San Diego Mello-Roos? Not Knowing This Detail Could Cost You Thousands!

SUMMARY

A Mello-Roos is a special property tax imposed upon homeowners of new housing developments to cover the county's costs of extending services and infrastructure to that new community--things like police, fire protection, ambulances, sewer system, schools, parks, roads, and libraries.

The GOOD NEWS is it doesn't last forever!  It can last up to 40 years after a project is built, but in most cases are 30 years or less.  So it's important to research how much longer a Mello-Roos lasts before buying or selling in that area.

Many buyers, sellers, and even real estate agents are not aware of this, which if not marketed properly, or at all (which I've seen), could cost the seller thousands of dollars!  The reason is because buyers will probably have a higher desire and be willing to pay more for a home with the knowledge that there are only a few years left for the Mello-Roos.  And if in a multiple counter situation, that could make a big impact on the sellers' bottom line!

TRANSCRIPT

Hey, it's Emil Ayoub, your Realtor in San Diego, helping you make moves with confidence.

If you've ever been shopping for a home, you may have heard this funny-sounding word--Mello-Roos.  Though it sounds like it could be a tasty marshmallow treat, trust me, it is not as wonderful and delicious as Dunkaroos.

If you're a home buyer or if you're a homeowner with a Mello-Roos, knowing what it is and how it works, could make a big difference when it comes time to buy or sell.  I will explain further in a moment.

First off, what the heck is it and why does it sound so weird?

So let's say there's a new housing project being built.  Well, the county now has to provide services and infrastructure to these new homes.  Things like police, fire protection, ambulances, sewer system, schools, parks, roads, and libraries.  So to pay for all that stuff, the county creates a bond that is paid by the homeowners in that area as a special tax.  This special tax is what's known as a Mello-Roos.

It's based on an Act that was passed in 1982 that limits how much local governments can pay for new projects, and it was named after California State Senator Henry Mello and Assemblyman Mike Ross.

But, here's the good news! ...The extra tax doesn't last forever!

A Mello-Roos can last up to 40 years after a project is built, but in most cases are 30 years or less.  Each Mello-Roos District, which is also known as a Community Facilities District or CFD, is different so it's important to research how long the particular one you're looking at lasts so you can see how much longer the special tax has to be paid.  For example, a Mello-Roos lasting 25 years that started 20 years ago only has to be paid for another 5 years.

Many buyers, sellers, and even real estate agents don't realize this, which is a HUGE misstep when it comes to buying and selling a home.

In fact, I just sold a home in Carmel Mountain with a Mello-Roos of about $100 a month, where I was representing the Buyer and I discovered that it was actually the LAST YEAR that the Mello-Roos had to be paid!  However, this was not mentioned anywhere in the marketing and I doubt the Seller or their Agent knew this.

As a listing agent, not knowing to look up that information or how to properly convey the value in the listing marketing could end up costing the Seller thousands of dollars because knowing that info would probably cause a buyer to pay a little more for the home, or it could be what puts a buyer over the edge to pick your property over another that's for sale, which obviously affects the seller's bottom line.

So there you have it.  Hope that helps.  If you have any questions, please leave them in the comments below. Be sure to like this post and subscribe so you don’t miss future videos. For more tips on selling and buying real estate, check out my other videos on my YouTube channel or at my blog at SoldByEmil.com.

And if you know anyone looking to buy or sell a home in the San Diego area, let me know and I'd love to help them out.

Until next time, this is Emil Ayoub, helping you make moves with confidence.