Buying a new home, especially from these big production builders, is not like buying a car. You really need representation. You should have a realtor or a seasoned professional broker that knows how to negotiate with these on-site sales reps in the model homes, so that you benefit from this purchase and you don't get burned, you don't pay too much. So I have some stories for you, but just a couple of things that need to just let you know about. The very nice salesperson in the model home is representing the builder. And when you're in there signing off hundreds of thousands of dollars to purchase a new home, without a realtor or a broker you're not being represented. What could go wrong there?
You got to remember also that that salesperson representing the builder is not licensed to sell real estate.
So they represent the builder and they do the builder's bidding, and even though they're friendly, and I've known many of them and worked with them over the years, basically nice people, but the fact of the matter is that without representation you have nobody there looking out for your best interests. Many things may not be disclosed to you.
I've got a few stories that I'm gonna share with you, that come to mind over the last few years, about new home construction purchases. A lot of times people just... and again none of these folks have had realtors representing them buying the new home. They pay too much. I had one client come to me to list their house. And I eventually did, but I had to tell them, because I looked back at when the purchased the house a few years ago, that they actually paid, it was nearly $15,000 for that house. And they were kinda shocked to know that. Its right there, they paid way too much for the house, about $15,000 worth. And they said they got a free refrigerator out of it. Well, I don't know if that refrigerator was free, do you?
The other thing is that they don't know about some of the other complexities, these complexities were not disclosed to them. For instance, a couple came to me, they had bought a new home a few years ago and they were in a high property tax bracket. And they wanted to get out, They needed some relief. So the problem was that they were in a MUD, which is a... The problem is they were in a MUD district, which is The problem was that they were in a MUD, which is a Municipal Utility District. And that is a service provider that has jurisdiction, and can add to your property taxes. They provide, could be sewer, water, could be some other amenities, some other services. And it adds to your property taxes. Plus they were in a high tax bracket. Oh for Gods's sakes. They were in a MUD, which is a Municipal Utility District. Which is a service provider, a management service provider, that has jurisdiction and can add to your property taxes, and they provide services like water, sewage, maybe some other amenities. But basically they're going to add to your property tax. Not every sub-division is in a MUD, but those that are, that's what happens.
And these folks were also in a high tax bracket. Typically tax brackets here in central Texas run anywhere from 1.8 up to 3.7 percent per year, and they were on the higher end of that. So they needed to get a place without a MUD and in a lower tax rate, and they wanted to get a new home. So I sent them new homes without the MUD, and with a lower tax rate.
And they called me up one day and they said hey, we bought a brand new home. And I said well that's fantastic. Congratulations. And I wished them well. But I did look back and I found out the home that they bought was actually in a MUD district, in a Municipal Utility District, and the tax rate was actually higher than the house that they were trying to sell. So, they went from the frying pan into the fire. They actually got into a situation where in about four years they were going to be in a much higher property tax situation than they were in the house they were trying to sell.
