A mortgage is generally not a negotiation because most people have no leverage against the bank. When the options are get a mortgage or you don't get a house, the bank gets to dictate the terms. A millionaire who wants to finance a house that they could buy outright for reasons has leverage. They can and do have actual negotiations.

http://www.sfgate.com/business/article/Mark-Zuckerberg-s-mor...

I have to say I have a fairly decent moral objection to this:

"When you can borrow at a rate below inflation, you're borrowing for free," McBride said. "This is the concept of using other people's money and it preserves financial flexibility for the borrower."

If you're borrowing at under market rates, we, the market are effectively subsidizing you. Does Zuckerberg need subsidies in order to have a mortgage?

Almost guaranteed that this was not a subsidy. Even for the extremely wealthy, banks are not in the business of giving away money for nothing.

The mortgage was likely only one piece of the deal negotiated. It costs the bank nothing to write an at-cost mortgage, but gives Zuckerberg value though additional liquidity. Items that cost nothing yet provide value to the other side are excellent things to throw on the table during negotiations to help seal the deal. One example: The bank may have the adjustable rate tied to the balance in an asset management account -- if Zuckerberg takes his money elsewhere, the mortgage also becomes profitable.

A mortgage yes, but not the house

Right, I was pointing out that there are negotiations where one side expects the other to lay their cards on the table and has the leverage/position to make it happen (underwriters don't care a whole lot about individual mortgages).

Commodities have prices set by supply and demand. We know how much a publicly traded company makes due to quarterly reports, this has no effect on its price buying a barrel of oil. Nor did my income play a role in buying my house. What I make has nothing to do with what my house is worth. Unless you are a cheat.

Inconveniently, that's not actually how economics works. Values aren't set in stone; they're negotiations between seller and buyer, where information asymmetry moves the price point.

https://en.wikipedia.org/wiki/Price_discrimination

How exactly does that work for commodities? What prevents the buyer from moving on to a seller that simply refues to engage in that practice?

For commodities, in general, buyers do move on to a seller who doesn't price-negotiate---commodities are interchangeable enough that a buyer has the liberty of saying no because there are alternatives the buyer values equivalently. Until sellers find a way to incentivize price negotiation again by making the buyer believe they are getting a special deal that applies only to them or people like them.

Stores in the US generally don't price negotiate at the register, but they do have coupons that discriminate shoppers into loyal shoppers (those that take the time to track down the coupons or join the store's particular flavor of loyalty program) and ordinary shoppers.

>For commodities, in general, buyers do move on to a seller who doesn't price-negotiate---commodities are interchangeable enough that a buyer has the liberty of saying no because there are alternatives the buyer values equivalently.

So how does your income play into house prices? We had many houses on offer when I bought last year. We spoke with experts and offered slightly below market. If they countered above market, we would have walked.

> Stores in the US generally don't price negotiate at the register, but they do have coupons that discriminate shoppers into loyal shoppers (those that take the time to track down the coupons or join the store's particular flavor of loyalty program) and ordinary shoppers.

Isn't that more to do with advertising than income discrimination? I know wealthy housewives who have the time to clip coupons, my working class wife and I do not.

I'm not denying these practices exist, but its always sleazy businesses that engage in them and most consumers end up moving on once they catch wise. Grocery store vs. Amazon for example.

> So how does your income play into house prices? We had many houses on offer when I bought last year. We spoke with experts and offered slightly below market. If they countered above market, we would have walked.

If the seller knows you are making a million a year, it's a fact that balances against their desire to sell. While their desire to sell could be greater and they might capitulate anyway, they may very well hold faster to their asking price because they know you're able to afford it.

If Warren Buffet makes an offer on my house and tries to negotiate me down on price, I'll hold out and even sell to someone else who also negotiates down on price, but isn't him; all things being equal, I'd rather feel like I helped someone out than was taken advantage of. This is among the reasons people with wealth will often use intermediaries to close deals.

> I'm not denying these practices exist, but its always sleazy businesses that engage in them and most consumers end up moving on once they catch wise. Grocery store vs. Amazon for example.

Amazon owns woot.com, which allows them precisely to engage in price discrimination and the benefits of time-scoped deals while simultaneously offering a more "supercenter" experience on their main site. They capture both sides of the market---people who like to feel they are getting a special deal, and people who prefer the simplicity of one price.

(Besides, since Amazon brokers trades between buyers and sellers who are selling at different prices, they don't even practice "one product, one price" on their main site, really. And they have Amazon Prime, which is a loyalty program).