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equinox63, save your energy and just add him to your ignore list. I added him and few others recently and it's helped reduce a lot of the negative energy post from him and his ilks.
Many of the people negatively affected by these trends are black, although the folks making the profits are not necessarily white.
Capitalism tends to favor those who already have capital. So in specific scenarios, what happens may not be based on race. However, in the bigger picture, if one group is lacking capital they (as a group) will tend to come out on the short end of the stick.
Gentrification can cut across the spectrum. In my own family, we've had a number of grandparents, aunts, uncles, etc., who left houses that now sell for 20 times more. They'd lived there for decades, but when they passed none of us in the younger generation had the money or the time to fix them up or pay the property taxes. So they were acquired by others.
I'm not a big fan of title loans or more importantly... our weak laws at how they work that allow lenders to accumulate the borrowed amount so aggressively. They really are preying on the poor at that point.
I do think some people are quick to decree racism too much on every little issue, but anything that primarily adversely impacts poorer communities will disproportionately affect Black people when larger socio-economic disparities exist. I think one problem is sometimes the problem isn't directly racism, rather its people taking advantage of the poor in hard to deal with circumstances. When mixed the racial disparities caused by other racial problems, it disproportionately affects certain groups. The problem is when you discuss the direct causal relationships of each particular problem, it impacts what conclusions to draw and could downplay the problem for other poor people that aren't necessarily black. Yet, it seems conservative fan boys are very quick to forget the disproportionate effects caused by larger socioeconomic difference in society at large.
I agree with the no-sale philosophy as advice from the mayor. I also agree that people should seek representation from a realtor before moving forward.
However, be a little bit cautious. A company that buys and rehabs properties are not necessarily predatory from that alone. They are taking on real risks and often value-adding to the property and they have the capital to do that when local individuals may not.
One issue that happens and isn't discussed is there is a cost to selling a property. When you deal with properties sub-$80k (in current conditions) the cost of selling can actually be a sizeable amount of the final price. The reason some of these companies are successful is they are preventing the seller from having to put any money into the house, pay a realtor, etc.. So the face that a house sells for $65k, is valued at $80k, is rehabbed and sold for $150k outright isn't necessarily wrong in every situation. They are taking on risk and creating real value-added in their business dealings, but they are doing it so they can create some profit too.
The buyer is taking on alot of risk and creates a situation where the seller wastes no money fixing basic things when they likely have no capital to do that themselves. It also removes risk from the poorest person. The seller might otherwise have to put $10k to fix a few basic critical things (and I don't mean an upgrade renovation, but the basics to make the house livable and showable) and pay the realtor just to get that $80k. There might also be a real risk that there is an unknown $20k problem that won't be revealed until a $2000 repair is attempted. In a $200k home, the seller has more of an incentive to take on those costs to get full value. In turn the buyer is taking on risk to do that, so they must have an upside and/or the ability to do a major renovation to create more value.
What I would caution and perhaps public information campaigns would be valuable for is teaching people to resist short-term pressures, better time the market, and teach them to get companies to compete and encourage consults with seller realtor agent first to make better informed choices.
I also can't blame communities and cities for having local codes and enforcing them. There is clearly a problem when someone owns a home, but they no longer will have the funds to maintain into the future. That could hit retirees really and I'm not really sure what the answer is. Yet, long-term complete lack of maintenance on properties certainly affects the neighborhood as a whole.
What makes these situations so dicey is they are often occupied by people that can't afford a rental. Sitting on a $60k property they own outright for decades on a time can provide stability to people who have little current income. It's those old retirees that might not have the funds to create that situation for themselves elsewhere again that I worry about most. For some that $60k house is their life savings and might be the only thing that makes living on social security alone possible.
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,376 posts, read 8,617,689 times
Reputation: 16736
Quote:
Originally Posted by cwkimbro
I'm not a big fan of title loans or more importantly... our weak laws at how they work that allow lenders to accumulate the borrowed amount so aggressively. They really are preying on the poor at that point.
