Is your condominium, or the one you are planning to buy, up to PAR?
With the condominium market now reviving in Chicago, the Private Association Rating report, or PARScore®—a high-tech data-driven analytics process that helps condo buyers evaluate their home purchase in advance—is becoming more and more popular among consumers.
“The PARScore® is similar to a credit score for condominium and homeowners associations, or a CARFAX® for condos,” said Michael Reilly, Chief Operations Officer for Association Evaluation LLC, a Chicago-based real estate data-analysis firm that created PARScore®.
“Through our proprietary algorithm, PARScore® provides a standardized rating between 400 and 900,” said Sara E. Benson, CEO of the company. Financially healthy and well-run associations receive higher ratings while risky associations plagued with low bank balances, non-paying owners, special assessments and lawsuits receive lower ratings, Benson explained.
Every association is assigned a unique Permanent Identification Code (PIC). More than 140 data sets are analyzed and scored against the coded individual associations by using the patent-pending PARScore® point system.
Announced last month, the newly designed, consumer friendly 2015 PARScore® report now features a comparison algorithm: “How does your association compare?” The technology also utilizes geo-coding with longitude and latitude satellite reporting.
Things To Remember About Your HOA:
- Condo and homeowner association boards are run by volunteer homeowners with different backgrounds, experience and goals.
- The board of directors have a major impact on the financial health of an association.
- Following a professionally prepared reserve-study plan should rule the investment dollars spent from the association’s reserve fund
Association Evaluation recently conducted a survey to analyze scores condominium associations have posted in popular Chicago neighborhoods. Last week, we focused on the Loop neighborhoods.
This week, we’ll focus on our results from North side neighborhoods:
- Gold Coast & Streeterville. Scores run from 700 to 830. The Gold Coast is bounded by Oak St. on the south, North Ave. on the north, the lake on the east and LaSalle St. on the west. Streeterville is bounded by the Chicago River on the south, the lake on the east, Michigan Ave. on the west and East Lake Shore Dr. on the north.
- Lincoln Park & Old Town. Scores vary dramatically and range from 570 to 880. The area is bounded by Lincoln Park and LaSalle St. on the east, Division St. on the south, Diversey Pkwy. on the north, and the Chicago River on the west. “The wide range in scores reflects rental ratios, building maintenance, association-loan balances, insurance, lawsuits, whether the association has conducted (and is following) a recent reserve study, and if an association recently levied a special assessment,” Benson said. Some newer, well-funded luxury owner-occupied buildings enjoyed exceedingly high scores.
- Lakeview & Wrigleyville. Scores average around 720. Some buildings had building-code violations which affected the PARScore®. The area is bounded by the lake on the east, Diversey Pkwy. on the south, Irving Park Rd. on the north and the Chicago River on the west.
- Uptown, Edgewater & Rogers Park. The average score for the area is 710. Scores vary widely based on the age and type of building. “Many high-rise buildings constructed and/or converted during the condo boom of the 1970s are now in need of substantial renovation of mechanical systems—elevators, roofs, masonry and balconies,” Benson noted. Some older, walk-up buildings have experienced higher scores depending on the amount of reserves compared to the number of units in the association. The area is bounded by the lake on the east, Irving Park Rd. on the south, Howard St. on the north and Ashland Ave. on the west.
- Outlying Chicago neighborhoods. Scores range as high as 875 and as low as 405. Depending on the size of the association, or number of units, pricing—including a site visit and PARScore® rating—ranges from $300 to $850.
“Collected data includes direct investigations with association directors and/or property managers, and on-site inspections of the communities,” said Reilly. “Additional data sources include monitoring corporate filings such as lawsuits, judgments, bankruptcies, and the certificate of good standing with the Secretary of State’s office.”
Financial reporting includes verification of operating and reserve-account monies. Board minutes are examined for adherence to standard accepted business protocol procedures and to ensure against unexpected and costly special assessments that have been discussed by the association’s directors, but not yet levied at the time of sale.
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.