Please answer | What are specials or special assesments in Fargo Moohead home ownership?
Here at Modern Market Realtors we get asked a lot, what the heck are specials on property and why does no other area of the country have them? If you grew up here you probably have heard of them but if not, it does seem very foreign. Specials are just another way these cities raise money to pay for all the extras that come when new neighborhoods are built or if work needs to be done in older neighborhoods. Most cities throughout just use local and state dollars raised thru taxation to support these projects, but not in the FM area. We have specials! Think of specials as nothing more then taxes, thats basically what it is. You can avoid the higher specials if you choose to live in a older more developed neighborhood. The new homes is where you really get hit with all those huge specials needed to pay for all new projects. If you really want to avoid paying high specials think older home.
In Fargo ND, and Moorhead MN, the cities pay for the street, sidewalk, ponds, bike paths and sewer maintenance or improvements with a loan and then the homeowner makes the specials payments over a 5 to 25 year time period through a Special Assessment district. In a new development, the city has a big bill and the homeowner pays that bill monthly or yearly if they don't have a mortgage. Occasionally, if a homeowner isn't caring for their yards or the snow removal of the city sidewalk, the city will do the work and charge the homeowner through the Special Assessment process. Not all cities do Special Assessment Districts. In Williston, ND right now, if a developer puts in roads/sewer, ect. the developer has to pay that bill and he charges more for the lot up front, in order to get paid back. It's much harder for developers to come up with the cash to create infrastructure and the developer bears all the costs and the risk. When the city shares in the "risk" - footing the upfront costs, lots are cheaper, but the Special Assessments can also be high. The city of Fargo, still takes part in new developments and has Special Assessment districts, as do Bismarck and Mandan. A Vacant Lot could cost $35,000 and have $14,000 to $25,000 in specials, etc. That could add $100 to $200 a month to your house payment. If no specials in the district, your lot could go from $30,000 up to $60,000 or higher depending on market conditions, but there wouldn't be any specials.
I asked Shannon Barnum of Modern Market Realtors how do you avoid special assesments? She says "either way with or without specials you will still pay, it maybe with a lower cost lot and specials or with a higher priced lot and no specials, there is no way to avoid paying the piper". Shannons best advice is to buy a home at least 10 to 15 yrs old and you may avoid the extra expense of higher specials. Shannon says remember when you buy or build a new you have to pay for that new home smell and its not cheap. My advice is if your young buy a older home and learn all the ins and outs of home ownership before you commit to a large payment, youll be much happier and as you get older you can always build that new shiny home down the road and pay those huge specials much easier.