel their agent guided them to an extra layer of protection, and sellers’ agents can keep the transaction on track without heavy concessions.
Even mortgage lenders and attorneys have shown interest in this warranty as a way to ensure everyone feels comfortable moving forward to closing. In short, it helps get more deals to the finish line.
A Real-World Example
Nothing illustrates the impact better than an actual success story. Recently, an agent in Chicago had a condo listing in a 130-year-old building that became a textbook case of HOA issues. The building’s HOA reserve fund was almost empty (only about $2,000 in savings), which immediately gave buyers pause.
Several interested buyers balked, worried that any significant repair would result in them getting hit with a big assessment bill right after buying. Rather than losing the sale or slashing the price, the seller agreed to purchase a 3-year HOA Warranty for roughly $800 and include it with the condo. That move did the trick.
The eventual buyer was comforted knowing they had a three-year cushion against surprise fees, and the deal closed successfully. In fact, this was the second time a seller in that building used an HOA Warranty to help seal a sale – a strong sign that this approach can work.
Broader Impact and Future Expansion
HOA Warranty might be new, but it’s addressing a widespread issue. Consider that the United States has over 369,000 HOA and condo associations (as of 2024) encompassing nearly 29 million homes.
And more are coming: about 67% of newly built single-family homes are in communities governed by an HOA. That’s a huge segment of the market where this kind of product could make a difference.
Wherever there are HOAs, there’s potential for underfunded reserves and special assessments – and thus a need for a solution to keep real estate transactions running smoothly.
Only Available in Six States (But Expanding)
Currently, HOA Warranty is available in six states:
- Illinois
- Indiana
- Michigan
- North Carolina
- Ohio
- Pennsylvania
If you’re not in one of those states, don’t worry – the company has plans to expand into more markets soon. The vision is to roll out this safety net across many states, given that HOA-related deal turbulence isn’t confined to just a few regions.
In the future, you might see HOA Warranties becoming as common as traditional home warranties in purchase agreements. Like writing an offer and checking a box for “HOA Warranty requested,” much like you would for a general home warranty – it could become a normal part of negotiating deals in condo and planned communities.
Reduce Friction & Uncertainty
The broader goal of HOA Warranty’s founder (and those watching this trend) is to reduce the friction and uncertainty in real estate transactions involving HOAs. It’s about leveling the playing field: for too long, buyers and sellers in HOA communities had to operate at the mercy of whatever the HOA’s finances might throw at them.
As Rhett Graves put it in an interview, no one should feel helpless or have to torpedo a sale just because of fear of an HOA surprise. If a relatively affordable policy can remove that fear, it creates a win-win situation – buyers feel secure, sellers get their home sold, and agents see fewer deals collapse at the eleventh hour.
Sources
- Real Estate News – “Buyers wary of surprise HOA costs now have a safety net” (July 12, 2025)
- HOA Warranty – Official Website (“Buyers/Sellers” and “Real Estate Agents” pages)