Home Buyers Only Finding Out About Resale Fees When It's Too Late
from the sneaky,-sneaky dept
We've been covering the growing practice of adding a "resale fee" to homes, that give developers a copyright-like extended control over a piece of your house long after the house has been sold. The idea is that they can get 1% of any future sale -- which of course makes the house worth less to both buyers and sellers, as they know right away, that 1% of the sale (and any future sale) goes elsewhere. The main company behind this concept is called Freehold Capital Partners, which is really trying to take those fees and securitize them, so the developers actually get a lump sum upfront (making it attractive to them) and you get random investors collecting whatever fees they can get.The NY Times also covered this story recently, and added the fact that these resale fees are often totally hidden from buyers, such that they either don't find out about them at all until they later try to sell their homes, or mixed in with the closing process, by which point they've more or less committed to buying the property. Meanwhile, the story also notes that HUD has stated that these deals violate regulations, and it won't finance mortgages that include them. A growing number of states are outlawing such deals, and the federal government is looking into them as well -- meaning that the investors who are buying into these sorts of things may discover that their investment is worthless. You would think after the last mess created by trying to securitize a part of the residential real estate market and pawning off the risk on less and less sophisticated buyers that people would know to stay away from such things -- top to bottom. However, it seems like some will always try to find ways to game the system.
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Filed Under: houses, resale fees
Companies: freehold capital partners
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Culture Of Scheming
Locking up the crooks who invented resale fees would be a good start. Get on with it.
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China
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Re: China
Melamine pet food, toxic drywall, lead paint babay toys ...
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Re: Re: China
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Re: Re: China
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Re: Re: Re: China
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Please cease and desist all your promotional efforts for your 'bag of broken glass', turn over all your bank accounts, your website, your first born daughter (as long as she's over 18...), and your wife (if she's hot). If you comply with our demands, we may not sue you at this time (but we reserve the right to sue you into oblivion in the future once we've got all we can out of you with baseless threatening letters).
Thanks for your time, and we look forward to hearing from you.
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Re:
Also, the digital goods model they are attempting to emulate has recently been declared to be only a license. Does this mean that you do not actually own that home. The mortgage payments are setup in a way that implies ownership. Smells like fraud no matter how you sniff it.
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If this kind of law went into effect on paintings in the USA for example, artists would have to *give away* paintings hoping that someone would eventually sell them for a lot of money. This would hurt the majority of artists when they need it most! :( A better plan would be to keep a portion of the paintings (or in the case of prints, the original and copyright) and then have the heirs make their money off of reprints and selling originals. I would feel cheated if I tried to sell something that I took a risk on since most paintings don't beat inflation. Anyone got references on that? It's obvious to anyone who's looked at art prices but I'm not sure if anyone's ever published a comprehensive study on this. Resale fees seem like such a self-defeating greedy money grab when not disclosed from the beginning. Art dealers are very quickly discovering a couple phrases: Private sales exemptions, Hong Kong
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"Unfortunately, it'd cost a lot to take the company to court in order to get it voided as unconscionable under contract law, especially if you're not the first purchaser."
And that is exactly why they do it. Just like record companies offer "pre-settlement" offers to people (pretty much "pay us Y or we will take you to court for Yx") this is simply a scheme meant to make more money in an f'd up economy where people trying their hardest to remain relevant.
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Fee?
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Re: Fee?
Like everything else in the real estate market, the solution is simply full disclosure, up front and before there is an offer made.
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Re: Fee?
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Big Deal
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Re: Big Deal
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Re: Big Deal
For Sale By Owner. It's the only way to go. Say you want $200,000 for your home, if you deal with a Realtor, you'll need to sell it for $206,000 and the buyer will have to pay $212,000, give or take. Sell it yourself, for $205,000. You get $5,000 more and the house sits on the market for $7,000 less.
Which do you think will sell faster? A house for $205,000 advertised by the owner or a house for $212,000 advertised by a realtor? Considering all a realtor pretty much does is take a few photos and toss it on a website...my money is on the for sale by owner home.
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Re: Re: Big Deal
I do agree that all a realtor does is pretty much take some pictures, put up a website, and do a few tours of the home. But they, just like any other middleperson trying to justify their existence, have sold themselves to buyers on the idea that dealing with a realtor is a protective measure. "Why take a chance on a such a big investment?" "Would you risk the next 20 years paying off a home that's of poor quality?" "Why don't you allow us to verify and confirm the condition of the house?"
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The concept of "Sale" is Being Eliminated
Recently CNET ran this disturbing article: The end of software ownership--and why to smile. There is nothing to smile about.
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Re: The concept of "Sale" is Being Eliminated
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I could see
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Transfer fees
A 1% fee could get the real estate industry going again and create millions of jobs. If the 1% is a “deal breaker” to the seller - pay a 5% real estate commission rather than 6%.
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Re: Transfer fees
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Oh, yeah, right - the country's basically run by the mafia state/banking complex.
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