I do think some people are quick to decree racism too much on every little issue, but anything that primarily adversely impacts poorer communities will disproportionately affect Black people when larger socio-economic disparities exist. I think one problem is sometimes the problem isn't directly racism, rather its people taking advantage of the poor in hard to deal with circumstances. When mixed the racial disparities caused by other racial problems, it disproportionately affects certain groups. The problem is when you discuss the direct causal relationships of each particular problem, it impacts what conclusions to draw and could downplay the problem for other poor people that aren't necessarily black. Yet, it seems conservative fan boys are very quick to forget the disproportionate effects caused by larger socioeconomic difference in society at large.
I agree with the no-sale philosophy as advice from the mayor. I also agree that people should seek representation from a realtor before moving forward.
However, be a little bit cautious. A company that buys and rehabs properties are not necessarily predatory from that alone. They are taking on real risks and often value-adding to the property and they have the capital to do that when local individuals may not.
One issue that happens and isn't discussed is there is a cost to selling a property. When you deal with properties sub-$80k (in current conditions) the cost of selling can actually be a sizeable amount of the final price. The reason some of these companies are successful is they are preventing the seller from having to put any money into the house, pay a realtor, etc.. So the face that a house sells for $65k, is valued at $80k, is rehabbed and sold for $150k outright isn't necessarily wrong in every situation. They are taking on risk and creating real value-added in their business dealings, but they are doing it so they can create some profit too.
The buyer is taking on alot of risk and creates a situation where the seller wastes no money fixing basic things when they likely have no capital to do that themselves. It also removes risk from the poorest person. The seller might otherwise have to put $10k to fix a few basic critical things (and I don't mean an upgrade renovation, but the basics to make the house livable and showable) and pay the realtor just to get that $80k. There might also be a real risk that there is an unknown $20k problem that won't be revealed until a $2000 repair is attempted. In a $200k home, the seller has more of an incentive to take on those costs to get full value. In turn the buyer is taking on risk to do that, so they must have an upside and/or the ability to do a major renovation to create more value.
What I would caution and perhaps public information campaigns would be valuable for is teaching people to resist short-term pressures, better time the market, and teach them to get companies to compete and encourage consults with seller realtor agent first to make better informed choices.
I also can't blame communities and cities for having local codes and enforcing them. There is clearly a problem when someone owns a home, but they no longer will have the funds to maintain into the future. That could hit retirees really and I'm not really sure what the answer is. Yet, long-term complete lack of maintenance on properties certainly affects the neighborhood as a whole.
What makes these situations so dicey is they are often occupied by people that can't afford a rental. Sitting on a $60k property they own outright for decades on a time can provide stability to people who have little current income. It's those old retirees that might not have the funds to create that situation for themselves elsewhere again that I worry about most. For some that $60k house is their life savings and might be the only thing that makes living on social security alone possible.
Had to rep you for a great and what I felt was an objective post.
Many of the people negatively affected by these trends are black, although the folks making the profits are not necessarily white.
Capitalism tends to favor those who already have capital. So in specific scenarios, what happens may not be based on race. However, in the bigger picture, if one group is lacking capital they (as a group) will tend to come out on the short end of the stick.
Gentrification can cut across the spectrum. In my own family, we've had a number of grandparents, aunts, uncles, etc., who left houses that now sell for 20 times more. They'd lived there for decades, but when they passed none of us in the younger generation had the money or the time to fix them up or pay the property taxes. So they were acquired by others.
Noted.
Capitalism and the free market indeed favor the individuals with capital. African Americans historically have encountered issues acquiring capital due directly to racism and still in 2020 are oftentimes obtaining mortgages with a higher interest rate relative to a non-Black person, even with all other factors being equal such as credit worthiness, level of education, etc.
When one consider that not only there is housing discrimination but also wage discrimination, still in 2020!
But, it will be 2021 in four months and still, there will be housing and wage discrimination.
The issues currently impacting African Americans are systemic, occurring over 400 years and multi-faceted.
So, with all that being said, what is the solution to gentrification?
Every neighborhood has a cycle - from the increase in demand for the neighborhood to equilibrium/stability to decline. There are some neighborhoods that have been in the equilibrium/stability phase for many many years. For this to occur, homeowners have enough capital to maintain the property - have the insurance deductible for handling any weather-related damage and have cash available for other maintenance issues such as replacing the galvanized plumbing, having the foundation repaired, repairing the eaves and other wooden structures of the house, repairing damaged brick or rotten wood etc.
