They are a discount buyer, so it is generally a bad deal to use them and you basically shouldn't unless you have no other option. It is similar to getting a pay day loan, or selling stuff to pawn shop or keeping a balance on your VISA. You are going to get a bad deal.
I don't really know what to do about it. How can you ensure people are educated enough to know that a discount buyer is a buyer who will under pay for your house? I guess you legislate away discount buyers completely?
In Canada, they have regulated severely the amount of interest pay day loan companies can charge. This has led to a shrinkage in the number of pay day loan companies. So I guess some similar type of consumer protection laws could be enacted in this space.
In the cases mentioned specifically, the buyer has broken a law already (at least two are fraud) or the contract is invalid (lack of mental capacity).
This isn't really a story per se. People are doing illegal stuff or stuff that won't hold up in court if challenged. We have a system for it - it works ok, not fantastically. We don't need new regulation for cases like this, we just need better execution on the existing system. Better execution costs more money, and as a society we get to some balance of more taxes v more stuff slipping through.
This is a reasonable take, but I think it's also reasonable to suggest that if current system execution is too expensive then perhaps a new regulation could make it cheaper.
Of course there are perhaps unintended side effects from new regulation, but "this is already a crime, we don't need anything new" isn't prima facie a sufficient argument.
If a lot of a similar type of crime is going unpunished, there may be a reason other than "enforcement agencies are lazy", and perhaps a new law can help.
They are essentially a market maker for housing. You can sell your house to them _today_. It's necessary that they pay you substantially under market. If you want a good price, it'll take you 6 months to sell your house. You're paying a premium for immediate execution.
Once you punish the fraud and crime, there's no problem left IMO. There's multiple of these companies competing and you should price shop before selling to one.
There’s a general problem with low friction transactions being used to exploit people with diminished capacity, particularly when intermediaries are involved (another common one in UK is signing them up for multiple phone contracts) and there may be some regulatory innovation possible in this area. Punishment after the fact is not sufficient if it doesn’t adequately prevent this population being exploited.
What is someone who owns a house but has reduced mental capacity supposed to do? The house is worth $500k, someone offers them $300k, the person doesn't have the mental capacity to shop around... I'm just not sure what the right solution here is. I'm afraid it would be even worse if they weren't allowed to sell.
I think the important part is that both parties go into the transaction with full information and a genuine meeting of the minds, which is obviously not the case in this market.
I use eBay's "Buy It Now" functionality all the time, in preference to the "Wait 7 days and deal with snipers" auctions. I fully know that I'm trading low-price for low-friction.
That laserdisc player is only jokingly a life changing transaction.
I see no reason to excuse fraud and deception, those are not convenient low friction services.
I see no reason to ignore how there is supposed to be a take-backs provision which they are merely getting around, producing exactly the outcome those provisions were created to prevent.
The real problem is that mortgages aren't as good as cash when buying a house. If someone needs to sell quick or if there are issues with the house they have to rely on these discount buyers. The protections that slow down the mortgage process have their use but it's one of those situations where the cure is worse than the disease.
Someone who is selling their house for pennies on the dollar most likely can't afford to police lenders and keep them honest via lawsuits, especially sellers like those in the OP who are mentally disabled.
This. It seems lost just how much enforcement relies on the smallest/weakest amongst us to fight back. That’s probably priced out of those same peoples possibilities. It shouldn’t be like this. It creates a lawless atmosphere tinged with legalese as needed to coherence the victim.
I think this misses the forest for the trees; the handful of cases where they broke the law are nowhere near as deleterious as the rest where they didn't. I can't think of a better time for new regulation than a hedge fund extracting home equity from desperate people.
What legislation could you make that wouldn't be a case of the side effects being worse than the disease (bearing in mind how often we dont realize there are side effects or their severity)?
Require that cash sales be registered through a state agency that monitors sellers for patterns of fraud. Add a “cooling off period” of 7-30 days where the seller can cancel the transaction without going to court. Streamline the process by which family members can raise claims of mental incompetence. Upon a sale being registered, provide the seller with a computer-generated piece of paper containing an estimate based on recent comparable sales (with a clear warning that this number may be inaccurate) so that they are aware of how much of a discount they may be taking. None of this stuff seems terrible onerous, and better: it would significantly reduce the load on the court system.
a) a person needs money asap, can't wait for a cooling off period.
b) a person has greedy children who expect the house as inheritance, and don't like that mom/dad has decided to sell the house and spend the money cruising around the world so they decide to declare mom/dad mentally incompetent.
None of these are new issues. We've arrived where we are (and that place is different in different jurisdictions) as we lurch back and forth between the least bad solutions.
I'm not a policy analyst, but this doesn't seem very difficult. Market failures caused by information asymmetry can often be improved by mandatory disclosure of some kind. Even if you disagree, the inability of a bunch of programmers to describe an effective regulatory solution doesn't mean one doesn't exist.
Legislating away discount buyers would be like legislating away payday lenders. The only thing accomplished would be to leave a hole in the market which will be filled by shady loan sharks.
1) Professional buyers are defined as any person not kin or well known to the seller that has bought another property within the last 3 years.
2) Professional buyers contracts must allow a 30 day cooling off period in which the seller may back away from the agreement without punishment.
3) The 30 day cooling off period is initiated by the buyer prominently posting the offer in the local MLS service or similar prominent and accessible system. The buyer is responsible for ensuring any alternative offers during this period are conveyed to the seller.
4) The buyer and seller may avoid the 30 day cooling period by having a certified appraiser conduct an appraisal of the property and executing the sale at no less than 6% below appraised value.
I could throw in a couple other clauses in there to take care of people "brokering" regular sales to straw buyer or about requiring disclosures that recommend sellers consult with family and/or homeowner advocacy group within the 30 day cooling off period, but that is the crux of it.
This wouldn't eliminate the industry, but it would limit the actions of the worst offenders. Offers dramatically below market value should get counters. The worst consequence seems like it would be that the seller will get absolutely swarmed by realtors trying to convince them how much more money they would get with them.
This will be a fairly contentious opinion, but I believe if there exists a class of business that is recognizably harmful to that level, which we only keep around so as to prevent criminal alternatives, then such businesses should be replaced by government run services.
In fact, I personally believe this scenario is likely the most essential use for government run services.
I don’t agree with your secondary point, but I agree so much with your primary point that my inner monologue was screaming “just say government, it’s okay, you’re correct and we all know this is where this is heading” as I was reading it.
> People desperate enough to use payday lenders have no other options.
Not always true, some folks misuse them for a variety of reasons.
Take the option away in the UK and a friend’s boyfriend wouldn’t have been able to use an app to take out a bunch of short term loans in her name for Xbox games…
So I think sometimes these facilities are used frivolously. You’re right that a portion of users in real hardship would turn to “informal” lending if these lenders were to disappear. But it feels like we as a society should come up with a better solution there really.
>Take the option away in the UK and a friend’s boyfriend wouldn’t have been able to use an app to take out a bunch of short term loans in her name for Xbox games…
There's already a solution there, she could take him to court to recover the money. Your argument is basically "ban X because X can be used in an illegal way".
No, my argument is that not every use of x constitutes immediate, severe need, so the consequences of banning x would not necessarily be to drive all service users of x straight into the arms of loan sharks.
Further to that, my argument is that for people who are in such severe need that they would then turn to loan sharks, there is probably a better solution out there that we as a society should be looking into, than usurious payday lenders.
At no point was my argument anything close to “ban X because X can be used in an illegal way"
In 1980, due to high inflation, the federal government passed a special law that allowed national banks to ignore state usury limits and pegged the rate of interest at a certain number of points above the federal reserve discount rate. In addition, specially chartered organizations like small loan companies and installment plan sellers, such as car financing companies, have their own rules.
The 1978 case Marquette National Bank v. First of Omaha Service Corp. unanimously held that nationally chartered banks may charge the highest rate allowed in the bank's home state. This is why so many banks are located in states like Delaware and South Dakota, which have very liberal or nonexistent usury laws. So even if you live in a state that has a very low usury limit, it typically has no bearing on the interest you pay on your credit card.
In response to this article the company promised to stop suing customers to force them to follow through on sale contracts. That sounds like a constructive change.
