Foreclosure in 95762>Question Details

Dave,  in Folsom, CA

Looking for Home in Folsom/El Dorado hills. Newer community , ~3700 sq.ft, ~600k.

Asked by Dave, Folsom, CA Wed Sep 26, 2007

I am trying to buy a home in folsomEDH having minimal HOA/mello roos. Can some one point a good locality(built in last 5 years) which can offer ~3700 sq. ft. home at ~600k??

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I appreciate your prompt and precise responses. I realize my requirements being a tad-bit hard to match but this market might be the chance to get something in that sq.ft. and price range. I have heard really good things about Highland views or Stonehaven which have no mello-roos or HOA, but is a bit outside the price-range. Ute's suggestion to buy down the mello-roos/HOA is a great suggestion. Another viable option is buying a new Pulte home in laurel oaks off of Bass Lake, but their CC&R is 260/mth and I am not sure how good of a home builder are they. So I guess I might be better off to be patient and see if something comes in my price range. Any more suggestions?
2 votes Thank Flag Link Wed Sep 26, 2007
Hi Djwl. I had one more thought. I share your desire of wanting to avoid homes with high Mello Roos and HOA fees. I was thinking that you could make an offer asking the seller to buy down the Mello Roos. Mello Roos is a tax assessment that basically spreads the cost of community improvements (schools, parks, etc.) among the property owners in certain areas. I think the tax is usually payable for 30 years and I have heard of seller buying down the Mello Roos assessments to make their property more attractive to potential buyers. Just a thought.
Web Reference: http://www.go2kw.com
2 votes Thank Flag Link Wed Sep 26, 2007
Ute Ferdig -…, Real Estate Pro in New Castle, DE
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It's so true. I have been ignoring GB thinking it is out of my price-range without even giving it a serious thought. I guess I should not leave it out of the equation without checking things out there. There is always a chance to get something we really like and in our 'stretch' limit. I'll do some preliminary search on Trulia on GB homes. Thx for your suggestion.
1 vote Thank Flag Link Fri Sep 28, 2007
Highland Views is a great neighborhood - with no Mello roos and low HOA's (I believe about $35 per month). Homes will run from the low $700,000s to about a million. The low $700,000 homes are runnining about 3,000 sf. As an example, my team has one short sale listed in Highland View at about 3,400 sf for $899,000. There is lots of inventory available, albeit at higher prices.
As for investment, it's hard to forecast, especially since I have not been in the Pulte development off of Bass Lake road. I would lean towards the Highland Views example. You are closer to infrastructure that is already in place, the community is maturing nicely, landscaping is most likely in and growing, and the lack of MR will reduce your out of pocket cash flow expense. Infrastructure fill-in off Bass Lake will happen in time, but until it is in the Highlands View alternative offers more. These attributes will be reflected in resale prices. You also need to think about your quality of life - which alternative is better for your personal commute, and your day to day living needs. I live on the border of EDH and Folsom, and for my family the convience to shopping and activities was a major part of our decision on where to live. Of course, your needs may differ!
I'll be happy to provide you more information on the Folsom and EDH homes I mentioned in my response, as I'm sure Ute and Jim can too. If you would like me to send the data you can email me through the web reference below (button is at the top right of the site). I'll be happy to send it. Best regards, Jeff
1 vote Thank Flag Link Fri Sep 28, 2007
Highland Views is a great neighborhood - with no Mello roos and low HOA's (I believe about $35 per month). Homes will run from the low $700,000s to about a million. The low $700,000 homes are runnining about 3,000 sf. As an example, my team has one short sale listed in Highland View at about 3,400 sf for $899,000. There is lots of inventory available, albeit at higher prices.
As for investment, it's hard to forecast, especially since I have not been in the Pulte development off of Bass Lake road. I would lean towards the Highland Views example. You are closer to infrastructure that is already in place, the community is maturing nicely, landscaping is most likely in and growing, and the lack of MR will reduce your out of pocket cash flow expense. Infrastructure fill-in off Bass Lake will happen in time, but until it is in the Highlands View alternative offers more. These attributes will be reflected in resale prices. You also need to think about your quality of life - which alternative is better for your personal commute, and your day to day living needs. I live on the border of EDH and Folsom, and for my family the convience to shopping and activities was a major part of our decision on where to live. Of course, your needs may differ!
I'll be happy to provide you more information on the Folsom and EDH homes I mentioned in my response, as I'm sure Ute and Jim can too. If you would like me to send the data you can email me through the web reference below (button is at the top right of the site). I'll be happy to send it. Best regards, Jeff
1 vote Thank Flag Link Fri Sep 28, 2007
I see your point Jim. And also Ute's argument. That's why I have removed Serrano from my search(due to excessive MR and HOA).
Jeff, Jim and Ute- You all seem very knowledgeable about the area. I had mentioned an area called Highland Views(off of Silva valley) which has 3-4 year old houses but no MR/HOA. Do you folks have any opinion on that area of EDH? Since you do this as a profession, have you seen houses with my criteria lately over there?
Also Jeff, I would like to take a look at more details on the homes in EDH and Folsom(empire ranch and American river) you mentioned in your first response?

