[quote=kkun]I wonder why paying off Mello Roos doesn’t increase the resale value?
When I was looking for house, the areas without MR clearly had a premium compared to similar home in an area with MR. In some places MR amount is ~$400- $500 per month. So why won’t a potential buyer pay the premium for a house for which he doesn’t have to make the payment?
One thing I can think off is the standard appraisal process won’t assign any value to “MR paid off status” in a MR area. So buyers will have to make larger down payment.
Is there other reason why paid MR status does not increase the house value?[/quote]
I think your comment about the appraisal process not having any mechanism to take into account paid off bonds on a property in an area where 99.5% of properties are not paid off is true.
I don’t agree that properties in areas without MR are commanding a higher price than for a comparable MR-encumbered property. I believe if you ARE seeing a higher price in the older area for a similar sized dwelling, it is because of the better location of the properties there, very often bigger lots, mature landscaping, and, in many cases, much better access to local services. The higher price is NOT because it doesn’t have MR.
Simply put, buyers who will not pay MR will not even consider looking in an area that has it. Since the MLS is sorted by zip code and often most of or entire zip codes have MR, these potential qualified buyers will never actually know the MR-pd-off property exists on the market.