That sounds like backing out for fear that regulation, resulting from popular pression, will mean that selling to folks with dementia will land you in jail.
Fyi it did Jack squat to payday loans, there are more and more stores opening all the time and they pivoted into term loans.
Can't fix any of this until the fiat network is fixed.
In Canada it's the big 5 banks that provide the liquidity to the payday loan network.
It's entirely possible to get it down to $5 per $100..which is still a shit deal but way better than $23 per 100 but ain't gonna happen while the big 5 is making bank
Interest rates of the average VISA card are insane and most people can get a better loan product if they need the money. VISA makes tons of money for being convenient but insanely expensive.
What interest rate is too high? What price for your home is too low?
They both depend upon your circumstances and your view of them.
There is a set of circumstances rationally viewed where you can pay a very high interest rate or take a very low price for your home.
If you're acting irrationally then you have problems - the question is should we try to help you with your problems or removing some of the ways you might act irrationally, keeping in mind that in doing so we're stopping some rational people from doing something they want that is by definition rational.
I bought a local house in 2004 that suffered a failed furnace in deep winter (with great damage) for $17k. I put another $10k into it for repairs, and rented it.
I started getting postcards around 2012: "I/we want to buy your house." I have a pile of them. None of them offered more than $20k.
The home in question is very near Augustana College in Rock Island, Illinois. I do a two mile walk through campus every day, schedule permitting.
The house was lost by previous owners who engaged two mortgages on the property to fund their gambling.
I had pandemic tenant problems; they didn't pay during the last six months, and the damage was substantial. I repaired the damage, then sold it on contract for $60k; I'm done with rental property.
I'm still getting calls and postcards.
p.s. I drove by a house, very similar to mine, but with substantial roof damage, that was for sale for many months for $15k. It dropped to $5k near the end of the summer. I walk by it, going downtown, and the current owners seem to have repaired the damage, and are on their porch from time to time.
I can't imagine property being so cheap - that too in the US. Here in India where I reside, you wouldn't be able to get even a 100sq.ft of open land for that price.
You often see this with old crappy houses in not super desirable areas, because your basically have to bulldoze and build from scratch to get something you’d want to live in rather than a cheap rental.
Funny, what you see as close enough to make it a good area to live in if you like skiing is enough driving time for me to go from central Denmark to Sweden (including ferry) to ski. To me it would need to be within 30mins to count as a good place to live if you like skiing.
> if you like to ski, there is plenty to indulge within a two hour drive.
I've been to Davenport several times, my ex was from CR, and I went to school about two hours north of there... and I don't recall anywhere that you could actually ski without driving far north into MN or WI. What am I missing?
I’ve got a friend I went to high school with who couldn’t qualify for a mortgage, so he took out a $15k credit card cash advance and bought a cheap house with some land in a rural area. Will have it paid off within 10 years of working for near-minimum-wage on a farm.
I can't imagine it being that cheap IN A COLLEGE TOWN. I get it isn't a major Big10 university town, but still... that should mean walkable neighborhoods, better restaurants, etc.
America is blessed with a low population density (10% of India's) and lots of rich people who recently decided to live crammed together in cities. So there's more than enough spare property for everyone.
We used to be the global manufacturer of farm equipment. The early 80's farm crisis closed several major players. Deere is still headquartered here, but plants are established in China and elsewhere.
My area also hosts a U.S. arsenal with custom manufacturing for military equipment that has kept many people employed. We also have the largest aluminum press in the world that makes all the skin for Boeing, Airbus, and all the rest (Bombardier, Embraer, et al).
I've worked for all of them.
We never recovered from the loss of farm manufacturing, which has depressed home prices.
I wish more older Americans understood how these people really work. My parents live in a neighborhood that has gone down hill through the years. They called up a company who did this kind of home buying. Usual visual inspections and the like went on with a quote being issued. They saw the amount was a little over the remaining mortgage which was less than the market value of the house. They decided to ahead of time wire over $20k in cash from their bank to the mortgage company then move on with the sale. The home buyer company had been notified of the mortgage payment and immediately reissued their quote minus the exact amount transferred to the mortgage company. I wish my parents had told me their plan because businesses communicate more than they used to.
>I wish more older Americans understood how these people really work.
I wish more Americans overall understood how real estate works. I see people get screwed all the time because of bad information. Here's an example: several times a year I will talk with a member of the public who will say something like "we want to work with the listing agent because then we won't have to pay as much commission" not understanding that in fact they are (assuming a traditional two sided commission offered by the seller) actually just giving that listing agent both sides of the deal.
Or, similarly, they will say things like "we want to work with the listing agent because it's their listing so they will know the most about the property" again, not realizing that depending on your state, the rules for dual agency may not give you as a buyer the same representation as getting your own separate buyer's agent. In fact in some states, you may not actually be getting any representation at all, IE: they fill out the paperwork on your behalf but actually represent the seller.
Those are just some trivial examples, but it's dumbfounding how many bad ideas the public has about real estate. So much of my job is hours of educating my clients apart from anything related to the actual transaction.
Serious Q: What value do agents add? And what's wrong with buyers and sellers negotiating directly, as in pretty much any other market?
As an outsider it seems that RE agents bring exactly nothing to the table except FUD around the transaction process which they then exploit for commissions so everybody, except the agents, are worse off.
They can provide access to listings that you might not have accesss otherwise. They also get stuff done fast: ours had a hole in our basement fixed (weep hole; Michigan basement) that would have prevented closing. We were first time buyers and it really made things sane.
I've bought and sold several houses and, for the most recent one, finally decided to skip realtors.
Best and easiest $21k I've ever made (saved).
RE agents have some value. Maybe $1-2k? For convenience, paperwork preparation, etc. Similar to a lawyer.
But I sold our house in record time, at a price that was good for both us and the buyers. No games of telephone, just meeting and sending emails directly to one another. The lawyer does the actual legal work, the agent mostly just prepares PDFs. The various PDFs took me maybe a couple of hours total to get together.
I'm not really here to convince you one way or the other - up to you whether you choose to work with an agent.
But - some of the things I have to know about in order to assist clients might persuade you that there's more to real estate than what you see on the surface. For example:
-- Environmental issues, including water bacteria testing, well issues, oil tanks and their mitigation, radon, lead, and asbestos issues.
-- Zoning, which includes a whole lot of topics. Can I build an ADU? Can I build a house on this ag-zoned property? Can I use this property as a VRBO?
-- Marketing. Sure, some properties sell themselves - but some require getting the property in front of a unique buyer. Ever try to sell an equestrian property? A vineyard? A single-wide?
-- Negotiating. Again, easy to think it's all about whoever brings the most money to a deal, but it's not always that simple.
-- Market Analytics. Good agents know their numbers and spend significant time in their week crunching numbers to understand what's really going on and how to help their buyers and sellers maximize their positions.
-- Psychology. Your buyers and sellers are from every background imaginable and you have to try to understand their familial and financial situation and help them achieve their goals. This is an art form.
-- Financing. Sure you might not be the mortgage lender, but understanding all the different types of financing options so that you can advocate for your client - both with the other party as well as with lenders - puts you in the best possible position.
-- Law. A real estate license is a limited license to practice law. And every year I have to not only stay up on dozens of standard state form changes, but also whatever the legislature has done and any meaningful case law that is changing how we do business.
That's just kind of a smattering... it's easy to get a real estate license in most states, but to actually become a skilled agent is another matter. If you believe that in software there exist 10x developers, I assure you the same concept exists in real estate - there are agents that are worth their weight in gold for the things they can do for their clients, and then there's the great unwashed masses who can barely fill out the forms.
Listing Realtors (TM) rely on people's misunderstandings to get them to sign those lopsided agency agreements in the first place (3% of a capital asset for setting up a key box, taking mediocre pictures, and writing a description of the property!), so those less critical misunderstandings are just part and parcel of their market. You should never skimp hiring a real estate attorney, as they will actually go to bat for you. But realtors' primary motivation is volume, and they'll often "represent" your interests by encouraging you to go along with buyers' nonsense lest you lose them.
