Tuesday, January 13, 2009

Trade Offs: Distressed vs. New

While investigating the perverted California property tax system for our new home, I happened upon a very handy tool. You put in the home APN, and it spits out all the additional taxes and fees associated with a property (Mello Roos, library, ambulance fees etc.). It only works for APNs in El Dorado County, but there is likely something similar for other counties.


Of course we would have preferred a home without a Mello Roos, but so far the trade offs seem worth it. Compared to our short sale and REO experiences, this purchase process is an absolute dream.

So far, the way I see it, buying new, as opposed to dealing with the banks on distressed inventory, has the following benefits:
1) The purchase contract seems much more evenhanded (less skewed toward the bank).
2) There is tons of disclosure.
3) Construction defect accountability etc. (California Civil Code).
4) The supervisor at the development has been very responsive about questions we have had (regarding an abandoned easement, and arborist reports).
5) The builders offer special financing incentives. I recently heard a story of how the bank’s title companies (primarily in SoCal) are charging exorbitant fees, which they are requiring the buyer to pay.
6) Putting in a backyard is pricey (for a new home) but you get exactly what you want, and can control the cost. The distressed homes we put offers on needed complete overhauls on the yard (dead plants and grass). It isn't as expensive, but still requires a lot of work.

Of course, many question the construction quality of new homes. However, I always tell people that homes made in earlier decades had their problems too. It’s just that time makes those defects apparent so they can be priced into the sale or fixed at the owners expense (our home in D.C. was very poorly made, and settled so much that doors wouldn’t close). My hope is that the home we are purchasing now was constructed with more care (since builders are no longer throwing up homes as fast as they can). I guess only time will tell.


Deflationary Jane said...

You couldn't close the doors in the Streng I used to live in too. This one is better but this one also had the insulation redone in the last 10 yrs. In my former Streng, a repair to an outside wall showed the insulation had settled to point where it only covered the lower 60%. There was no interior insulation. Don't even get me going on the plumbing!

Bottom line is all houses require work. The trick is to not defer it or it will eat you alive >; )

Buying Time said...

The poor workmanship on our house (1979) in D.C. drove Mr. BT crazy (not a single square wall, some were warped etc.).

For instance, we put up crown molding to cover up the fact that the ceiling did not meet some of the walls (like a 1/2 gap).

Jacob said...
This comment has been removed by the author.
Jacob said...

For Placer County tax info I do this:

After finding a house on ziprealty or somewhere go here:


Plug in the address and get the parcel number.

The go here:


Plug in the parcel number in the assessment number field and click submit.

You may get several results, top one should be the latest. Click it.

It lists the tax rate fee 1% and any additional fees.

I was asking at open houses what the mello roos was and either the realtor didn't know or didn't want to say (especially if they are high) so I just look it up online.