5 ms·

Incentivizing individual home ownership I get, but killing the home flipping market, I don’t. Personality, I don’t want to renovate an out of date home, I just

by rib3ye 4y ago

Incentivizing individual home ownership I get, but killing the home flipping market, I don’t. Personality, I don’t want to renovate an out of date home, I just want to move in and done with it. Taxing flippers to death doesn’t seem progressive to me.

_8j50 4y ago
That's the first argument I usually get as well. I am very much saying end flipping. I don't know what is progressive about that at all. But to be practical, perhaps loosening the profit tax based on how long you owned it makes sense. Perhaps 1% for every year owned? That way you can flip it, live in it 20 years and sell it with inflation adjusted 20% profit?
- jefftk 4y ago
  That's not what people usually mean by flipping, and doesn't address your parent's point. They want to be able to buy property in good condition, and flippers are providing a useful service of increasing the supply of housing good condition. (I would actually like us to deregulate housing construction past the point where flipping is no longer economic.)
  - _8j50 4y ago
    Sellers themselves would be incentivized to make their house in good condition to sell it at a profit. If all they do is renovate then that should be a service to the original seller. If your house is devalued by 20% when selling, you pay a renovator to fix it up and take 50% of profits so instead you only lose 10%. Like you said they provide a service, they could handle the sale as a real estate agent and get more pay as well. My suggestion just means the original owner will retain ownership until an actual person who wants to live in the house buys it.
    - jefftk 4y ago
      In your proposal the 'flipper' owns the house for 20 years, which is a completely different model and makes standard flipping uneconomical
      - _8j50 4y ago
        That wouldn't be flipping just a side-effect of ownership. Flippers should provide renovation/real-estate as a service with the original owner maintaining ownership until the sale to someone else.
        jefftk 4y ago
        > Flippers should provide renovation/real-estate as a service That's a general contractor, not a flipper. The key difference is who takes on the risk: if I hire a general contractor and they turn out to be not very good at their job, that's my problem.
        _8j50 4y ago
        Exactly, what I am suggesting is current flippers will guarantee a sale price to the seller, renovate and how much of the profit above the sale price they take is a matter of market/negotiation. They still take on the risk and work on multiple houses they just now have a seller pestering them to sell soon instead of hoard houses until price is high enough.
    - anamax 4y ago
      > Sellers themselves would be incentivized to make their house in good condition to sell it at a profit Many sellers don't want to do this. Consider someone who inherits their parents house, 1000 miles away. The house needs renovation. You want them to uproot their lives or find a "service provider" (1000 miles away) instead of just doing an "as is" sale to someone who will do the renovation and sell it. Sellers want out. There's no social benefit to making that more difficult.
      - _8j50 4y ago
        Flippers are selling for profit so they will not sell until the market is suitable that means an incentive to artificially raise prices because as you point out flippers don't just want out unlike residents.
        anamax 4y ago
        Many sellers can't afford to do a renovation and even if they can, they don't have the knowledge to do what the market wants. (They can't borrow without both equity and the ability to repay.) They also may not have the time. Many buyers aren't interested in doing a renovation, and most of the other things apply. People who renovate for a living do have those things. You seem to think that holding out for more money is no-cost - you're wrong. Flippers lose money if they're wrong about the market, so why are you so insistent that it's wrong for them to make money? Which reminds me, how long does someone have to own something for you to be okay with them selling?
        _8j50 4y ago
        I won't repeat what I said about flippers since I replied to multiple other comments but they would still exist but provide flipping/renovation as a service(see other comments). People can sell whenever they want, my restriction is the profit margin. I have no problem with that margin being more and more over time so long as that rate is nationally set to be uniform.
        4y ago

by rib3ye 4y ago

_8j50 4y ago

That's the first argument I usually get as well. I am very much saying end flipping. I don't know what is progressive about that at all. But to be practical, perhaps loosening the profit tax based on how long you owned it makes sense. Perhaps 1% for every year owned? That way you can flip it, live in it 20 years and sell it with inflation adjusted 20% profit?

jefftk 4y ago
That's not what people usually mean by flipping, and doesn't address your parent's point. They want to be able to buy property in good condition, and flippers are providing a useful service of increasing the supply of housing good condition. (I would actually like us to deregulate housing construction past the point where flipping is no longer economic.)
- _8j50 4y ago
  Sellers themselves would be incentivized to make their house in good condition to sell it at a profit. If all they do is renovate then that should be a service to the original seller. If your house is devalued by 20% when selling, you pay a renovator to fix it up and take 50% of profits so instead you only lose 10%. Like you said they provide a service, they could handle the sale as a real estate agent and get more pay as well. My suggestion just means the original owner will retain ownership until an actual person who wants to live in the house buys it.
  - jefftk 4y ago
    In your proposal the 'flipper' owns the house for 20 years, which is a completely different model and makes standard flipping uneconomical
    - _8j50 4y ago
      That wouldn't be flipping just a side-effect of ownership. Flippers should provide renovation/real-estate as a service with the original owner maintaining ownership until the sale to someone else.
      - jefftk 4y ago
        > Flippers should provide renovation/real-estate as a service That's a general contractor, not a flipper. The key difference is who takes on the risk: if I hire a general contractor and they turn out to be not very good at their job, that's my problem.
        _8j50 4y ago
        Exactly, what I am suggesting is current flippers will guarantee a sale price to the seller, renovate and how much of the profit above the sale price they take is a matter of market/negotiation. They still take on the risk and work on multiple houses they just now have a seller pestering them to sell soon instead of hoard houses until price is high enough.
  - anamax 4y ago
    > Sellers themselves would be incentivized to make their house in good condition to sell it at a profit Many sellers don't want to do this. Consider someone who inherits their parents house, 1000 miles away. The house needs renovation. You want them to uproot their lives or find a "service provider" (1000 miles away) instead of just doing an "as is" sale to someone who will do the renovation and sell it. Sellers want out. There's no social benefit to making that more difficult.
    - _8j50 4y ago
      Flippers are selling for profit so they will not sell until the market is suitable that means an incentive to artificially raise prices because as you point out flippers don't just want out unlike residents.
      - anamax 4y ago
        Many sellers can't afford to do a renovation and even if they can, they don't have the knowledge to do what the market wants. (They can't borrow without both equity and the ability to repay.) They also may not have the time. Many buyers aren't interested in doing a renovation, and most of the other things apply. People who renovate for a living do have those things. You seem to think that holding out for more money is no-cost - you're wrong. Flippers lose money if they're wrong about the market, so why are you so insistent that it's wrong for them to make money? Which reminds me, how long does someone have to own something for you to be okay with them selling?
        _8j50 4y ago
        I won't repeat what I said about flippers since I replied to multiple other comments but they would still exist but provide flipping/renovation as a service(see other comments). People can sell whenever they want, my restriction is the profit margin. I have no problem with that margin being more and more over time so long as that rate is nationally set to be uniform.
        4y ago