I'm sorry you've had such bad experience with realtors... just some thoughts:
-- My experience with real estate attorneys has been as mixed as your experiences with realtors. Some know what they are doing, many do not. Many care about billable hours just as much as the outcome. YMMV.
-- Some realtors care about volume, and some care about their fiduciary responsibilities to your business. If they are actually a Realtor and following the standards set by the NAR, then volume or commission % shouldn't be their motivation. Again - just like any profession - some are good, some suck.
-- Finally, regarding commission percentages - yeah, in many markets commissions shouldn't be as high as they have been. In my market(s) we are seeing commissions decline. That said - I regularly more than pay my own commission in the earnings / savings I negotiate for my clients. If I make you an extra $50K and I get $10K for that service, I've earned my money. Again - if you haven't found that with the agents you've used, I fully encourage you to report any fraudulent activity to the local real estate association and/ or state agency. In any case if you don't receive the service you expect, find a new agent.
> If I make you an extra $50K and I get $10K for that service, I've earned my money.
That's totally fair on the surface.
But it's also impossible to demonstrate. Nobody can know if the house would've sold for 50K less if a different (less competent) realtor sold it, or if the owner sold it on craigslist or wherever.
It's difficult, but not impossible, and here's how... I could give you at least five case studies from the past year in which specific things I did created those kinds of gains / savings for a client. It's basically standard CMA stuff - show comparable properties, where they sold, where we sold (or had our offer accepted) and demonstrate the tactics that got to that point. Do that across a group of agents and you quickly have a comparative model.
Now - sometimes there are emotion-driven data outliers. For example, sometimes you will see someone overpay in cash for a property that could not have appraised at that same value. So again, using data you can account for those scenarios as well. Point being - all that sales data is available and you can pretty accurately create a model of which agents overall are having success not only selling properties, but the degree to which their clients are winning negotiations. I'd argue that even if an agent was being "overruled" by their clients - even that would be interesting, as it would show that their clients were not actually listening to the negotiating advise offered by that agent (IE: the data could actually demonstrate that there are communication / trust issues between the agent and their clients).
It’s a largely reputation-based business; if they’re not helpful, the “Bob was useless” comments and reviews outweigh the “Bob saved me money/found the perfect house” ones over time.
While no individual knows for sure what their next best alternative was, their hunches and hindsights add up to a reliable picture in aggregate (that I’ve seen, anyway.)
Sure, Sturgeon's law and all that. The problem is you don't know how poor a realtor will perform at selling the property until you sign the agency agreement, and once you've signed that agreement your BATNA becomes taking the property off the market for six months or more.
And then the second time around, trying to negotiate those terms with several different realtors was like talking to a brick wall. None of them wanted to understand that as two parties sitting down to sign a legal document, you can agree to cross bits out. Full on steering wheel tossed out the window for the game of chicken.
I'm sure there are many realtors who do a decent job - the problem is the incentives are just set up all wrong. I wouldn't actually mind if they got a 20% or 25% commission on every dollar over the market appraisal of the property. It's just ridiculous that they're taking 6% from the first dollar when the property would sell itself for a low amount.
> I wish more Americans overall understood how real estate works.
There aren’t good resources for learning compared to many other fields. Compare learning about real estate to e.g. learning how Linux works. Even though the latter is far more complicated conceptually, you can go and read man pages and the Arch wiki or whatever and learn it all from whatever level of abstraction you prefer. Learning about real estate from any source feels like the equivalent of trying to learn how Linux works via ChatGPT prompts.
Real estate is such a highly regulated industry with so many myriad laws governing it that you might as well ask what it would take for eBay to auction human organs.
Elderly people need an 811 (the service you call to check for buried hazards) for shit like this. Basically a free service they can call to verify if something is a scam or not.
Not just the elderly, and this would very much help with online scams, as well.
Case in point: my mother, who I would not consider elderly, and who's skeptical enough to pretty much assume everything is a scam, yet wasted a fair bit of time on a scam email from "PayPal".
She doesn't have a PayPal account, and, for reasons, doesn't want one. So she was certain the email was part of a scam. What she did not know was whether it was phishing email from a scammer — her words, so, yes, she's generally well aware of the practice; again, not elderly — or the result of a scammer attempting to set up a PayPal account in her name (in order to defraud her friends and family, perhaps).
So she went to PayPal.com, emailed, called, etc., and they weren't willing to confirm or deny whether they may or may not have sent her an email concerning an account that may or may not exist in her name, for privacy reasons, unless she was first able to log into this hypothetical account that an unknown third party may or may not have set up in her name[1].
She then showed me the email, and it was immediately obvious to me that it was low-effort scammer spam of the "From: PayPal Security <SecurityPayPal@gmail.com>" variety.
Even if only useful for trivial cases like these, it would be helpful if some government agency or trustworthy nonprofit would set up a well-known mechanism where anyone could forward potential scam emails and receive a prompt, semi-automated "obviously a scam / not necessarily a scam, but still exercise caution as follows; …" result.
This would obviously need to be set up with measures in place to minimize its usefulness as a fraud-detection oracle for scammers themselves, but still seems like a worthwhile cause.
[1] I'm not trying to call out PayPal for bad behavior here: while they could have been a bit more helpful by offering useful, general advice, this is otherwise a reasonable response to what, from their perspective, was an admitted non-account holder requesting information about someone else's account in violation of their policies (and possibly the law).
> Real estate agents have a fiduciary responsibility to represent a homeowner’s best interests in negotiations, which is defined in state laws, licensing requirements and an industry code of ethics.
Our experience with real estate agents has been far from this ideal. We had to fire one after she lied to a counterparty and then lied to us in an attempt to cover it up. Other agents weren't much better, and none of them seemed to take their fiduciary responsibility seriously. They seemed to be looking out for themselves 100% of the time, and their client only when interests were aligned.
The relationship epitomizes the principle-agent problem.
Real estate agent here...While there are many agents that hold themselves to the standard that the National Association of Realtors has documented in their code, one of the root problems is that state agencies are negligent in enforcing rules and investigating fraud. For example, I know a fellow agent who had documented proof of another agent committing a fraud that did approx $400K in damage to a client - and the state didn't even bother to investigate. For that matter, local Realtor associations are often complicit as well - mostly out of laziness rather than deliberate ill-intent.
My best advise is to treat a real estate agent the same way you might your accountant / lawyer / financial planner / private banker: don't just pick one off Zillow or at random, but carefully cultivate a relationship before you need their services and take steps to discern for yourself whether they are acting as a fiduciary. I agree completely - there are a lot of bad actors in this space, but over the next decade I expect market forces to drive a lot of people out of the business and improve the professional standard.
Also would add, RE just isn’t that complex. It’s mostly standardized contracts in use. The contract to rent an apartment is usually more complex than the average RE sales contract. Read them ahead. Study the market to form your own opinions. Learn about what’s actually happening (agent can be helpful here) and what negotiating techniques you can deploy in the process. For most people, it’s worth your time.
I'd agree in general... that said, those standardized contracts change regularly, often because someone sued someone else leading to updating those contracts. So a real estate agent who stays up-to-date on contract issues can make a difference. As you point out - where an agent will really shine is market information and negotiating. I saved a client a ton of money last night because I out-negotiated the other side. That's why I'm worth the money - because what I saved them is more than I will make on the deal.
Agreed too that my office lease is about the same number of pages as a typical residential contract, but far more dense. My landlord added some of the most ridiculous clauses I've ever seen in any contract - and prior to real estate, I regularly wrote business contracts from scratch.
> I saved a client a ton of money last night because I out-negotiated the other side
You’re in the business so this might seen brash but it’s not meant to be. I’m just a pretty experienced buyer/seller.
The assumption I have to make is 1) buyer couldn’t have negotiated that themselves (I happen to be a good negotiator) and 2) further negotiated to keep the buyer’s agent portion of the commission (it’s a standard seller’s cost they’ve already agreed to pay so doesn’t matter if it goes to me or to an agent, net to seller is the same). I’ve done both, regularly. It’s not for everyone for sure, negotiating skills are the hardest to screen for when I have used agents but people not knowing how to negotiate should definitely focus on trying to find that skillset. But saving more than you cost someone is good, but not guaranteed and it’s always possible to pocket the fee you do charge; so you still have a cost and I usually have to decide if “you’re” worth it for something I can do over a handful of calls/emails.
