Q: My mom passed away and we are going to be selling her condo. I was going through the documents for the condo and saw something about a reserve fund. I’m new to this and don’t know what that is. Do I have to do something with it?

A: Sorry for your loss. There is nothing right now that you have to do. Here’s a brief explanation: A reserve fund is also known as a condominium association fund and is also referred to as a reserve account, replacement reserve account, capital expenditure reserve, working capital deposit, initial operating deposit, seller’s equity in condominium association fund, rainy day fund, or any other funds collected in excess of the monthly association dues. I know that it sounds like a lot, but here is the easy-to-understand explanation: A reserve fund is an account maintained to provide funds for anticipated expenditures required to maintain a building or property. A replacement reserve may be maintained to provide for the replacement cost of short-lived maintenance items, such as roofs, roads, exterior painting, etc. So, let’s say that the monthly association fee is $280. After grass cutting, fertilization, snow removal, trash pick-up, insurance, etc., are paid each month, there may be $40 left over per owner that goes into the reserve fund for future maintenance expenses. (This is given as an example only).

The minimum replacement reserve requirement for Fannie Mae and Freddie Mac is jumping from 10% to 15%. Because of this, the monthly association fees could be increased or the HOA could change how it divvies up the funds to meet the new reserve requirements. If the reserve fund for your mom’s condo is short, then that will have to be addressed as to who the responsible party will be at closing: the seller, the buyer or both. The normal practice in southeast Michigan is that reserve funds get transferred to the buyer. There should always be a condominium addendum included with the offer to purchase that spells out what happens to the reserve fund. It also provides the buyer with a copy of all the condominium documents and financials for the association within a specific time frame and shows what the current monthly association payment is and that it is subject to change.

The foreclosure rate in Michigan in June 2026 was 1 in every 4,026 homes, according to ATTOM. That is 0.0002483855%. That is below 25 thousandths of 1%. No negative effect on the market whatsoever. Any property that goes into foreclosure can be sold relatively quickly at or near market value. The foreclosure rate, for many years, has been running well below what the foreclosure rate was before the Great Recession hit almost 20 years ago. When the Great Recession hit, we were already sitting at a 10-month supply of homes.

June’s market update for Macomb County and Oakland County’s housing market (house and condo sales) is as follows: In Macomb County, the average sales price was up by more than 3% and Oakland County’s was up by almost 3%. Macomb County’s on-market inventory was down by less than 1% and Oakland County’s was up by almost 5%. Macomb County’s average days on market was 25 days and Oakland County’s was 23 days. Closed sales in Macomb County were up by almost 4% and closed sales in Oakland County were up by almost 13%. (All comparisons are month to month, year to year.)

By the long-standing historical definition from the National Association of Realtors, which has been in existence since 1908, a buyer’s market is when there is a seven-month supply or more of inventory on the market. A balanced market between buyers and sellers is when there is a six-month supply of inventory. A seller’s market is when there is a five-month or less supply of inventory. Inventory has continued to stay low. In June, the state of Michigan’s inventory was at 2.7 months of supply. Macomb County’s inventory was at 2.4 months of supply, and Oakland County’s inventory was at 2.6 months of supply. By definition, it’s still not close to a buyer’s market.

Steve Meyers is a real estate agent/Realtor at Realty Executives Home Towne in Shelby Township. He can be contacted with questions at 586-997-5480 or emailed at Steve@MeyersRealtor.com. You can also visit his website at AnswersToRealEstateQuestions.com.