[CoachKandSportsguy]

Originally Posted by Laker14

If the bond, or lack of a bond, really did not impact the selling price then two things would happen:
1. Realtors would not include "BOND PAID" in the description of the property they write up for flyers and internet listings, and..
2. Automobile dealers would include a "bond" (hey folks, it's not part of the price. It's a "bond") when selling cars. And people would pay it because "hey, I got a good price and the bond doesn't count".

Maybe, though I disagree

1) realtors including "Bond Paid" is marketing, and any positive spin is for attractiveness. May or may not be part of the price setting, very unknown
2) drug induced reasoning

What no one knows is and can't really quantify the value of the intangibles between houses which any one particular buyer may value more than any other buyer. Humans are funny and unpredictable creatures. Are all 3-2 designer models equal in resale of the same sq footage? If you bought a lot, and then built your designer, why did you pick that particular model? If you have an affinity for a Begonia, then the relative number of begonia options will influence the price you will pay for your designer. . . that factor is what the seller of a higher than market price house is hoping.

so the bond may or may not have any relationship to the buyers' motivation. All this discussion about paying off the bond is about the annual cost of ownership of paying off the bond with interest over 30 years, relative to future income, future expenses, and cash flow from your financial asset and income structure.

[Laker14]

Originally Posted by CoachKandSportsguy

Absolutely theory versus reality . . . . the question I was asking is about how does one get their money back if the bond is paid off early. Everyone is different, and setting the price above the market means that you are expecting/hoping that a buyer comes along who agrees with you.. . If you are the only house in the desirable neighbor, there is no comparable, therefore the probability increases of the sale.

There are two main issues affecting the pricing of a house relative to market:
the number of similar houses for sale
the motivation of the seller.

The higher motivated the seller, the lower the price. Time is costing him/her money he or she doesn't have.

The should you pay off the bond is a cash flow question. Can you afford the bond payment and the potential loss of the asset and income from it in a trade off against more free cash flow against income, mostly SS and RMD. Not paying off the bond when one can risks the future increases of the remaining cost of the life style increasing faster than income, and therefore reducing free cash flow in the future.

That is the counter point to its a fixed amount, and therefore will be covered by income inflation. What is not taken into consideration is that not all incomes and expenses inflate / deflate together at the same rate.

man, those down hill skiers are crazy!

the "market price" is vague and variable. The "comparable sales" that realtors and assessors use gets one in the ball park, and that is largely based on the supply and demand at that point. However, the final price is tweaked by upgrades and features, and how valuable those upgrades and features are to a specific buyer.
It's silly to think that comparing a house with no bond, to one with a 15K or 20K bond wouldn't enter into a buyer's decision making process, just as comparing a house that has the granite counter tops and crown molding they like would affect the desire to purchase.

In fact, I'd argue that it would have a greater effect because everyone likes money, but not everyone has the same taste in other "features". I may want granite, but "not that granite".
Money is money. Everyone likes it.
Another advantage to the buyer of having the bond paid off, and subsequently added to the purchase cost, is that cost can be amortized longer, and at a lower interest rate, typically, than the bond payments.

Having a bond is not a deal breaker, but having a bond or not having a bond is an influencer of final agreed upon price. Right now, demand for housing is so high, that influence may be minimal, but in a regular market, it will have more of an influence.

[Laker14]

Originally Posted by CoachKandSportsguy

Maybe, though I disagree

1) realtors including "Bond Paid" is marketing, and any positive spin is for attractiveness. May or may not be part of the price setting, very unknown
2) drug induced reasoning

What no one knows is and can't really quantify the value of the intangibles between houses which any one particular buyer may value more than any other buyer. Humans are funny and unpredictable creatures. Are all 3-2 designer models equal in resale of the same sq footage? If you bought a lot, and then built your designer, why did you pick that particular model? If you have an affinity for a Begonia, then the relative number of begonia options will influence the price you will pay for your designer. . . that factor is what the seller of a higher than market price house is hoping.

so the bond may or may not have any relationship to the buyers' motivation. All this discussion about paying off the bond is about the annual cost of ownership of paying off the bond with interest over 30 years, relative to future income, future expenses, and cash flow from your financial asset and income structure.