In addition, the annual property taxes need to be paid in a timely fashion.
There need to be intercession either by the relatives of the aging African American homeowner or another entity that will ensure that the above-mentioned repairs are performed in a timely fashion and that annual property taxes are paid.
Other thought is the conversion of some of the deteriorating property into mixed use developments where there are a set number of housing for senior citizens, reduced rental rate apartments, etc. to prevent displacement of the current population.
Have they ever heard hiring a real estate agent or view there property value on Zillow. Wouldn’t it be much easier to provide basic education so they can profit and not just greedy investors.
Just wanted to make a comment or two about poor people who are selling older houses that may need a good bit of work.
First, most realtors that I know of work on a commission. They get a percentage of the total sale price IF/WHEN the house sells. The owner is not required to put up a dime unless or until the house sells. Then, whatever costs the owner does have will come from the total selling price of the property.
Second, if a house needs repairs that the owner may not have the money to fix before selling it, then the owner can simply list the house for sale in "As Is" condition. That means that the owner is not going to make any repairs or guarantee anything about the house that they are selling. It is up to the buyer to do whatever inspections he thinks necessary to decide how much to pay for the house because regardless what "deficiencies" are found by the inspection, the seller is not obligated to repair them under an "As Is" sale.
Third, if the house is in a neighborhood that has seen severe decline in property values due to deterioration of house conditions, it might even be better if the owner does NOT do any repairs to the house because the new owner may want to tear it down. In other words, they're basically just buying the lot, so why should repairs be done which will only increase the cost that the buyer will have to pay for the lot?
Don't know if this applies to the particular situation being discussed, but it seems that it might.
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,376 posts, read 8,617,689 times
Reputation: 16736
Quote:
Originally Posted by Chas863
Just wanted to make a comment or two about poor people who are selling older houses that may need a good bit of work.
First, most realtors that I know of work on a commission. They get a percentage of the total sale price IF/WHEN the house sells. The owner is not required to put up a dime unless or until the house sells. Then, whatever costs the owner does have will come from the total selling price of the property.
Second, if a house needs repairs that the owner may not have the money to fix before selling it, then the owner can simply list the house for sale in "As Is" condition. That means that the owner is not going to make any repairs or guarantee anything about the house that they are selling. It is up to the buyer to do whatever inspections he thinks necessary to decide how much to pay for the house because regardless what "deficiencies" are found by the inspection, the seller is not obligated to repair them under an "As Is" sale.
Third, if the house is in a neighborhood that has seen severe decline in property values due to deterioration of house conditions, it might even be better if the owner does NOT do any repairs to the house because the new owner may want to tear it down. In other words, they're basically just buying the lot, so why should repairs be done which will only increase the cost that the buyer will have to pay for the lot?
Don't know if this applies to the particular situation being discussed, but it seems that it might.
All very well if it is a cash buyer. If a lender is involved I don’t know if they will go for an as is sale. Who wants to make a loan unless it is a private lender and the house needs structural work like a roof.
All very well if it is a cash buyer. If a lender is involved I don’t know if they will go for an as is sale. Who wants to make a loan unless it is a private lender and the house needs structural work like a roof.
I've bought and sold some "as is" properties where financing was involved.
I think it just depends of whether the value is there.
All very well if it is a cash buyer. If a lender is involved I don’t know if they will go for an as is sale. Who wants to make a loan unless it is a private lender and the house needs structural work like a roof.
Cash is the way to go.
Private Lenders secondary but I've had clients go that route fairly frequently.
Conventional Loans are possible but its difficult and not worth it if we're talking about a home that needs serious repairs. Given the house will need repairs and most likely will not be a primary residence, they will typically require 20% of the loan amount as down payment as to show you have skin in the game and are capable of making the repairs, they 'want' you to fail is the reality. That way they collect your down payment, and a discounted house they can later resell for a profit.
FHA is also possible but only if you intend for the property to be your primary residence, and follows the same principals of Conventional Loans.
All will require that repairs do not exceed 70% of the ARV.
All may also be subject to releasing funds in increments after the initial closing while periodically inspecting the property to ensure that actual work is being done to the house and you (or your contractor) is not taking the funding to lollygag with.
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