Personal finance radio character Dave Ramsey strongly advises householders to look out for warning indicators.
If these alarms are critical sufficient, he may counsel promoting the house fully.
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He lately took a query from an advice-seeker who recognized herself as Daniella.
“I live in Dallas, Texas, and I’m wondering if I should sell my condo in order to pay off debt,” she defined, in response to KTAR News in Phoenix. “I owe $120,000 on it, and it’s worth around $260,000. Plus, the homeowners association fee used to be $450 a month and has gone up $100 each year for the last two years, so now we’re paying $650.”
“No one has ever told us why the fee went up so much,” Daniella added. “There haven’t been any major improvements to the complex in the last five years, so I don’t know what to think. Can you give me some advice?”
Ramsey advised she take instant motion on determining what the explanation was for the rise within the house owner affiliation charges.
“Dear Daniella,” Ramsey wrote. “As a homeowner, I’d want some answers by the end of day as to why the HOA fees are so high. I mean, for a $260,000 condo, the fee you mentioned is ridiculous unless the building owners are doing a major renovation, like replacing the parking lot or updating the community’s clubhouse. Even then, it’s crazy!”
“On top of all that, it devalues your condo,” Ramsey continued. “Nobody wants to buy a $260,000 condo with a $650 HOA fee every month, especially when the fee has gone up that much for no apparent reason.”
The radio host thought-about the prospect that the charges are rising to gear up for property enhancements.
“There’s always the possibility the company is building up a war chest for improvements in the next year or so,” Ramsey wrote. “But you have a right to know exactly where the money you pay in HOA fees is going. Ask to see a copy of their financials, and if they won’t do that — or explain why the fee is so high and where the money’s going — you need to sell the place because it’s being poorly managed.”
Ramsey emphasised that Daniella is owed a proof for the upper charges.
“If you try to sell the place, you’re going to have to tell prospective buyers why the HOA fee is so high,” he wrote. “Maybe there’s a good reason for it buried somewhere. But without knowing more, as a buyer, there’s no way I’d take this thing off your hands.”
Ramsey stated he is not a fan of HOA charges within the first place, however this example appears to him to be particularly worrisome.
“There are a lot of red flags fluttering around the situation, Daniella,” Ramsey wrote. “Even in a place like Dallas, this HOA fee is about double what it should be for a $260,000 condo. I’m not saying this just because I don’t like HOAs, which I don’t. And that’s mainly because I don’t like paying money for something, and then being told by someone else what I can or can’t do with it.”
“But you need some answers for your own information, peace of mind and to give potential buyers an honest answer when they ask why the fees are insanely high. Lose the headache. Sell it.”
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