Highlighted above: Your response to an argument you can't refute with logic.
Money is money. People aren't stupid. People may agree to pay the bond, but its existence or lack thereof is an influencer, whether they are buying a car, or a home. It still comes down to whether they want to pay for it, and how much they are willing to pay for it. Call it a bond, call it a "dealer add-on", to the buyer it's still money, and the less the buyer has to pay, the more attractive it will be.

[dewilson58]

Originally Posted by Laker14

Having a bond is not a deal breaker, but having a bond or not having a bond is an influencer of final agreed upon price.

I agree.

This assumes people have a brain and have the ability to think, I agree bond balance impacts.

Assuming bond balance is not a consideration, assumes people don't understand.

[CoachKandSportsguy]

Originally Posted by Laker14

Highlighted above: Your response to an argument you can't refute with logic.
Money is money. People aren't stupid. People may agree to pay the bond, but its existence or lack thereof is an influencer, whether they are buying a car, or a home. It still comes down to whether they want to pay for it, and how much they are willing to pay for it. Call it a bond, call it a "dealer add-on", to the buyer it's still money, and the less the buyer has to pay, the more attractive it will be.

Drug induced referred to a car purchased being the same as a house purchase, when there are factors of 10 differences in price and length of paperwork and loan durations, and asset lives. they are not the same comparisons, just like relating CPI to house prices. CPI is the price of liquid every day living. House assets are illiquid and seldom bought and sold within a year. The topics are similar, price increases, but the logic doesn't work

When there is a financial transaction, there is a buyer and a seller. You just described the buyers viewpoint of every house being unique, and the desirability of the intangibles by the buyer, not disagreeing there, and there being price insensitive buyers

What the conversation is about is the seller's point of view, So from a seller's point of view, if the house is priced at market and you decide to recoup your paid off bond by adding that cost to the market price of the house. So market price plus 7% remaining on a 10% originated LTV bond. What the effect of the higher pricing between two identical houses is that the seller is waiting for that unique buyer to find the desirability worth the extra price. Your glossy generalization misses the point that the sale might never happen if the price particular buyer never comes along. Which is why you see houses on markets for 6 + months when housing markets are normal

The factors I described in the prior posts would cause that desirability to afford the increase above market price, or the seller waits along time randomly hoping that the buyer who is much less price sensitive will be looking at that particular house for sale.

Your point is that there are price insensitive buyers, the fallacy with your point is that the seller most likely doesn't want to wait an abnormally long time to sell the house if a motivated seller, ie, needs the money sold to maintain lifestyle. . ie, can only afford to own one house at a time, which i would presume is the majority of the population, with whom real estate professionals have to sell to every day.

and finally, yes behavioral economics shows that many to most people handle money in stupid ways, extremely suboptimal spending. The higher the price tag, the less number of people who can make stupid financial decisions.

[rustyp]

Anyone having a problem selling a house in TV at present with or without a bond (including the price of bond baked in)? I say the winner was the person that paid off the bond and saved the interest for years.

[Catalina36]

Originally Posted by jrref

I know there has been endless discussion concerning whether to pay off the Bond or not. But for example, if you have a $20,000 bond on a $700K house and you pay it off, when you go to sell it at some point i would think you could probably re-coupe the $20K because there is no bond to pay. At this price point you can easily add $20K to the price of the house assuming it will be one of the many selling points of the house. This assumes the $20K you are spending to pay off the bond isn't making much interest in the bank or whatever you may have it invested in these days.