Also I’m a landlord and those contracts like you said are much more dense. Where I am, the standard sales contracts change annually but not significantly in the last 15 years anyway. For example, I’ve noticed they’ve recently done away with the X days after in favor of precise dates. The math involved in X days and then finding later it lands on a Sunday or something was always sloppy IMO so I welcomed this change. But anyway, the fact it’s focused on a sale makes it so much easier to read than a lease which specifies so much more about condition, use, pets, roommates, etc.
If you've done a number of deals and watch the market closely - you are right, chances are you can get deals done on your own without me. Where I benefit savvy clients though is mostly in a) current market information b) current contract information c) advance / non-public information d) project management e) resources / referrals / connections f) sometimes even with a savvy buyer and seller, it helps to have someone in the middle to bring the deal together, Ie: someone has to do the paperwork and make the trains run on time.
Where I work, there's added complexity to the market in part by the variety of properties and the shortage of skilled agents. Of the licensed agents in the area, only about 30% are actually "full-time" agents, and of that 30% very few will do much outside standard residential work - and we've got several types of specialty agriculture, bare land, commercial, and we are on a state line. Our forms in both states have been going through a surprising amount of volatility the past few years, as have what I'll call "practices", Ie: what's considered normal buyer / seller responsibilities and negotiating chips. For example - with one of these practices I saw a way that our area was behind the times, I started doing things differently and it put my clients in a negotiating position such that my sellers were getting a much higher return relative to comparable properties.
I agree on negotiating skills - unfortunately, the public seem to pick agents based on who they know socially rather than on professional abilities. Finally, to your point about negotiating - one of the challenges for many buyers (and sellers) is that they really don't know the value of a property or where it should sell. So for example many buyers (assuming they aren't in a competitive situation - in which case it's a different set of strategies) will offer some stupidly low number in hopes to get the seller to come back with a reduced price. It's "let's split the difference" negotiating, rather than a data-driven approach. So for example when we go into a negotiation, we don't just index off of the asking price, but rather we've done a market analysis (as a example) of our own and thus have arrived at what we believe to be the fair market price. From that, anything below that number is gravy. So when I not only negotiate below the asking price, but below where we believe the property should fairly sell, then we've really won for the client. Or likewise when I'm on the sellers side, there's a whole slew of ways I set us up pre-market to put us in the best possible position. Even knowing how to read the possibly negotiating strategies for a property, or what "levers and dials" are available in a negotiation isn't something that the general public understands - if you've done a number of deals on your own, you may have developed this expertise.
What is it you anticipate happening that will trigger the change you describe in coming years? We were grossed out by our agent a decade ago, and when we went with a different agent (who came highly recommended by a neighbor whose house she sold) in a more recent transaction we were met with even more dishonesty than before.
Yeah, I think conductr and I are on the same page here... basically I see real estate ripe for the same kind of transformation as financial services has experienced... once upon a time if you wanted to buy and sell stocks or other assets, you went to a stockbroker / financial advisor. Today, sure there is still a need for those professionals, but many more people trade on Schwab / Fidelity (as examples) and the standard of practice for the remaining financial advisors has improved as expectations have increased.
Essentially - I expect some combination of technology / low-cost brokerages to take over a lot of the business, while some demographics of buyers / sellers or types of properties will continue to rely on the services of brokers who will be forced to up their game in order to compete. I fully expect a bloodbath among some of the larger national / international brokerages, as many of them have abusive, unsustainable business models.
Less volume will push the underperformers/hobbyists out of the RE agent business. Word of mouth is not a great way to hire, there a lot of incompetent but charismatic people in this industry. I interview a handful of them and then I basically do all the negotiating myself. In my opinion, they’re just there to unlock the door so I can view the home/or put my listing on the MLS. Once an offer is being made, they just care about the transaction closing. For this reason, never take their recommendation on inspector either. Find people that work for you and are not concerned with a ruining a relationship with your agent (their referral source). Also, never sign a buyer representation contract. It’s unnecessary and no agent worth their salt cares about locking you in (if you’re a serious and capable buyer). Never engage with an agent at an open house, this is usually agents without much work trying to drum up business.
>Also, never sign a buyer representation contract.
FWIW: In one of the states where I do business, it is about to become law that we have to have these with clients. I expect it to be a total clusterfuck.
Required to sale or show? I should clarify that I’ve usually signed and amended it during pend stage so agent gets commission and has documentation that I’ve agreed to all the terms within. I also limit it to just the property in question so if things fall apart it does too.
Requiring it to show, seems like a mess that will slow things down or people will just ignore it/backdate it like they do so much already to beautify things for underwriters and such.
We're kinda waiting to see what form it will take, but there seems to be a belief we are headed toward a required to show type scenario. I think it was one of your earlier comments that said something I completely agree with - clients should always have the ability to walk away from an agent they no longer want to work with, and should not feel pressured into signing an agreement that might create a binding relationship they don't want. Already we're strongly encouraged by our state legal advisor and MLS best practices to use buyer agency agreements - but I (mostly) don't for exactly the reasons you stated - if a client wants to work with me, they will, and if they don't, a piece of paper shouldn't force them. The general public is scared / distrustful enough of Realtors, and now we're supposed to put this legal document in their face the moment we meet them? Sounds like a good way to further create distrust and alienation.
I suppose once it becomes norm, everyone will see it as norm and go along. I do agree with you on being turned off by initial interaction being a rep form. They're pretty easy to void. The various RE lobbyists are pretty strong and continually pushes for laws like your discussing to essentially force people into utilizing agents.
I have to get creative to get the commission into my pocket when I don't use agents. First, the other side usually does have an agent and explaining to them that I want the commission and it's already a sunk cost is usually a nightmare. I do it at the end, because otherwise it impacts negotiations "but your keeping the commissions already". (No I'm talking to you, doing the work of an agent, so I should get paid just like you are; it doesn't cost your seller anything more than the transaction costs they were already planning - in reality, I know it's because the sell side hears no agent and thinks "I get to keep it all").
In my state, it says only licensed RE brokers and attorneys can collect commissions. I'm neither. But we also have a clause in the law that allows commission rebates. So, I typically just pay an attorney a small flat fee to collect the commission and rebate it back to me. It can be a pain but then I realized I don't have to tell the sell side anything, I now have a standing agreement with my attorney who will collect the buy side commission and subtract out the flat fee part and rebate the rest to me. I just put his info on the offer as my agent and give him a heads up a few days before close. It works pretty well.
>(who came highly recommended by a neighbor whose house she sold)
I had a neighbor once tell me how much they loved their agent, and before I could stop myself I blurted out "I can't believe they stayed sober long enough to get your deal done!" It's a sad reality that while agents get to know who is trustworthy / skilled, because we deal with each other every day, the public seldom really gets the whole picture. I think it's worse in large metro areas because there are thousands of agents - so doing your research is hard. I assure you - national brands have very little to do with quality either.
If I'm being really crass - I find a lot of people pick their agents like it is a beauty contest. They pick based on age, looks, they go to the same church we do, our kids are at the same school, etc. And for a lot of people, whether they feel good about the agent has more to do with if they are now "friends" then if there was actually a successful business outcome.
A notary in France must mean something completely different from a notary in the United States. In the US a notary simply is verifying the identity, and swearing they have done so, of the people signing the document.
It's entirely possible and happens all the time that a fraudulent document is notarized.
In France (civil law, different from US common law) a notary is a qualified lawyer whose role when selling the house is to ensure that all the legal aspects are handled correctly (including things as making sure that the technical reviews of the house have been done, that there are specific documents from the city etc.), and to make sure that the people who sign the documents are the ones that are allowed to do so.
This means that when you are done with the signature, all legal aspects of the transactions are covered.
Since what needs to be checked is completely standardized and what is in the contract is standardized as well, you are not expected to negotiate anything (except for the price). There are no surprises in the contract either - it is all standard (and boring).
When you are at the notary the contract is read out loud but for one you do not understand everything, and for two you do not worry either as this is the same thing everytime and cannot be neither less nor more than what is required by law.
BTW, each party can have their own notary (what each of them do is legally defined as well and they share the fee (also according to the law :)) or you can have the same for both.
