Did you see the FSBO currently being advertised on TOTV? Price "reduced" to $349K. But, Zillow says it's only worth $321K, and it sold 2.5 years ago for $222K. The house is 24 years old.

Where did I say it was smart or not smart to pay off a bond?

& if someone sells a home in 3 years, you're right ... he didn't pay $20,000 ... he/she paid the interests & costs and borrowed the money. Those "near 4% Bonds" you mentioned, were a great deal when you could borrow money at 3%, huh?

A bond is just another type of mortgage. You borrow the money and pay it back over time. The exact same considerations someone would make with a mortgage, is exactly what you'd do with a Bond. Weigh the interest rates and do what you think is prudent. It's just a mortgage that's secured differently. As someone else pointed out, it's not backed with a personal guaranty, but backed by it's priority lien, so it's not a "personal debt".

The one and only time I can think of, when a Bond is different than a mortgage from a Buyer's perspective, is when the financing ratio is tight. A Primary Lender who's selling mortgages on the secondary market, has Loan to Value ratios to worry about. A CDD Bond is a slightly different circumstance from that viewpoint. That said, it sort of washes itself out, as it affects income to expense ratios.

Plenty of Villages Too High
 

Hey, there are plenty overpriced homes out there. Some are by realtor, some by The Villages, some BO. I get it. Most homes are coming off that 2022 wish list though lol. A realtor certainly doesn’t guarantee the lowest price.

Buyers do need to do their Homework. Prices are downward against last month’s comps.

Check out this clown show

Homefinder - The Villages(R) Homes and Villas for Sale


It was purchased in 21 for 799,990. Pardon Our Interruption Now asking 1.2 million.

Investment of a pool at 130 k. I think they are just wishing upon a star.

The house you mentioned was bought in 2021 for 222,000 dollars. What a joke! Now they want 350k!

///

This is great article on the subject.

The obvious flaw in the situation, is the general use of REALTOR® as a noun and that will likely be the catalyst when they lose their trademark.

https://www.washingtonpost.com/archi...-3032bf96dc3a/

Be careful here because if you pay your tax bill in November, the 4% discount applies to the total, including the bond, of which the bond holders are not eating the discount, it is made up by the admin fee.

The home with the 375k and 25k bond would cost more in the long run. The 25k bond can not be written off. The 400k would be included in the mortgage payment…. Now you can write it off .

The market is mixed.
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Thanks Brian. That is a great article. I guess I understand why Retiredguy felt the need to respond to the use of the term realtor. From the article...

"Local NAR member associations nationwide are under orders to police uses of the word Realtor and intervene when necessary."

You may be on to something that we are headed for a buyers market...

Nice observation, had not comprehended that.

That is dependent on the current bond value. If the home is 15 years old, at least half or more of the bond will be paid off. If the homes are new....then the bond value is the difference.

"Geez, it's 4th grade math." ;-)

Don't let the tail wag the dog.

"Realtor Real estate agent National Association of Realtors Often used by the public, the media, and even real estate agents to refer generally to any real estate agent, but the term is a legally recognized trademark of the National Association of Realtors. The terms "Realtor" and "Realtors" refer to members of this association, and not to real estate agents generally. The National Association of Realtors is engaged in ongoing efforts to prevent the mark from becoming generic. These efforts include, among other things, writing to members of the media to complain of improper usage, distribution of information and guidelines on correct usage, and the development of an educational video on the subject.[163]"

From: List of generic and genericized trademarks - Wikipedia

I have been guilty of using Xerox as a verb, and many of the listed marks such as Tupperware, Thermos, Scotch tape, Q-tips, post-it and Crock-Pot as nouns.

Thank you all!
 

Finally! We now have a handle on the typical real-world savings of a bond vs. no bond. And also the tax considerations. And that maybe we need to re-think our realtor. We thank you all for your helpful insights.

Weirdly, our original concerns made us even more interested in The Villages. Your quick opinions and helpful responses in this forum are indicative of exactly the kinds of neighbors we'd like to be around.

Thanks again to everyone that answered our question.

Bond is not half paid off at 15 years. Just like a mortgage, you are paying more interest in the earlier years and less later. Example here...

https://www.districtgov.org/departme...Unit%2065V.pdf

We bought our home new in the spring of 2022, south of 44. Ballpark figure for the bond is under $150/month for 30 years. Our annual total expenses (utilities, taxes, bond, insurance, and amenity fees) are around $17k, so it's about 10% of our expenses. Not really a big deal to me. Surely with inflation, in 10-15 years the bond will end up being 5% of our total expenses, or less.

Here is a snip from our bill. Once you are interested in a property, you can search the county's property site for tax information.
NON-AD VALOREM TAXES
F111 Fruitland Pk Villages, Res Fire $212.00
C087 VCDD 11 Debt (see note below) $1,828.72
C088 VCDD 11 Maintenance $721.20
TOTAL $2,761.92

Bond
 

Here is a snip from our bill. Once you are interested in a property, you can search the county's property site for tax information.

