Community-scale building retrofits are not merely scaled-up versions of single-building retrofits. They involve complex challenges, such as reconciling individual interests with collective goals and managing the dynamic interplay between buildings through mechanisms like power grids and social connections. Internet of Things (IoT) connectivity holds the potential to leverage these interplays to balance individual and collective interests effectively in smart communities. One critical aspect of this interplay is information diffusion, which shapes how retrofit decisions spread among neighbors, influencing individual choices and ultimately impacting community-level retrofit outcomes. In other words, IoT-based smart devices automatically push tailored retrofit notifications to homeowners, which completely changes the format of information diffusion in the future. To investigate this influence by such information diffusion, the study used CityBES to simulate energy performance for different retrofits and applied an information diffusion model to analyze how decisions spread in a networked community of 192 buildings. The diffusion process was modeled on a weighted, directed network, capturing the dynamics of information flow and decision-making across 16 scenarios. Individual retrofit benefits were evaluated through payback years, while community-level retrofit outcomes were assessed using greenhouse gas (GHG) emission reductions. The results demonstrate that easier information diffusion among neighbors encourages households to prioritize retrofit measures that align with the majority's optimal choices, even at the expense of individual financial benefits. In this case, such collective prioritization enhanced community-level retrofit performance, increasing GHG emission reductions by up to 29.4 %. However, this improvement came with trade-offs, as the average payback period for households extended by approximately 1.74 years. These findings highlight the potential of IoT-based information diffusion in future smart communities to coordinate individual interests with collective goals, ultimately accelerating community-level building retrofits.