It is very comforting for a stressful act like this.
This is very similar with labour contracts (no notary involved, but a fixed set of points in the contract, no more an no less)
>In France (civil law, different from US common law) a notary is a qualified lawyer whose role when selling the house is to ensure that all the legal aspects are handled correctly (including things as making sure that the technical reviews of the house have been done, that there are specific documents from the city etc.), and to make sure that the people who sign the documents are the ones that are allowed to do so.
This is typical in the US, too (just called a lawyer, not a notary) but it's not required
If you're buying a house with a mortgage, you're going to be represented by a lawyer who makes sure everything is on the up and up (and more importantly the mortgage company is being represented to make sure everything is on the up and up)
But, it's not required and really all that's required to transfer property is a signature on a deed
In France it is a hard requirement. Also you cannot pay directly, the money goes through the notary (and a special account handled by the government).
This is actually a two-step process. You sign a first contract that entirely engages both parties - the only exception is if the buyer cannot get a credit. They have a month (or something like that) to secure it.
Then once the funds are there the final contract is signed.
They pay dearly for this though -- 7.5% of the price of the house goes to the notary/state. In the US it can be as high, but it's usually not, since most fees are fixed amounts.
It depends if the house is new or old. For a new house this ~2%.
There is a legal possibility to negotiate part of the notary cost (to lower it below the legal maximum) but the chances are thin (they get better for expensive houses).
In the US you have to have a real estate attorney as well. And contracts are standardized by the federal government. I think the actual price varies and the last time I bought a house the attorney’s fee was $850.
When I was leaving the UK a couple of years back, I was tempted by some of the marketing blurb from some similar organisations there.
We had a house to sell, and were hoping to get it wrapped up before leaving, so "we buy all houses, we can close the deal in a few weeks, great prices offered!" sounded interesting.
But then you look up people's experiences and the shady practices start to show. They give slightly low-ball offers, but nothing outrageous, 5-10% under market to hook you in. Most people who use them have some sort of extra motivation to sell and these arseholes know it, so at the last minute* they drop their offer significantly, in the region of 20-30%, and try to really screw you.
So we stayed well clear!
(*and there are a lot of last minutes in UK house sales, in fact several last months sometimes... our eventual sales process took about 4 months from acceptance to completion, and either party can drop out with no penalty up to roughly the last two weeks. It's a terrible system)
(The above does not apply to Scotland, who have sorted this out long ago!)
I bought a local house in 2004 that suffered a failed furnace in deep winter (with great damage) for $17k. I put another $10k into it for repairs, and rented it.
I started getting postcards around 2012: "I/we want to buy your house." I have a pile of them. None of them offered more than $20k.
I had pandemic tenant problems; they didn't pay during the last six months, and the damage was substantial. I repaired the damage, then sold it on contract for $60k; I'm done with rental property.
Almost anywhere in the rust belt has houses like this (well under $100k, at least back in the early 2000s). Typically they’re in rough areas of town and it’s difficult to rent them to anyone but section 8 tenants (government program that covers much or all of the rent for low income tenants).
In Australia, for many people the (new) Australian dream is:
"One day I hope to have the income to be able to afford to pass the grueling real estate agent's suitability test to rent a house and move out of the tent/car."
I don't even know how we got here. Population growth has been below average for the last 3 years(no immigration). Housing/Apartment construction didn't slow down.
I just don't understand it. Mortgages are insane. If you're buying a rental property with a mortgage, you can't afford to not rent it out.
But home costs are up, rental costs are up, and properties are vacant. Do we really have so many people able to afford to sit on empty properties rather than lower rental price? It's also insane. Most rents are north of $600 around here, and a $10-a-week difference is $520 a year in rent. So if you raise rent by $50, that's $2600 a year extra(excluding taxes). but if the apartment stays empty for 6 weeks while you wait for someone willing to pay, that's likely to cost you > $3000. So that $50 increase has a 1 year payoff, assuming a long-term tenant.
The whole market is irrational. The greed of landlords these days is palpable.
I think we need a wealth tax on people who own more than 2 properties. Start making landlording infeasible and get people to instead invest their capital in productive assets.
AirBNB has turned vast numbers of houses into hotels/short stay accommodation, pushing local ordinary people out of the local housing market, especially in popular tourist towns.
Australia sells its residential real estate to any buyer from anywhere around the world - which results in millions of empty houses, and locks Australian's out of owning houses.
Australian politicians have huge property portfolios, so they have incentive for all the above mechanisms to stay in place.
The Australian government does not build any substantial number of public houses any more.
Australia has a vast flow of foreign students into our universities and the unspoken transaction is that if you buy the education then you also get a permanent resident visa, putting pressure on housing.
The current Australian government - the ALP - has a "huge Australia" policy and is importing 715,000 migrants this year and next, with 1.5 million overall for the next five years - despite what the government says, these people need somewhere to live.
Negative gearing is made out to sound much worse than it is. If anything, it's a benefit to wage earners by allowing them to pay a business expense from their pay. It's just a standard deduction afforded to investors for business expenses.
IIRC it's actually quite difficult for foreign buyers to get into the market, and expensive as well.
The housing vacancy rate is lower than ever. There definitely aren't millions of empty houses.
Largely the issue is just going to be too many people and not enough houses where they are needed. The more liberal we are with permitting apartment and unit construction, the better things will be in the long term. I'm not sure restricting migration is the solution - but you can definitely argue that the rate is too high.
The 2021 Census reveals that 10.1 per cent (1,043,776 homes) of Australia’s 10,318,997 private dwellings were unoccupied on the night of the Census. While this may seem that a very large proportion of Australia’s housing is unlived in, the reality is dwellings are identified as unoccupied for a number of reasons such as:
homes are being renovated
homes being sold as vacant possession
newly built or bought homes where no one has moved in yet
rental homes awaiting new tenants
people living away temporarily from home during the census count (travelling or visiting other homes)
homes are deemed unliveable
subject to a probate application or other legal proceedings
holiday homes
homes owned by people currently living overseas
homes being land banked, that is held vacant until the local area economics (or personal circumstances) make it more profitable to sell or redevelop the property.
Had there not been the tax concessions, those property investors might've not invested in the first place, and thus, there would be an even lower baseline - the gov't's $20BN that they supposedly saved would not have made up for the shortfall either.
I rather the gov't give back the tax dollars in that case. And nothing stops an investor from making a company, and using that mechanism to negatively gear - unless somehow the proposal specifically targeted real estate.
People in australia complain about high property prices often think it's negative gearing causing it - but it's not. Australia is full of rich people, and high income earners. That's why property prices are high.
On this note, I find it increasingly infuriating to keep coming across people who blame all housing shortage issues on eeeeeevil investors and landlords, and spout a lot of bullshit about massive vacancy rates that don't exist, when the blatant root supply-and-demand cause is that there's just not enough physical housing in the places that people want to live.
You see exactly the same kind of stuff endlessly parroted in the US by people who somehow think that confiscating property from all landlords will make the millions [1] of needed housing units just manifest out of thin air.
Much of that resembles the UK situation. I wish MPs received more scrutiny for their property purchases, the best we've had so far is when the open corruption of their expenses came out.
From my perspective 2007 just destroyed the market. So many troubled assets and loose government money and no one putting any effort into helping the average citizen. A giant wealth and land transfer occurred. The second largest in recent memory.
> I think we need a wealth tax on people who own more than 2 properties.
All you will do is create a "straw purchase" market for homes.
> Start making landlording infeasible and get people to instead invest their capital in productive assets.
> From my perspective 2007 just destroyed the market.
2007 was the end of the destruction of the market (that time when housing prices doubled for no other reason than the money that left dotcom poured into housing.)
Fact is, after people are used to paying more, there's a new baseline and a new level of profit expected. Not even by the landlord, who overpaid for the property and needs you to pay an absurdly high rent or they'll get behind. It was just a phase change in how much people were expected to pay for housing, and that money ultimately went to the people who owned that real estate back in the 90s.
I met a guy who in 2005 sold a house in Los Vegas for $750K that he bought for $175K 5 years before. We're still paying him. Multiply that by orders of magnitude for real, wealthy property owners. Then to add insult to injury, when a bunch of leveraged people lost their shirts on property derivatives, we bailed them out, paying twice.