NON-AD VALOREM TAXES

F111 Fruitland Pk Villages, Res Fire $212.00
C087 VCDD 11 Debt (see note below) $1,828.72
C088 VCDD 11 Maintenance $721.20
TOTAL $2,761.92

Bonds on a new home can be 30 to 40 thousand dollars can be paid over 30 years. That's one reason to tell people they are selling their house that has no bond. Say you are looking at a house with a sales price of $450,000 and you know your max that you can afford to pay for a mortgage will max out at $450,000 well then you need to shrink your home sales price down let's say $40,000 to cover the bond that you will have to pay. That's in addition to the monthly HOA fee that can run a few hundred dollars a month forever and will go up with the CPI.

Pay it off
 

You might want to research what CDDs are to better understand a bond requirement. When I first moved to Florida and bought a home (not in TV) my home had a bond and I was extremely confused. You also can pay off a bond in a lump sum payment. If you are buying a home with a $30k bond, you might want to pay that off in one payment by splitting your down payment. Bonds will significantly increase your property taxes, they will be under the non ad valorem category. I would look at some nearby properties with similar bonds and see what the taxes are so you have an idea.

No HOA in The Villages,

You may not call it an HOA but with a monthly amenity fee in addition to your annual district tax I say potato potato

In theory the price of the home where the bond is paid off should be higher than a home still has a bond. In actuality my realtor advised me not to pay off the bond as the resale values seldom reflect the full value of the bond payoff

:smiley: Also NO "annual district tax"

I call everyone who sells real estate a realtor. Come get me.

It’s called the amenity fee not a home owners fee.
The HOA gives people a different prospective, not usually good.

For a highly qualified independent agent contact: Kerry Hanson, Realtor, Kerrysellsthevillages@gmail.com

Risking beating this dead horse any farther.......

A few of the posts in this thread talk about high bond interest rates, but mine its only 3.18% (District 13). My credit union has CDs paying 5.01%. Until those CD rates drop it wouldn't make much sense to use those funds to pay off the bond.
Looking at District 15 their rates are 5.19% for the units listed with their total bonds $50k and up.

When considering a home, it shouldn't just be bond vs no-bond, but also interest rate on the bond.

my brand new home in 2007 had popcorn in Virginia trace after the tornado came through and recked it there was no more popcorn

Mostly everthing said so far about the Bond is true BUT at the end of the day, a house with No Bond is just another selling point like having a pool or a view. A home with a paid off bond will definetly be a couple thousand dollars cheaper to run every year.

Also, those who say I get more interest in the bank so i'm not paying off the bond, on a new or relatively new home you are paying mostly interest just like a regular mortgage so since interest rates won't be this high forever, in a couple of years when they go back down, all you would have done is paid more of the bond interest and very little of the principal.

Bottom line, if you have the money or plan on staying in your home for 5+ years or forever, then pay off the bond. If you plan to move every couple of years then don't.

Also remember even a large $40,000 bond in an expensive home can get easily hidden in a $900 - $1 million dollar home so you can always arrange to re-coup the cost. Most of the older homes 5+ years old have bonds in the $20,000 range. So why pay interest and administrative fees every year?

That’s why I’ve never paid off the bond on any of the houses I’ve purchased in TV. Paying off the bond does not increase the value of the house.

Did you know that popcorn shrimp has no popcorn?

True, but you also need to add the admin then calculate the effective interest rate for yourself. Because the admin fee is fixed, its impact on the effective interest rate (or cost of money) increases each year. There may come a point where you are actually paying more than 5.01% for the bond.

(Not to mention that it wasn't that long ago that you were not receiving 5.01% at your bank. Things change and what looks like the smart decision today may not have been the best decision last year, or next)

But a paid off bond does increase the value of the total purchase (or net value of the house if you prefer).

With enough things being equal I would certainly purchase the home that no longer carried the bond. Of course, it is usually the case that not enough things are equal.

I’d rather pay the 4% interest on a 20k bond over three years rather than pay the bond off at closing if I sell in 3 years! Paying off the bond does not increase the appraised value of the property.

When you sell the house, you don't need to pay off the bond at closing. The buyer automatically assumes the bond payments.

I agree and disagree with that statement.
Paying off the bond doesn't change the valuation of the house, i agree.
Getting a buyer to pay above the "valuation" may happen just fine due to there being no bond, as a buyer constraint

depends upon the buyer and his/her/their motivation and how the sell price is set, and the competing houses. Fewer houses for sale, motivated buyer, priced above the market, buyers looking for no bond specifically, they might buy it. .

This is not a black and white, yes or no topic.

retired finance guy

I have seen stupid corporations buy over value companies and then go bankrupt on deals I was part of. There are no shortages of buyers whose concept of value is skewed. .

I look at it this way. If I pay off a $20K bond, the best I can do when I sell is to break even by getting a buyer to pay $20K more than the appraised value. But, most likely, I will get less than the $20K. And, if the current CD interest rate is comparable to the bond interest rate, it makes no sense to pay off the bond.

Bottom Line
 

The bottom line is financial. Home loans don’t go above appraisals. Bond paid or not paid isn’t consequential to 3rd party observation. Banks don’t give loans above appraisal for good reason. You could ask more, but it really is a buyers market with the supply surplus. At best, you are talking about a carrot on the stick in this market.