Another dilemma which I'll push your way for insight: What would you rather recommend to buy? A 600k brand new home with 260/mth MR(no HOA) off of Bass Lake with no shopping or road/street-light infrastructure OR a 700k 3-5 yr old home with no MR/HOA off of Silva valley(Highland Views 2 miles from Green Valley). Which one will make more financial and investment sense in 5 yrs time?
1 vote Thank Flag Link Thu Sep 27, 2007
Hi Djwl. Hi Djwl. Buying down means just paying a portion in advance to lower the balance which then would also lower the monthly payment to you the buyer. If the outstanding Mello Roos is very high, ou are absolutely right, a seller will not pay the total amount remaining on the Mello Roos assessment, but they may consider paying some. When you say the CC& R is $260/month in some communities, are you talking about the HOA fees. Usually, the monthly amount of Mello Roos is not mentioned in the MLS. It's the HOA fees that are published and you would not be paying down the HOA fees. You could ask the seller to pay for 1 year of HOA fees, but that's different from buying down the Mello Roos. I think Jim's financial analysis for the Mello Roos is great. Keep in mind, these are just possibilities that we are mentioning. In the end, what can and will happen depends on what the seller is willing to do and how motivated the seller is. Part of our job as real estate professionals is to counsel our clients and give them options and the information to make an informed decision. That's why I don't like it when people refer to real estate agents as sales people. While we are in the business of selling real estate, when we represent buyers, our job is not to sell them something. It's to help them make the right decision. When you do the first part of the job right, the sales will follow. I am sorry to have gotten off the track a little bit, but I felt I needed to mention this.
Web Reference: http://www.go2kw.com
1 vote Thank Flag Link Thu Sep 27, 2007
Ute Ferdig -…, Real Estate Pro in New Castle, DE
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When you say 'buy down Mello Roos', do you mean that the seller pays for it? In some new communities I checked, the CC&R is 260/month which makes it ~95k for 30 years. They'll won't even think twice on pushing back on such a suggestion.
1 vote Thank Flag Link Thu Sep 27, 2007
Our clients who have gone with Pulte have been happy - they've got a good reputation as a builder. Being patient might not be a bad way to go. If you are in no hurry to buy then waiting a bit should give you more options. However, if you find your dream home today then you should go for it.
Over all market conditions in Folsom and EDH are faring better than the region, but we are seeing prices coming down. Folsom is down about 3.8% YTD and 8% year over year. If trends continue you should be able to see more selection in your price range. I don't have a crystal ball, but I am expecting further price erosion into next year. Of course you still have the HOA and MRissues, unless you try to negotiate a paydown like Ute suggested. In addition some homes may have already paid down their Mello Roos levys - that is one question to ask as you investigate a home you are interested in. I've helped two buyers in Folsom purchase homes that already had the MR paid off. Again - Best of luck!
1 vote Thank Flag Link Wed Sep 26, 2007
Ute's suggestion is a good one for getting rid of mello roos, -

" the interest rates for financing Mello-Roos levies as general obligation bonds are comparatively low. Such bonds are exempt from both state and federal income taxes on the interest they earn, and therefore are sold to investors as "tax-free muni bonds", with interest rates well below the going rate for residential mortgage loans. If the lump sum amount of a Mello-Roos bond were, for example, $11,000, the annual interest as a general obligation bond might cost the homeowner $495 at 4.5% annual interest rate as a "muni bond". However, for the very same amount, could cost $770 at 7% interest financed at regular market rates. "

Because sellers consider their net proceeds, paying off the $11,000 balance of the bond is very little difference to the seller than dropping the price by $11,000.

If you are paying cash that is great. Bond Rates average 4.5% Passbook savings accounts pay only about 4%. You'll be ahead by $5 per thousand of Mello Roos Debt by getting the seller to pay it off instead of reducing the price (Or you can personally pay it off after the close of escrow if the seller doesn't agree to do it - the effect is the same)

If you have to get a big old ugly mortgage like most people then it will cost you about $30 per month extra per thousand to trade mortgage debt for bond debt. If you have a deep felt philosophical objection to you may want to take the financial hit to pay it off.

