PARScore® FINE-TUNED TO EVALUATE CONDO ASSOCIATIONS & HOAs BETTER

The newly designed, consumer friendly 2015 PARScore® report now features a comparison algorithm: “How does shutterstock_293357519your association compare?” The technology also utilizes geo-coding with longitude and latitude satellite reporting.

“Just because you live in the Gold Coast doesn’t mean your building will have a 24-karat gold PARScore®,” noted Benson. “Wealthy neighborhoods can be an asset due to the walkability, proximity to recreation, and quality of life, but there may also be individual buildings representing high risk to a new buyer.”

Some vintage Gold Coast buildings have had lower scores due to low reserves balances, lawsuits, and deferred maintenance, Benson said. Life safety compliance is also an issue in many older buildings.

“Always remember condominium and homeowner association boards are run by volunteer homeowners with different backgrounds, experience and goals,” Reilly said. These boards of directors have a major impact on the financial health of an association. That fiscal (and physical) health will directly impact their PARScore®.

Some condo boards make decisions that may negatively impact the other owners: for example, instead of investing in the future mechanicals and infrastructures, the board may choose to spend money on redecorating the lobbies or outfitting the workout room with new equipment, leaving few to no dollars left for critical infrastructure maintenance.

“Following a professionally prepared reserve-study plan should rule the investment dollars spent from the association’s reserve fund,” Benson said.

Imagine two identical buildings standing side-by-side on the North Side. Both are six-unit 1920s walk-up buildings. One building has $60,000 in the reserve fund and 100-percent owner occupancy, with a strong condo board. The other building has no money in the reserve fund, less than 50-percent owner occupancy, and a condo board with no leadership.

“Although the location, age, and materials of construction may be identical, owners in the first building may expect their sale prices to be nearly double than those in the second building,” Benson explained. “PARScore® will reflect that,”

The highest achievable rating is 900 and indicates the most creditworthy and healthy associations. Lower ratings reflect associations with high assessment delinquencies, excessive foreclosures, high non-owner occupancy, pending lawsuits, low financial reserves, and known unabated health hazards such as mold and radon, for example.

Association Evaluation recently conducted a survey to analyze scores condominium associations have posted in popular Chicago neighborhoods.

This week, we’ll focus on our results for the Loop neighborhoods:

  • Loop, East Loop & River North. With a mix of vintage rehabs and newer high-rise buildings, the PARScore®s range runs from 640 to 800. The area is bounded by Congress St. on the south, Lake Michigan on the east, Chicago Ave. on the north, and the Kennedy Expressway on the west.
  • South Loop. This area, with many newer high-rise buildings, has an average score of 770. The area is bounded by Roosevelt Rd. on north, Cermak Rd. on the south, the lake on the east and the Chicago River on the west.
  • West Loop. Scores range from 660 to 810 depending on whether the project was new construction or a conversion of an older loft building—and the extent of the developer’s rehabilitation of the building. The area is bounded by Halsted St. on the east, Lake St. on the north, Ashland Ave. on the west, and Congress St. on the south.

Next week, we’ll focus on the north side of Chicago and outlying suburbans areas. 

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For more housing news, visit www.dondebat.biz. Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit www.escapingcondojail.com.

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