> 2007 was the end of the destruction of the market (that time when housing
> prices doubled for no other reason than the money that left dotcom poured
> into housing.)
Overall home ownership increased from 64.0% to 68.4% from 1990 to 2007.
During that time the population also increased from 250m to 300m.
Ostensibly, around 47m new home owners were added to the list during that
time. Going from 160m owners to 205m owners, or adding a new 28%.
During the same period 27m new housing units were completed, with 21m being
single family homes. I would assume this imbalance would impact pricing,
and there were plenty of other ventures for bummed out dotcom money to pour
into right around 2004.
Total ownership continued to fall until 2016. New single family home
construction rate has only recovered to about 1995 levels. The current
population is now 330m. I contend this suggests it's _still_ going.
> Fact is, after people are used to paying more, there's a new baseline and
> a new level of profit expected
If you take the chart of average home sale prices over the past 45 years,
you see mostly linear growth. 2007 was a bubble in pricing, seeing around
an 18% higher price than this trend line. The prices stabilize back to the
trend from 2010 until 2013 again, since then, prices have been about 10%
above trend until 2021 where they rocketed back up to 18% above the half
century trend.
There's been more than one mode impacting price, and whatever it is, it's
happening again. Probably worse, because we don't have any corresponding
movement in new home construction with this "bubble."
> Multiply that by orders of magnitude for real, wealthy property owners.
Then divide it by all the people who didn't do that, which I'm estimating
to be of at least a similar if not slightly greater order of magnitude. I
know quite a few of these people. Some who bought into the irrational
exuberance as an opportunity to just remodel the home they've lived in for
more than a decade. They don't live there now. The smart ones managed
to just barely break even.
> Then to add insult to injury, when a bunch of leveraged people lost their
> shirts on property derivatives, we bailed them out, paying twice.
Bailing the American people out is how it was sold. This is not a bad idea
if that's what they actually did. It would probably have a little more
sticking power if they bothered to put more than a token banker or two in
jail for minor indiscretions during the first pump and dump of housing
turned commodity.
I'm not sure about where you are, but in Perth properties aren't vacant. AFAICT availability of rental properties is at a historic low, and so is the availability of properties for sale.
So agents can pull tricks like giving a nod that overbidding is going to be required, and you'd better make that rental profile sparkle if you want a place, and be prepared to put up with rent rises at the first opportunity, because there are 30 other people looking at this house today so if you're not willing to do what it takes, buh-bye.
On the other hand ... to this Brit, mortgages are more easily available for very large sums and you get much more house for your money than you would in the UK. But maybe that's a west coast thing.
I’ve made the argument that owning multiple properties should basically be completely untenable or outright illegal for many years but every time I bring it up, even the poorest people in the conversation decide that’s a bridge too far, like someday they’re going to have a beach house in Laguna.
People in the US, at least, can’t stand the idea of not being allowed to own absolutely everything you want.
Negative Gearing and AirBnB are the big culprits people get tax incentives to buy properties and then make more off of short term leases through AirBnB then renting to long term tenants.
It's used to be a small number of people here and there.
The obsession with owning real estate has turned our society into landlords and renters, with renters paying the mortgages on their landlords investments - mortgages which are spiraling up due to interest rate rises.
Nearly all the members of parliament have extensive housing portfolios so they have disincentive to fix it. In fact recently house prices were going down, so the ALP government just fast tracked in 715,000 migrants, which has fixed that problem nicely.
Australia was already in the worst housing crisis ever in its history. When asked how the 715,000 migrants will impact the housing crisis, the ALP government simply says that migration does not impact housing, and that the housing crisis is not the fault of migrants.
Previously even the slightest questioning of migration risked you being labelled a racist, but with the new government fast tracking 715,000 and planning for 1.5 million migrants in the next five years, it's has become a huge community issue and many are standing up and asking why we are importing vast numbers of people when the country does not have the housing or resources to support them.
The people at the bottom of society - who don't look great on a rental application form - what are they doing? I don't know what happens to them. It's awful and the ALP government really don't care.
I've come to deeply hate government in general. The ALP is meant to be the left wing party that looks after ordinary people. Instead it has turned out to be just another bunch of rich politicians feathering their own nests.
Yes, which is why more people need to vote minor parties and independents if there are good ones in their electorates. Basically our major parties are a bit like the US - the Liberal/National coalition, like the Republicans, govern for the rich at the expense of the poor, and the Labor party (like the Democrats) just maintain the status quo but put a progressive PR spin on it... The political ratchet, where one party moves things, and the other just stops things moving back...
At least our voting system actually lets minor parties win seats, which is why I think our Government is at least a bit less crazy than the States.
> so the ALP government just fast tracked in 715,000 migrants, which has fixed that problem nicely.
And now the ALP secured 715,000 additional ballots. Genius. Why try to improve the situation for the Australian people when you can literally "import" ballots?
I spent 1 month in Australia and my daughter 6.
Hiring ads are on almost every shops or business activities, so - probably - those 715.000 workers are necessary.
Giving them a decent house for living is another problem
GP stated what is, broadly-speaking, a fact - an artifact of policies that were integral to the development of the modern American housing stock (and how families are able to access it) as we know it. It succinctly conveys the American side in a discussion comparing the relative state of housing in America and Australia. It's on-topic and, while blunt, only "political or ideological" in the sense that some people will always see the statement of uncomfortable truths as "political or ideological." Please don't wield the guidelines like a club, it's done so in bad faith.
Exchanges of over some amount of money should be supervised by a third party just to check it's not a scam - how hard could it be? I can't believe there are no safeguards for people...I can't believe it wouldn't be worth it socially
Often two people want to do a transaction without anyone else knowing about it. The US is, to a large extent, built on the idea the idea of individual freedom etc etc.
Yup, and practically speaking the IRS ends up knowing about virtually every meaningful transaction too. But, the people get to do the thing without anyone knowing they are going to do it, or stopping them doing it, or in most cases many of the details.
It's not hard to spend some time finding a lawyer you can use for random small things earlier in life before you actually need it and have them help you out with all of this stuff. You can treat it as an assistant that knows what they are doing. Certainly way cheaper than selling your house for 33% of the real price, or even paying huge "real estate agent" fees.
Yup. I can easily imagine some third-party scam police cracking down on things like "I sold my son the family home for $1" or other similar unusual (but not scam) transactions
An independent party (like in Germany, a notary) can at least flag suspicious activity and demand explanation or verify if the parties are authorized to act and of sound mind.
I've seen those signs before. They were posted in rapidly gentrifying Hispanic areas, probably targeting those with weak English or financial literacy.
The interesting things is that the signs appeared to be handwritten with a black marker but all of them looked exactly the same. There were commercially produced but they took the effort to hide it.
The jankiness is intentional. Apparently it helps weed out people that'd catch on to the scam. Someone dumb or desperate enough to call a hand-written sign is more likely to follow through to the end without getting suspicious. It's the same reason lots of spam and email scams are full of typos and bad grammar.
> Real estate agents have a fiduciary responsibility to represent a homeowner’s best interests in negotiations, which is defined in state laws, licensing requirements and an industry code of ethics.
How is this possible when looking at 2 houses, one $700,000 and one $850,000. The realtor makes more money on the latter.
People focus on this but the far bigger lever is simply time. If it takes 2/3 the effort to get you into the $700k home then the agent comes out ahead on a revenue/hour basis, and can move on to the next customer.
(And the much bigger conflict is for properties with a no or reduced buyer’s agent commission.)
>(And the much bigger conflict is for properties with a no or reduced buyer’s agent commission.)
I work in two states, one of which now has a mixed commission model and the other soon going there... we aren't seeing a lot of properties without a buyer's agent commission, but in those cases (mostly FSBOs) I've simply negotiated a reasonable fee to represent the buyer and we've baked it into the cost of their financing. They get representation but don't have to come up with more out-of-pocket.
