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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 exp

by 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.
  - sokoloff 11y ago
    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. If the buyer's agent is acting on behalf of the buyer, they were under no obligation (legal certainly, nor ethical or moral, IMO) to bring that higher offer to the seller. (Real estate law and practices are hyper local; around here [MA, USA], a "buyer's agent" owes a fiduciary obligation only to the buyer and is allowed (and in fact would be required) to not disclose the presence of this other potential offer as by the "undivided loyalty" clause, they are "prohibited from advancing any interests adverse to the principal's [read: buyer's] interest or conducting the principal's business in such a way as to benefit a customer, a subagent, the agent or any other party to the detriment of the principal's interest." In other areas, that might not be the case.) In that case, it is the listing/selling agent's responsibility to advise their client (the seller) that the offer is too low and they should wait longer.
buzzdenver 11y ago
That would not work. Suppose Bob offers $1M for your house and you accept. 10 minutes later Charlie comes along and offers $1.2M. Why would Bob get out of that contract, when he knows that he can resell it to Charlie and make $200k minus the transfer tax (assuming you cannot reassign the contract). The only difference between allowing or disallowing reassignment is how many times the transfer tax is paid. Or if you're a sentimental seller and actually care about who buys your home.

by biot 11y ago

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.
- sokoloff 11y ago
  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. If the buyer's agent is acting on behalf of the buyer, they were under no obligation (legal certainly, nor ethical or moral, IMO) to bring that higher offer to the seller. (Real estate law and practices are hyper local; around here [MA, USA], a "buyer's agent" owes a fiduciary obligation only to the buyer and is allowed (and in fact would be required) to not disclose the presence of this other potential offer as by the "undivided loyalty" clause, they are "prohibited from advancing any interests adverse to the principal's [read: buyer's] interest or conducting the principal's business in such a way as to benefit a customer, a subagent, the agent or any other party to the detriment of the principal's interest." In other areas, that might not be the case.) In that case, it is the listing/selling agent's responsibility to advise their client (the seller) that the offer is too low and they should wait longer.

buzzdenver 11y ago

That would not work. Suppose Bob offers $1M for your house and you accept. 10 minutes later Charlie comes along and offers $1.2M. Why would Bob get out of that contract, when he knows that he can resell it to Charlie and make $200k minus the transfer tax (assuming you cannot reassign the contract). The only difference between allowing or disallowing reassignment is how many times the transfer tax is paid. Or if you're a sentimental seller and actually care about who buys your home.