"After all is said and done, the final and only issue that a buyer needs to consider when deciding between a home located in a Mello-Roos District (or any other special assessment district, for that matter), and one that isn't, is: how much down and how much per month for an essentially equal home offering the identical value. If the monthly payment is the same for either, then it's a wash. Whether the payment is skewed toward high principal and interest, with lower taxes on one, or the payment is skewed toward lower principal and interest, with higher taxes on the other, it's still the same monthly payment"
1 vote Thank Flag Link Wed Sep 26, 2007
Jim Walker, Real Estate Pro in Carmichael, CA
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If you decide to eliminate homes with Mello-Roos assesments from your search you eliminate about 92% of the inventory for your price range and size range.
What you could do is step up your price range, but you would wind up with a monthly payment that is higher than taking the mello roos house.

I found one house in Folsom stating it has no Mello-Roos it was built in 1994. Has 3500 square feet, with a pool, sport court 5 bedrooms 3 baths and a 3 car garage - priced at $680,000.

The other 11 under 700K had Mello.
1 vote Thank Flag Link Wed Sep 26, 2007
Jim Walker, Real Estate Pro in Carmichael, CA
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We've got about 9 homes in EDH matching your rough characteristics. In Folsom we've got 4 homes on the market now, but asking prices are starting at $635,000 for about 3,500 sf in a short sale. Mello Roos and HOA's vary depending on the neighborhood. Homes built in the last 5 years are more likely to have MR/HOA versus older homes. EDH neighborhoods with homes in this rough category vary from Serrano to Stonebriar to Green Valley Hills and others. In Folsom you are looking at Empire Ranch with what is on the market now, and one home in American River. There are many more neighborhoods and options available if you look for homes that might be a bit older than 5 years. If you would like links to more detailed information on these homes let me know or visit the website - we can't post links when answering questions. Best of luck in your home search!
1 vote Thank Flag Link Wed Sep 26, 2007
Hi Djwl. Unfortunately, the newer homes in EDH all seem to have mello roos and HOA fees. Serrano is one of the big new communities and the HOA fees are in the $300 - $400 range. There were only 5 current listings in EDH that matched your square footage criteria and all of them mentioned Mello Roos. Without looking at the actual tax bill, I don't know how much the annual Mello Roos assessment is. I'd be happy to further research this for you. Please let me know if you'd like to receive more detailed property information.
Web Reference: http://www.go2kw.com
1 vote Thank Flag Link Wed Sep 26, 2007
Ute Ferdig -…, Real Estate Pro in New Castle, DE
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There's a development in El Dorado Hills called Stonebriar where you can get everything you are looking for for less than 600k. It's near White Rock Road and Stonebriar Drive.
0 votes Thank Flag Link Thu Oct 7, 2010
El Dorado Hills is an attraction to a lot of high end buyers who are looking from executive custom homes with quality schools and great active community. Sterlingshire is one of the few subdivisions that is well established, bigger lots, quality custom built homes that in a normal market is in the top range when it comes to affordability. I have a listing here a little higher than your price range but because it does not have MR and minimal HOA, it compensates. It is in the MLS and for what is worth now, I honestly think this is a great opportunity for the right buyer.
0 votes Thank Flag Link Sat Sep 25, 2010
You are very welcome. Because fewer production production homes were built in GB during and after the boom 2002 to 2006 than in neighboring cities, GB has not been hit quite as hard by the rash of foreclosures and price declines. For many years it has had the higher price per square foot, and higher median home prices. Even with all therecent price reductions, it still comes out higher than its neighbors.
0 votes Thank Flag Link Fri Sep 28, 2007
Jim Walker, Real Estate Pro in Carmichael, CA
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I hope I am not out of line by suggesting Granite Bay in your search. We are the next town up (north) from Folsom. Very high rated schools here, too. A lot of the homes that were built were custom built, instead of production built. The per square foot prices are slightly higher than Folsom and El Dorado Hills production builder homes. On the other hand some of these GB homes have huge lots, and many come without mello roos.
0 votes Thank Flag Link Fri Sep 28, 2007
Jim Walker, Real Estate Pro in Carmichael, CA
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Yes 260 times 360 equals $93,600. However a dollar 29 years from now is not worth a dollar today. In my college accounting class, they taught a concept called "present value of money" and its corrolary "future value of money". The present value of 360 monthly payments of $260 is not $93,600 because those payments in the later years are worth far less in todays money than payments made in early years. To determine the present value of the stream of 360 payments of $260 one needs to know the interest rate that the lender (or bondholder) expects to earn and the rate that the debtor (homeowner)is expected to pay.
0 votes Thank Flag Link Thu Sep 27, 2007
Jim Walker, Real Estate Pro in Carmichael, CA
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