[Vision2020] Why Shakespears's original suggestion needs to be modified

[Art Deco]

Shakespeare said:  "First, we kill all the lawyers."

The modern version is:  "First, we kill all the lawyers, real estate developers, brokers/salespersons, and packaging engineers

The article below shows one of the reasons such feelings are expressed.


Wayne A. Fox
1009 Karen Lane
PO Box 9421
Moscow, ID  83843

waf at moscow.com
208 882-7975



_______________________________________________________
The latest real estate rip-off?
By Les Christie, staff writerAugust 23, 2010: 3:21 PM ET 




NEW YORK (CNNMoney.com) -- Would you be willing to pay the original builder a fee when you resell your home? That's an obligation some developers are trying to slap on homeowners in their communities. 

Many condo and townhouse dwellers are already familiar with the "flip tax," more formally known as a resale fee. Typically calculated as a percentage of the sale price, it's a fee due to the condo association or community when an owner sells. These charges fund common-area maintenance or provide a boost to reserve funds, which benefits the association's homeowners.

But in some new developments, homebuilders are including in contracts a 1% fee to be paid to them every time the house is sold -- for 99 years. And the money doesn't go for improvements or upkeep: It's just money in the builders' pockets.

That has the real estate industry and consumer protection groups up in arms.

"It's of no benefit to consumers," said Kathleen Day, of the Center for Responsible Lending. "It's another innovative way to price gouge. Every extra dollar they suck out of people's wallets takes away from other spending. It's not good for the economy."

The issue has attracted the attention of Washington, where Rep. Brad Sherman, D-Calif., is leading a charge against the fees. "Consumers are not in a position to deal with another level of complexity, one that pits plain vanilla homes against ones that come with fees," he said. 

5 most affordable cities to buy a home
Freehold Capital Partners, the New York-based financial company that is developing the program, claims it has already signed up thousands of developers nationwide, representing hundreds of billions of dollars of development.

The company's plan is to monetize that future income -- essentially allowing developers to get paid now rather than later. To do that, Freehold would bundle together the estimated income from the future fees and sell that package to investors. It claims this new "asset" would be worth about 5% of the original home prices.

One company that is working with Freehold is Thieman Enterprises, a developer based in Ohio. "I think it's a fantastic program," said owner Ted Thieman. "I can get my development going again."

He said he needs the upfront cash to fund the building of infrastructure -- roads, sewers and other essentials. Working with Freehold to sell the fee package on to investors would potentially give him enough cash to get projects going and land construction loans more easily. 

Ohio, though, has banned the practice. Thieman thinks that removing this potential funding source will discourage development. He said he will relocate one of his development plans to West Virginia, where he has acquired land. He's disappointed for his home state. 

"We can bring billions into Ohio and jump-start the economy," he said. 

A Utah builder, Development Associates, initiated a similar program several years ago in order to recover some of the up-front costs of its developments. But after complaints from homebuyers, who said they were unaware of the fees, the company withdrew them. 

-------------- next part --------------
An HTML attachment was scrubbed...
URL: http://mailman.fsr.com/pipermail/vision2020/attachments/20100824/6aa10d55/attachment.html