5 ms·

It sounds to me like the solution is to introduce legislation where the seller receives the final closing price (minus fees and commissions), not the pre-close

by biot 11y ago

It sounds to me like the solution is to introduce legislation where the seller receives the final closing price (minus fees and commissions), not the pre-close sale price. Assign as many times as you want prior to closing the deal, but if that $2M house gets reassigned a few times and ultimately closes at $2.6M, that's what the seller should receive. Essentially, the sale isn't complete until the property is actually transferred. This would protect the interests of the seller and align the agents with their interests, something which is required to happen in theory but seems lacking in practice with rules easily skirted by an agent making laughable claims like "oh, I wasn't aware that I would be interested in having a financial stake in this property until an hour after the buyer accepted the offer".

sharemywin 11y ago
just don't sign a contract with an assignment clause.
- sokoloff 11y ago
  Why do you (as the seller) care if the contract is assigned? You agreed to sell the house for X dollars on Y date. You get X (minus commissions) on or before Y date and you're good. Whether the house is resold (or the contract assigned) 0 or N times isn't your concern. You took a price that you're happy with and got it. Whether another buyer was willing to pay a higher price 5 minutes, 5 days, 5 months, or 5 years later is not your concern, IMO. I bought both of my houses with an "or assigns" clause in the offer. In both cases, I expected to (and did) move into the house as my personal residence, but if a seller balked at the "or assigns" bit, I would have walked on the first house and not sure on the second house. Why? Because I may want to assign the contract to a trust, partnership or LLC, in addition to the freedom it gives me to assign to another buyer. The couple in the article were OK with selling their house for it to razed and a new structure built, but weren't OK with the new buyer selling the house to someone else?! That makes no sense to me...
  - biot 11y ago
    What's happening is that the house is not being resold. The sale isn't complete until the property is transferred to the new owner, who assumes the title. I explained this elsewhere [0]. If I were selling my place, I'd be happy to have you assign as many times as you want, whether it's to assign it to your holding company or to another seller if you're unable to complete on the deal. However, I would insist on receiving the completed sale price since that is the time at which the sale and transfer of the property happens; because I still own the property, it is still my concern. Upon taking ownership of the property, if you then wish to re-list the property on the market and try and get a better price that is no longer my concern. [0] https://news.ycombinator.com/item?id=11059602 https://news.ycombinator.com/item?id=11059602
    - sokoloff 11y ago
      I get that the legal ownership is not literally changing hands multiple times (mostly because of the comical inefficiency of the real estate market and the effect of transfer taxes). As a seller, you agreed to price X. As a buyer, I contracted with you (the hypothetical you) to ensure you are paid X. I then do some legwork and find another buyer for X+P, and assign the contract to them. At closing, you get ~X; I get ~P; new buyer gets the property, and a bunch of do-littles in the process take a bunch of fees, expenses, taxes, and commissions off the table. I don't see the problem for you or I. You do and I acknowledge that. You can feel free to insist (in the contract) that, under those circumstances, you are due X+P, and what you'll find is that the subset of the buyers who wish to assign the contract won't deal with you (you've taken their economic value add away), but you'll eventually sell the house. It might be for X - L, where L is the loss you take by excluding that subset of buyers, as remember that X was the highest offer you were able to find otherwise and that was from a buyer that you've now excluded. But at least you can feel good that you got the "full value" of the transaction.
      - biot 11y ago
        When P is $1M, as the article describes, I (putting myself in the seller's shoes) am not getting market value for the property; I'm only getting about 80% of market value. That's the problem I see and it really has nothing to do with you or your ability to make P on the property. The selling agent should have worked harder to capture at least a portion of that $1M, particularly since that $1M came at little to no risk for the chain of assigners. Additionally it may be the case that the buyer's agent purposely withheld a buyer, hoping to low-ball the seller, assign the purchase to themselves, and then sell the property for an offer that they could have brought to the seller in the first place. The only reason this is possible is because the market is inefficient and I'd like to see more efficiency introduced into the market, whether that comes through legislation or via technical means, so that people aren't leaving $1M on the table to be scooped up by others. In reality that $5.2M property which ultimately closed at $6.2M might have sold for $5.7M, earning the family another $500K and saving the real buyer $500K.

by biot 11y ago

sharemywin 11y ago

just don't sign a contract with an assignment clause.

sokoloff 11y ago
Why do you (as the seller) care if the contract is assigned? You agreed to sell the house for X dollars on Y date. You get X (minus commissions) on or before Y date and you're good. Whether the house is resold (or the contract assigned) 0 or N times isn't your concern. You took a price that you're happy with and got it. Whether another buyer was willing to pay a higher price 5 minutes, 5 days, 5 months, or 5 years later is not your concern, IMO. I bought both of my houses with an "or assigns" clause in the offer. In both cases, I expected to (and did) move into the house as my personal residence, but if a seller balked at the "or assigns" bit, I would have walked on the first house and not sure on the second house. Why? Because I may want to assign the contract to a trust, partnership or LLC, in addition to the freedom it gives me to assign to another buyer. The couple in the article were OK with selling their house for it to razed and a new structure built, but weren't OK with the new buyer selling the house to someone else?! That makes no sense to me...
- biot 11y ago
  What's happening is that the house is not being resold. The sale isn't complete until the property is transferred to the new owner, who assumes the title. I explained this elsewhere [0]. If I were selling my place, I'd be happy to have you assign as many times as you want, whether it's to assign it to your holding company or to another seller if you're unable to complete on the deal. However, I would insist on receiving the completed sale price since that is the time at which the sale and transfer of the property happens; because I still own the property, it is still my concern. Upon taking ownership of the property, if you then wish to re-list the property on the market and try and get a better price that is no longer my concern. [0] https://news.ycombinator.com/item?id=11059602 https://news.ycombinator.com/item?id=11059602
  - sokoloff 11y ago
    I get that the legal ownership is not literally changing hands multiple times (mostly because of the comical inefficiency of the real estate market and the effect of transfer taxes). As a seller, you agreed to price X. As a buyer, I contracted with you (the hypothetical you) to ensure you are paid X. I then do some legwork and find another buyer for X+P, and assign the contract to them. At closing, you get ~X; I get ~P; new buyer gets the property, and a bunch of do-littles in the process take a bunch of fees, expenses, taxes, and commissions off the table. I don't see the problem for you or I. You do and I acknowledge that. You can feel free to insist (in the contract) that, under those circumstances, you are due X+P, and what you'll find is that the subset of the buyers who wish to assign the contract won't deal with you (you've taken their economic value add away), but you'll eventually sell the house. It might be for X - L, where L is the loss you take by excluding that subset of buyers, as remember that X was the highest offer you were able to find otherwise and that was from a buyer that you've now excluded. But at least you can feel good that you got the "full value" of the transaction.
    - biot 11y ago
      When P is $1M, as the article describes, I (putting myself in the seller's shoes) am not getting market value for the property; I'm only getting about 80% of market value. That's the problem I see and it really has nothing to do with you or your ability to make P on the property. The selling agent should have worked harder to capture at least a portion of that $1M, particularly since that $1M came at little to no risk for the chain of assigners. Additionally it may be the case that the buyer's agent purposely withheld a buyer, hoping to low-ball the seller, assign the purchase to themselves, and then sell the property for an offer that they could have brought to the seller in the first place. The only reason this is possible is because the market is inefficient and I'd like to see more efficiency introduced into the market, whether that comes through legislation or via technical means, so that people aren't leaving $1M on the table to be scooped up by others. In reality that $5.2M property which ultimately closed at $6.2M might have sold for $5.7M, earning the family another $500K and saving the real buyer $500K.