Planned Unit Developments: What Real Estate Agents Should Know

Planned unit developments can attract many potential buyers since they offer various amenities and community living. This makes them an important aspect of real estate and one that agents should study and be familiar with. 

Introduction to Planned Unit Developments (PUDs)

A planned unit development (PUD) is a group of single-family homes, condos, or townhouses where all the homeowners belong to a homeowners association (HOA). Homeowners own their home and lot and HOA membership is mandatory. This community of houses may include recreational, industrial, and commercial elements. Real estate developers typically design PUDs to be purposeful and thoughtfully put-together spaces that are in convenient proximity to shopping areas, schools, places of recreation, and possibly workplaces. The uniqueness of a PUD is that it does not have to adhere to current zoning regulations, so developers can be more creative and flexible in how they use the land. 

Modern complex of residential buildings

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What Is a Planned Unit Development?

Originally conceived in 1925, planned unit developments gave developers freedom from rural, residential, industrial, or commercial zoning laws and enabled them to create a more flexible and cohesive community that blended elements of residential, natural, and commercial spaces. Here's what every real estate agent should know about PUDs. 

Key Features of Planned Unit Development

While a PUD can include single-family homes, condos, or townhouses, what all home styles in a planned unit development have in common is that homeownership grants access to a homeowners association. The association typically maintains public amenities that are available to all residents in the PUD. That said, agreeing to be part of an HOA means that homeowners must adhere to the HOA's rules regarding how their house and land should look. The rules vary from one association to the next, but some HOAs don't leave much room for customizing. 

PUD Legal and Zoning Considerations

While traditional zoning restrictions don't apply, PUDs are governed by legal agreements between the developer and local authorities (such as the planning commission or city/town council). There may be public hearings where other stakeholders, like neighbors, may raise questions. Developers must adhere to high standards of public health and safety, design quality, permissible land use, and population density limits. Developers may also be expected to preserve any natural, architectural, scenic, historic, or cultural features of the area. 

Common Types of Planned Unit Developments

Expect most PUDs to fall into one of three categories: 

  • Residential PUDs: Residential planned unit developments are primarily focused on housing developments. They may include various types of housing, such as single-family homes, townhouses, apartments, and condominiums. Residential PUDs often incorporate amenities like parks, playgrounds, and community centers. 
  • Mixed-use PUDs: These PUDs combine residential, commercial, and often other uses, such as offices or retail spaces, within a single development. The goal is to create vibrant, walkable communities where residents can live, work, and shop in proximity. 
  • Master planned communities: These are PUDs on a large scale covering 2,500 acres at a minimum but ranging to over 10,000 acres in some cases. You could find between 100 and 50,000 homes in a master-planned community. Think of an MPC as a small but self-contained city. 

The Role of Homeowners Associations in PUDs

Homeowners associations play a major role in the operation of a planned unit development. All PUDs are run by HOAs, so potential buyers must understand what they're signing up for. The HOA may be run by a board of directors consisting of volunteers from within the community and some external experts. Residents of PUDs conduct elections to appoint their board of directors. 

Benefits of HOAs for Planned Unit Developments

Homeowners’ associations are usually responsible for property management within a PUD. They can do a community a lot of good by prioritizing cleanliness and maintaining common amenities such as recreational areas, roads, pools, parks, etc. They also collectively maintain high standards for the planned unit development that positively impact the overall desirability of the community and can be a factor in overall property value. 

Drawbacks of HOAs and Planned Unit Developments

HOA membership may come with monthly or annual fees that can be quite high depending on the community and the amenities they offer. HOAs are also often responsible for strict regulations designed to maintain uniformity in the area. For instance, the HOA may prohibit the use of certain colors on a home's exterior, or they may have rules about whether a homeowner can erect a fence to separate their property from a neighbor. Agents should prepare buyers for these facts and remind them that not paying fees or flouting HOA rules can result in heavy fines. 

Impact on Buying and Selling PUDs for Agents

When a client is selling or buying a house in a PUD, some important considerations may affect different aspects of the transaction. Here are a few things real estate agents can keep in mind. 

Desirability and Long-Term Home Value

PUDs can be highly desirable since they're usually well-kept, have great amenities, and offer access to shared spaces that encourage a sense of community and shared living. These factors encourage a high standard of living within a planned unit development and help them maintain long-term value. This is further enhanced by the uniformity of the homes in a PUD. 

Challenges and Opportunities With PUDs

The costs and potential loss of autonomy that come with being a PUD resident may pose a challenge for real estate agents facilitating a sale. However, identifying the right buyer is the key. Agents can pitch the exclusivity, amenities, and high standard of living to clients who can afford the costs. Some buyers are willing to forego customizations in favor of buying a house that retains its value for longer – these are typically the people who would be interested in PUDs. 

Strategizing PUD-Specific Sale and Resale Approaches

Agents responsible for selling PUD homes can benefit from creating a buyer profile based on the unique strengths of the planned unit development. For instance, proximity to good schools may be a strong selling point for parents, whereas amenities such as tennis courts and parks may attract buyers looking to make the most of their leisure time. As with any sale, it's important to quickly identify the buyer's needs and highlight features of the home or larger PUD that align. For example, it may not make sense to pitch a PUD home to a buyer who wants to customize their home's exterior to suit their preference. 

Navigating the Planned Unit Development Landscape in Real Estate

PUDs play an important role in real estate as they offer access to features and amenities that most neighborhoods don't. As an agent, noting down the key selling points of homes in planned unit development, understanding HOA rules and regulations, and identifying potential buyers willing to pay a premium for PUD benefits can help you facilitate effective sales and purchases. The first step is understanding the fundamentals of PUDs as well as the role that HOAs play in a particular development. Grasping these basics helps you better serve your client at every stage.