I would encourage people to ask their agents about commissions and have open conversation. I have a closing tomorrow and another next week and I couldn't even tell you the commission amount other than that yes I'll get paid something. If an agent is paying excessive attention to the commission or trying to strong-arm you into a house, find a different agent. Real estate is seldom about traditional sales - I don't sell you the property, I match-make you to it, IE: I'm here to find you the right property for you, and if I do a good job on your behalf the money will come. Again - if that's not the experience you are having, go find a different agent.
I respect that there are many people doing their best to help their clients, without regards to the short run impact to their pocket book. (Obviously there is a long run benefit to keeping clients happy, etc, etc.) It is not hard to find examples online of buyers agents being told to ignore sub-3% listings, and the universal advice for people doing FSBO or flat fee listings is to still offer 3% tot he buyer.
I think it would be better if the system didn't have this conflict of interest in the first place. It sounds like your market is there already, I expect the rest of the country to eventually follow even if they have to be dragged kicking and screaming. (See Moerhl, Sitzer/Burnett)
On the positive side for agents, currently the best and worst buyer's agents are forced to charge essentially the same price. Breaking up the current model would in theory allow some differentiation. The best agents can offer more services that buyer's may want. Experienced buyers who need less help can go to an agent who charges less, etc.
Reading what a mess real estate is in the US I'm now very happy with buying here in Scandinavia. I for some reason keep getting amazed at the many areas people are allowed to be screwed over while there is also the crazy litigations going on for even seemingly tiny things. So confusing.
>One whistleblower tells of how the company uses the surveillance advertising industry to locate elderly people who've broken a hip: "a 60-day countdown to death — and, possibly, a deal."
This statement right here is truly disgusting and real. It doesn't just apply exploitive contracts either. In the case where the victim is deemed incompetent by the government, this is how families have them die. You want to talk about socialist death panels? Family members with power of attorney will turn down surgery knowing full well its not only a death sentence, it's excruciatingly painful the whole time. People show more mercy to their pets.
Surgery for a broken hip in an elderly patient may not do much to aid survival, depending on the patient's situation. Managing pain may be more humane than a surgery; especially if the patient is not of sound mind and may be unable to participate in rehabilitation to make use of their repaired or replaced hip. Of course, you're not allowed to request euthenasia for your relatives like you are for your pets, so it's harder to show the same type of mercy.
This is just barely scratching the surface of the surveillance society that our own tech industry has enthusiastically embraced, at every opportunity.
Even from the very first alpha prototype or placeholder Web site we create, we almost always throw in third-party "analytics". Haven't even launched MVP, and already selling out out the privacy of our visitors.
Reminds me of recently reading an opinion about how thrifting has been ruined by the upper middle class. The person expressed how thrifting is a necessary need when growing up poor and how the trend of thrifting in popularity among middle class has reduced the quantity of quality items to basically none. Quality of life I believe is getting worse for a lot of people regardless of how long we can force people to stay alive with medical means.
If anything, thrifting is about the most democratized activity there is. The bad that I see in thrifting is resellers who dedicate their whole life to combing thrift stores, estate sales and garage sales, finding items with a lot of resale value so they can hock them on EBay or in their own boutiques.
There's another legitimized scam involving foreclosures, pre-foreclosures, and outright theft: adverse possession where a 3rd-party pay some back taxes and gets the property for a song.
In some municipalities, adverse possession can be used without paying back taxes to squat and legally transfer a portion of another title to a person occupying that area.
A "contract" where one party is clearly not of "sound mind" is supposed to be null and void according to basic principles of contract law[0]. Tricking an elderly person with dementia or a mentally handicapped person into selling their house for half of its fair market value is reasonably characterized as "theft" or "attempted theft".
The fact that a company is able to get away with stealing homes from elderly people who have dementia without these contracts being quickly voided as obviously fraudulent is all the evidence you need that the legal system is currently badly broken. These are not hard cases for a judge or a juror to consider.
> "Propublica reveals homeowners with advanced dementia who signed their shaky signatures to transfer their homes for a fraction of their market value. They show how Homevestor targets neighborhoods struck by hurricanes, or whose owners are recently divorced, or sick. One whistleblower tells of how the company uses the surveillance advertising industry to locate elderly people who've broken a hip: "a 60-day countdown to death — and, possibly, a deal.""
Indeed, they entered into the contract of their own volition.
There is a nuclear waste disposal site next to aboriginal villages on Orchid Island off the coast of Taiwan because someone handed a contract to a Chinese-illiterate person and said, "sign this and we will build a cannery and help your local economy, trust us."
What do you call volition without symmetrical information? What happens when other people's livelihoods rely on your volition? Should vulnerable people deserve additional protections?
Your comment suggests that _anyone_ has volition enough to decide whether to sign these contracts or not, and I don't see how that's the case here.
No contract has ever been signed with perfectly symmetrical information. So if that's the standard then no human being has ever had volition.
If you mean there's some maximum acceptable threshold of asymmetrical information then the obvious rejoinder is who gets to decide what that threshold is?
(And, philosophically, how is that decided when any possible deciders, or combination of deciders, are themselves asymmetrically informed?)
They're talking about buying houses from people who are suffering, bombarding them with advertising, and finally people who lack the mental capacity to know what they signed (the provided example in the blog, but there are far more in the original propublica article, is an elderly man who was incapable of writing their own name or naming the month of the year).
But even setting that aside, I'm sure you're also absolutely fine with every "Terms and Conditions" you sign up to every time you create a free account online. So if as parodied in the South Park episode, Apple shows up to your house and insists you join their Human Centipad because it was right there in the terms and conditions you signed up to when buying an iPhone, you will happily have your mouth sown to someone else's backside because you agreed to a contract.
If there's enough fine print to require 3+ hours of reading for someone with high-schools level comprehension... then it can easily hide exploitive terms.
For seniors with dwindling mental capacity the situation is even more dire.
If you haven't understood (or even read) what they are telling you to sign you shouldn't sign. What you can't do is sign and then complain about what you signed. That's ridiculous, and the courts agree.
I'm pleased to report that the courts don't agree here in Australia. I was taught this story at university - apologies in advance if I've butchered some of the details.
As I remember it, there was a famous case decades ago where a bank manager visited the home of an elderly Polish couple. The couple had a mortgage with the bank, and the bank wanted to renegotiate the terms of their mortgage. Only the wife was home, and she barely spoke any English. She understood that the man in the suit from the bank wanted them to sign some paperwork, so she did. As a co-signatory of the mortgage, her signature was enough.
The couple eventually lost their home as a result, and the case went through the courts. Eventually the high court (equivalent of the supreme court in the USA) sided with the couple. They said that because the bank has more money and skill, they have more power in a negotiation like this. As a result, they bear proportionately more responsibility during contract negotiations. In this case, it was their responsibility as the powerful party to make sure the borrowers actually understood the terms they were signing.
We basically only have 6 banks in Australia because of things like this. Its very difficult and expensive to open a new bank in australia because of regulatory requirements. But my impression is that the banks here are extremely careful when it comes to interacting with unsophisticated investors. They (reasonably) assume the courts will rule against them if they do anything that doesn't pass the pub test.
(I am not a lawyer, this is not legal advice, etc.)
Contracts signed by mentally incompetent people are generally invalid. So this article isn't about that. Therefore, when the article says the courts accept the contracts as valid they can't be talking about the contracts signed by the infirm, but the article conflates both things maliciously.
I would suggest that you read the ProPublica article that is the source of the claim, which details a years-long legal battle that then ensued, before you continue.
It's not as cut and dry as you would like it to be. The following is literally about a "contract signed by the infirm":
>After David learned of the contract, he explained to Evans that his mother had dementia and tried to cancel the sale. Instead of walking away, Evans dug in, recording a notice on the property’s title that essentially prevented a sale to anyone else, which forced the Casanova family into a years-long battle to keep the home. Along the way, Evans disputed that Casanova showed signs of impairment during their interactions.
Not disputing this is fucked up shit, but it's unfortunate there's not a super clear explanation of where the legal system is failing here.
In general, it seems like a huge problem that people who probably are not capable of signing contracts can in fact sign them and have no real recourse for dealing with it. Seems like a good spot for a safety net.
There is a very long history of courts having people declared mentally incompetent to enable all sorts of abuse. Being cautious in cases like this is entirely reasonable, even when it's painful.