I really Don't Believe if 2 identical houses are for sale and everything being the same.
#1 house has a Bond balance of 20K, and #2 house has no Bond. I don't believe the house with no Bond is worth 20K more. Maybe the house is with a Bond is worth less than then the # 2 house. Most definitely the house with NO BOND will sell faster.

[VApeople]

Originally Posted by CoachKandSportsguy

realtors including "Bond Paid" is marketing, and any positive spin is for attractiveness.

I guess you are saying that realtors think a house is more attractive to buyers if the bond has already been paid.

If a house is more attractive, do you think buyers would be more inclined to pay more for the house?

[Bay Kid]

A bond is like a bad credit card loan.

[Stu from NYC]

Originally Posted by Bay Kid

A bond is like a bad credit card loan.

Not quite bond carries low interest rate

[Bilyclub]

Originally Posted by Stu from NYC

Not quite bond carries low interest rate

Mine is over 5%. That's like a juice loan now.

[Laker14]

Originally Posted by CoachKandSportsguy

Drug induced referred to a car purchased being the same as a house purchase, when there are factors of 10 differences in price and length of paperwork and loan durations, and asset lives. they are not the same comparisons, just like relating CPI to house prices. CPI is the price of liquid every day living. House assets are illiquid and seldom bought and sold within a year. The topics are similar, price increases, but the logic doesn't work

When there is a financial transaction, there is a buyer and a seller. You just described the buyers viewpoint of every house being unique, and the desirability of the intangibles by the buyer, not disagreeing there, and there being price insensitive buyers

What the conversation is about is the seller's point of view, So from a seller's point of view, if the house is priced at market and you decide to recoup your paid off bond by adding that cost to the market price of the house. So market price plus 7% remaining on a 10% originated LTV bond. What the effect of the higher pricing between two identical houses is that the seller is waiting for that unique buyer to find the desirability worth the extra price. Your glossy generalization misses the point that the sale might never happen if the price particular buyer never comes along. Which is why you see houses on markets for 6 + months when housing markets are normal

The factors I described in the prior posts would cause that desirability to afford the increase above market price, or the seller waits along time randomly hoping that the buyer who is much less price sensitive will be looking at that particular house for sale.

Your point is that there are price insensitive buyers, the fallacy with your point is that the seller most likely doesn't want to wait an abnormally long time to sell the house if a motivated seller, ie, needs the money sold to maintain lifestyle. . ie, can only afford to own one house at a time, which i would presume is the majority of the population, with whom real estate professionals have to sell to every day.

and finally, yes behavioral economics shows that many to most people handle money in stupid ways, extremely suboptimal spending. The higher the price tag, the less number of people who can make stupid financial decisions.

that's a lot of words to dance around a simple subject. When I shopped for my home in TV, I definitely looked at the bond. 375K purchase price, with bond paid = 375K.
375K + 15K bond= 390K...Next question: Is house #2 worth 15K more than house #1? It may or may not be to the prospective buyer, but to assume the 15K bond isn't even a factor is just nutty thinking.

Similarly, House #1 purchase price (including bond) = 365K, but has a nice new roof that won't need replacing for 15 years. House #2 purchase price (including bond) will need a new roof in the next 2 years, and my estimate for the roof is 15K. Which house is really going to cost me more? I am factoring in that roof cost. In fact that is exactly the scenario for the house we bought.

The car analogy is an analogy. Analogies are comparisons of similar ideas, not comparisons of identical things. My analogy compares the fallacy of thinking a buyer doesn't care about a $20K bond, to the fallacy of thinking a car buyer wouldn't object to an added cost above the purchase price, simply because it's called a "bond". That analogy holds.

[dewilson58]

Okay, can we talk about James Bond now???

[Laker14]

Originally Posted by dewilson58

Okay, can we talk about James Bond now???

he's a hoser.

[Stu from NYC]

Originally Posted by dewilson58

Okay, can we talk about James Bond now???

Didnt something quite bad happen to him recently?