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scooter
Flash in the pan


Joined: 16 Aug 2008
Posts: 79
Location: houston

Developers aim to attach transfer fee to homes
PostPosted: Wed Mar 31, 2010 2:51 pm Reply with quoteBack to top

Story in today's Houston Chronicle...

http://www.chron.com/disp/stor.....37231.html
Quote:

Here's a new concept in real estate: buy a house and when you go to sell it years later, owe the original developer or builder 1 percent of the sales price.

Freehold Capital Partners, a company started in Texas, is selling developers across the country on a plan that would attach a private transfer fee to homes, allowing developers to profit for generations.

The fee, written into neighborhood restrictions, would encumber the property for 99 years and throw 1 percent of the sale price back to the developer —or his or her estate or another investor — and Freehold each time the home changes hands.

And they wonder why developers are thought of as one step below used-car salesmen?

This is a terrible idea. And I'm in the industry Confused Developers have as much right to an income stream from future sales as the landscaper, interior designer or remodeler who updates the house 20 years later. I guarantee this will lead to laws banning this practice.

Or how about this rider: If the sale is for less than the original price, the developer has to give back 1%. This is America after all; if someone has some upside gain, they should carry some downside risk.
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Crow
Cherry Bomb


Joined: 04 Nov 2008
Posts: 154
Location: U.S.A.

Re: Developers aim to attach transfer fee to homes
PostPosted: Wed Mar 31, 2010 3:20 pm Reply with quoteBack to top

scooter wrote:
Or how about this rider: If the sale is for less than the original price, the developer has to give back 1%. This is America after all; if someone has some upside gain, they should carry some downside risk.


Yup, I agree, this entire thing stinks, and it's obvious the developers think they should only profit, not share in the losses. Typical of entire industries that participated in various bubbles and scams that harmed the economy, then they belly up to the govt trough for a bailout. Capitalism when they're making money, Socialism when they're not. Corporate welfare, transfer fees, all should be banned. This kind of outrageous greed is destroying America. I would NEVER buy into a development that had a transfer fee.

I'm waiting to see how this company and developers will spin this to fool consumers into thinking it's good for them (for consumers). A mass of ignorant voters who only hear one side (lies) could very well support it or at the very least be apathetic, til it's too late.
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EmelioTextevez
Flash in the pan


Joined: 09 Dec 2009
Posts: 37

Developer Fees at Resale
PostPosted: Wed Mar 31, 2010 3:35 pm Reply with quoteBack to top

This is nothing new, although the 1% is high. This practice is already being done here in Houston. I know it is done in Riverstone, Telfair, and Sienna. I'm sure it is done in several other master plans as well.
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NewHomeDallas
Dyn-o-mite!


Joined: 05 Jan 2009
Posts: 404

Re: Developers aim to attach transfer fee to homes
PostPosted: Wed Mar 31, 2010 6:24 pm Reply with quoteBack to top

I can see the lawyers salivating now. If this becomes a widespread practice, how many salers down the road will convieniently forget to pay or tell the buyer about the fee and how many title companies will miss it?

This is like the 99 year leases on swimming pools at outragious fees in Florida. One major company sold condos at cost because of fees on the swimming pool, gym, and lake.

The courts declared some illegal and the practice lead to registration requirements in New York and New Jersey.
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TX Homebuilder
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Joined: 09 Feb 2009
Posts: 276
Location: Houston Metro

Not News To Builders or Realtors
PostPosted: Wed Mar 31, 2010 10:45 pm Reply with quoteBack to top

E.T. is correct... this is not news to anyone in the industry in Houston .... although it may be news to the Houston Chronicle. What's tomorrow headline H.C.? .... Man Lands on Moon.

Most, if not all, master planned communities have been doing this for years ... I agree 1% is high. It's usually $150 - $300.

Ho-Hum ... Next Subject...
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palmer
Dud?


Joined: 01 Apr 2010
Posts: 1

Re: Developers aim to attach transfer fee to homes
PostPosted: Thu Apr 01, 2010 1:03 am Reply with quoteBack to top

Are you sure you're not referring to transfer fees that go to the HOA upon a sale?
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Nelson
Dyn-o-mite!


Joined: 07 Nov 2008
Posts: 351
Location: Texas

Re: Developers aim to attach transfer fee to homes
PostPosted: Thu Apr 01, 2010 1:40 am Reply with quoteBack to top

They are correct, and it has nothing to do with the HOA.
This deal is being pitched to many builders and developers.
Record the provided document and collect the defined amount (1% in the deals I've seen) on every transfer from hereon.
Ideally, you then sell this right into a Wall Street securization and never look back.
The pitch to the homeowner is it reduces the developers cost by maybe $5 or $10k and the house is cheaper, And anyway the futeure buyers pay, not him.
It may be legal, but it is as slimy as the government running big deficits with the burden falling on future generations.
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TX Homebuilder
Dyn-o-mite!


Joined: 09 Feb 2009
Posts: 276
Location: Houston Metro

Developers Carry the HOAs
PostPosted: Thu Apr 01, 2010 2:09 am Reply with quoteBack to top

Apples vs Oranges. In most communities, and specifically in master planned communities, the developer is the ...at least for the first years. You cannot have a club house, pools, water parks, rec center, utilities, legal counsel, accountants and so on for a multi million dollar operation run with the HOA dues a of a couple hundred home owners. So, the developer subsidizes the HOA until the HOA is self supportive.

Transfer fees are a way to generate revenue to help offset the cost of subsidizing the HOA. Anything over ten years is ridiculous...and therein, in my opinion, is the issue.
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NewHomeDallas
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Joined: 05 Jan 2009
Posts: 404

Re: Developers aim to attach transfer fee to homes
PostPosted: Thu Apr 01, 2010 5:39 am Reply with quoteBack to top

I sure hope the sales people are disclosing this fee. And, if I were selling next to a community that had one and mine didn't, I would have a huge poster telling the buyers about it. And, I would have it in my "Dare to Compare."
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Crow
Cherry Bomb


Joined: 04 Nov 2008
Posts: 154
Location: U.S.A.

Re: Developers aim to attach transfer fee to homes
PostPosted: Thu Apr 01, 2010 4:26 pm Reply with quoteBack to top

I read about transfer fees in devleopments in CA during the early days of the housing bubble, but don't doubt it had been going on for a long time and in many places. If the fee is small, people are apt to dismiss it but that kind of apathy is what leads to little problems becoming big ones, such as insignificant fees becoming burdensome. People should pay attention and oppose these fees while they have the chance. They should not be placated by early promises of fees being insignificantly small as you know it won't stay small once it's law.
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