These scams prey upon seniors who are legally able to enter contracts but do not have the mental state to know what they are doing. Many of them are too scared or embarrassed to get help afterward as they fear they’ll be a bother or have what’s left taken away.
The lesson here is to marry someone much younger so you have someone to take care of you in your twilight years. Also good to have lots of kids and raise them right. Statistically at least one of them will be able to take care of you.
The buyer has the signature on paper and can proceed with taking the house.
The person who just sold their house _could_ contest it in court... except that they're not mentally competent so by definition they won't be able to mount a defense (i.e., realize that they just got scammed, hire a lawyer, put together a strategy, etc, etc). Brilliant!
If the elderly, mentally incompetent person has _someone_else_ in their life who notices this early and jumps in to clock a lot of hours to stop this from happening, then sure - everything will be fine.
The linked examples literally contain cases where the signer had diagnosed dementia or was tricked in an extremely dubious way (e.g “oh this is the exact same contract as last time just sign it”). And the contracts were upheld.
Idk if it warrants a story beyond “existing laws not being upheld in some cases”, meaning I don’t know how much these cases apply to the whole market or most courts, but it looks like there are a fair number of seriously messed up contract scams getting through in this industry.
The buyers do not approach those who have been legally deemed incompetent. As you say, such a sale would not be valid. But then again, can the isolated mentally incompetent even bring such cases to court? Vulnerable people who break a hip and can't afford surgery also don't deserve to lose their homes, especially not at a fraction of market value. There are clear gaps in the system which these buyers are exploiting and which you are repeatedly and willfully excusing. There's a chapter in the Bible about this type of behavior involving whips, overturned tables and an angry Jesus.
The article linked in the post contains several separate stories, including ones where the victim was seemingly given a separate contract to sign than the one they had originally read (or was told, under pressure, that a contract was different from what it actually contained).
The law has a concept for that: deed or title theft. "Stealing" is the appropriate colloquial descriptor.
Your needlessly ridged, hyper literal view of the world is going to be problematic eventually. (lol ask me how I know. )
Making an unfair offer to someone, after lying and/or gaslighting them when they're desperate or vulnerable, and THEN working incredibly hard to prevent them from undoing or recovering from a mistake. Might not meet your strict definition of stealing (still possibly fraud which would count as theft), it's clearly deep into the ethics of stealing.
Which is the authors point.
The thesis isn't a legal one "these people have committed the crime of theft". It's an ethical one, what these people are doing is equivalent to stealing; and a just society would prevent them from getting away with this asshattery.
The revolutionary film Soy Cuba also features this completely bogus line of thinking. The farmer sells over his land because he's broke then goes insane when he's evicted by the "mean capitalist" to whom he sold the farm. Somehow this forms the basis for the revolutionary spirit. People completely miss this. They just see evil capitalists under every stone.
they see evil capitalists under every stone because under a amoral economic system and a high enough number of “capitalists” resorting to mischievous ways to turn a buck that’s a precautionary principle
I hate to respond to arguments made in bad faith, but this is so ignorant that I simply have to.
If you read the article, and the excellent primary reporting it links to, you'll see that these companies are swindling people for significantly less than they would get from the open market. These people could hire a realtor and retain 95% of the value of their home. However, scams like "We buy ugly houses" blanket areas in advertisements so these folks never even get to find their market value - instead, selling for 50% or less of it. They're intentionally targeting folks who are least-likely or least-capable of protecting themselves with due diligence.
I've witnessed this myself. An elderly man under full-time care, in another state, inherited a property in my neighborhood. A "franchisee" of one of these places got him to sign over the "right to buy" for a fraction of what it would have sold for in a single day on zillow or similar. I was interested in buying it, but I didn't want to end up owning something that way, so I reached out to the man directly to link him to the (much higher) estimated value.
I never received a response from him: just from a "caretaker" who, I imagine, was being enriched somehow by the deal. I doubt the actual owner was ever informed.
It's incredibly predatory and there's a whole industry of "how to" get into it (it being "wholesaling," or unregulated real estate brokerage):
There's a libertarian idealization of predatory behavior. Apparently, when we don't restrain predators they get better and better, and more and more people become predators, and that's how we build civilization. Also those who don't become predators are getting what they deserve.
I am not a libertarian FYI. The question is not whether predatory businesses are good or bad, the question is, so long as their advertising is not deceptive, who do you or the government think you are to take options away from people and profits from business owners? Everything from junkfoods to lotteries are "predatory" because poor people who can do better choose them by this logic.
I am simply challenging you to educate people or invent a competition that is better and can advertise better. What you call predatory is a fair business practice given the responsibility of spending your money after being well informed is the consumer's responsibility while the business simply needs to not deceive or coerce consumers.
No, that's such a strawman. If they defrauded people lock them up. You very well know that is not what this discussion is about. And you dare suggest it is I who argued in bad faith!
How are they defrauding and scamming if they're honest? You made your counter-argument about something else so you don't have to address my argument. Bad faith.
> These people could hire a realtor and retain 95% of the value of their home.
And it would take longer. If my parents house was dilapidated and I had moved away years ago, I would do something like this not to deal with the hassle.
If I had to relocate quickly and didn’t want to sink money into a mortgage waiting for a house to sell, I might use something like OpenDoor knowing I could get more if I made the house ready for sale and use an agent.
I recently sold our old house without a realtor. It's the 5th house I've sold, the first one where I did FSBO, and it was the fastest to close.
If you presented the same people with: I can get you $150k today or I can get you $300k in 45 days, it's pretty ridiculous to suggest that any reasonable person would choose the former. There are plenty of means to get short-term loans of tens of thousands of dollars, as a homeowner, without setting fire to half the value of your largest asset when you're 65 or older.
Wth are you talking about? That's capitalism! Everything is worth what people are willing to pay for it. If you have a house that can sell for 300k but you sell for the first person that comes along for 200k whose fault is that?
You people blame these companies instead of blaming the reason people are ignorant. It's their wealth to protect or squander. Is lottery predatory, I bet you think so, payday loans? Car title loans? Casinos? Welcome to capitalism! People lose money because of their ignorance all the time.
I will give you a personal example since you gave me one. Many moons ago, I needed money for an emergency and took out pay day loans, they asked for only basic info and they were fast. i am sure banks would haggle you and give you a better loan anyways but I needed it fast and lost a lot of money because if it. And guess what? i am grateful for those companies that people like you are trying to shut down.
If you think your peers are ignorant then educate them!
I will give you another example, I sold a car I paid in total 10k+ on for a few hundred dollars from a "we buy junk cars" company, just the metal alone could have gotten me more money but I just needed it gone ASAP and I am so glad I did that.
You wanna take away my choices to stoke your freaking ego about how nice and caring of a person you are? Go do that elsewhere! Leave my freedom to make bad decisions alone. Neither you nor the government are my fucking nanny!
If I had a house that needs to close fast even at a huge loss I wanna find the first company I see advertised on a billboard or google results and get liquidity immediately! My wealth. mine! Period.
It feels good I bet to pretend to be the savior of the uneducated poor from the evil greedy corporations, but in my perspective you are the virtue signaling hero wannabe's taking what little freedom we have away.
Millions of americans love predatory businesses, this is a democracy not a technocracy or meritocracy, which means we the people get to have whatever shitty situations we want and your role to affect change is to communicate and engage in debates (I wonder how many won't even participate in this thread seeing me downvoted to max lol) not in silly outrage and virtue signaling, so you can change our minds (and I give you credit for at least replying and trying to do just that).
I don't like deceptive businesses, I just want predatory ones for when I want to be preyed upon. If they promised the best prices that would be a different story but their only claim is that they will give you cash for your crappy house.
It is amazing how many red tapes and regulations and bullshit I have to jump through just trying to exist in this supposedly free society. please stop making things shitter so you can feel like you helped people that aren't asking for your help.
I don't really know what to do about it. How can you ensure people are educated enough to know that a discount buyer is a buyer who will under pay for your house? I guess you legislate away discount buyers completely?
In Canada, they have regulated severely the amount of interest pay day loan companies can charge. This has led to a shrinkage in the number of pay day loan companies. So I guess some similar type of consumer protection laws could be enacted in this space.