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Home sellers beware: Fee might be hidden
By Jennifer Hiller - Express-News
Comments
R Thomas8:29 AM
The anger about a completely voluntary economic decision is hysterical. You people act as if Freehold Capital has taken over the world and you are all being forced to pay a 1% fee to some greedy entity against your will. That scenario sounds more like what the current administration is doing to you. Yet, you all seem to be fine with that! I guess as long as they force you to pay for something and take it incrementally, so you don't notice it, you are fine. The politicians are bilking hundreds of thousands of dollars from American families. It is actually a fairly sad commentary, that everyone has been so "snowed" by the politicians that all "fees" they "impose" are for your on good, and you believe it! As for "anonymous", it is obvious you have never been someone who has tried to create something. It begins in phases and you evolve. Not all phases of the evolution is exactly right. Are you telling me that Apple computers have always been awesome? And as for "nuwayhomes", I think you are probably hitting the nail on the head! But from reading the majority of posts, you are wasting your breath.
Wait...let me get this right. A 1% fee will kill the real estate market, but a 6% fee paid to realtors for doing squat won't. I'll bet the first response was written by a realtor and that a realtor initiated this article.
The claim that these fees are paying for infrastructure is simply the newest spin on Freehold's story. The fee has nothing to do with paying for infrastructure. Freehold (or its predecessor) originally tried to present this as a residual income scheme for homeowners. The HOA industry liked the scam so much that legislation was adopted to create an enabling act to permit such a fee to be imposed and paid to the government, HOA, HOA management company, or a 501(c)(3) organization. They then touted the legislation as putting an end to the scam. It didn't. It actually authorizes it. These fees can be imposed long after you purchase your property - especially if you live in a developer controlled subdivision. The developer has unilateral control of the restrictive covenants and simply amends them. Alternatively, an HOA corporation can be used to impose a transfer fee on your property with the loathed manufactured "consent" of HOAs. Freehold simply changed its target market. Common law would not permit such a covenant to run with the land. Freehold is blowing smoke to try to come up with a marketing strategy. The "charities" referred to in the article are not charities at all. Instead they are typically developer- controlled entities and the disposition of money received by these entities deserves IRS scrutiny. They may be created as "nonprofits" but they are quite profitable for the directors and officers and affiliated vendors. Even if your property falls to half its value, the transfer fee is extracted from the sale. If you want to force elimination of transfer fees, use the weapon being used against you. Create a "foreclosure poison pill" by limiting the fee to be each first sale after a foreclosure. Set the fee to a high percentage or a fixed $ amount. Make the fee payable to a legitimate charity. The fee is not paid when you sell, only when a lender forecloses and tries to resale.
...Famous Last Words...10:27 PM
Madoff-esque ..."Selling transfer fee rights to investors would mean a developer could add more amenities to a neighborhood [YEA RIGHT] or sell for less than the competition[YEA RIGHT] — or both. “It just makes sense[TO DUMMIES],†Blume said. “You can do more for the project and have less debt[SURE SURE, NOW STFU PLEASE].â€
If allowed and implemented these financial instruments will be securitized and traded just like the derivitives that almost brought the world economy to it's knees (and may yet). This is a scam.
Good article. Good timing. We plan to buy a house early next year, when our current lease ends. I've added "transfer fee" to my list of things a house MUST NOT HAVE. I've been looking at realtor.com for some time and have decided an older home is more in line with what I want anyway. More square footage for less $$$ and generally less restrictive HOA's, which are pretty much evil incarnate, IMO.
...Famous Last Words...9:38 PM
boo! get this crap proposal outta here!
Czer74, you have a great deal to learn about Authors. Try being one. Royalties are the profit ALL authors get. If you haven't, your using a vanity publisher.
What idiots, it does not surprise me that this corrupt company started in Texas. Perry, the gov, is probably going to receive some of these monies. This fee is nothing less than criminal.
OK, so this is supposed to allow builders to lower the initial selling price of a new home? So that first time buyers can afford to buy a home? You know, if a home is to expensive, it either sits unsold, is rented out, or the price is reduced to a level that people can afford. Comparing this to authors selling books? That was kind of odd, unless an author is very well known, with a following, they are lucky if they can just sell their book outright to a publisher for a fixed amount. Royalty's written into the contract is something authors aspire toward, not something they get right off the bat. So is the artistic part of cultivating and building a home directed toward high end unique homes? Although most first time home buyers don't buy homes like that, so maybe this is talking about KB homes. My friends four year old seems rather capable of drawing boxes, that look rather similar to many track homes. Nothing against this, a box is a very cost effective manner of building a home, but is it really artistic?
Maybe we should start a FEA movement (Fee'd Enough Already)..People are getting tired of hidden taxes, I mean fees popping up everywhere. These people will never stop until every American has been nickel and dimed to death. We don't need you to come up with shady ways of getting your prices down to increase sales. IF I CAN'T AFFORD TO BUY YOUR HOME, I SHOULDN'T BUY YOUR HOME!!! IF YOU CAN'T SELL HOMES, BECAUSE NOBODY WILL BUY THEM AT YOUR PRICE.......LOWER YOUR FRIGGIN PRICE OR GO OUT OF BUSINESS!!!!!
Jeez, folks...whatever happened to English? "Sale" is an adverb, meaning to offer for purchase at a set price ("For SALE"); or a place where one can buy items ("Garage SALE"). "Sell" is a verb, meaning to commit to the act of offering something for a set price ("to SELL a car"). GET IT RIGHT! I bought the item for SALE at a Garage SALE...the previous owner wanted to SELL it to me.
There's abuse of the Concept of the "Freedom of Choice" Sorry Mark B, I couldn't disagree with you more. You are correct that any homebuyer has the choice to not buy if a transfer fee is included in the deal. What you seem to have missed is the impact of the majority of developers joining Freehold's movement thereby restricting the choices for buyers in any given market location. Next, have you bought a home lately? Have you observed even 10% of the purchases of homes in this area? How many buyers have the savvy that you have to carefully read the ton of paper that's always generated in these transactions? Then consider the legalize that's used in describing everyone's obligations and risks. Do you honestly believe the average buyer will understand all that is described therein? No...I strongly disagree with anyone that believes this practice should be permitted. Freehold's concept should not only be barred by law, but those who have thought of this abusive practice need to go back to school and learn why you just need to respect your fellow citizen. Afterall, they are something more that fodder or jerks to be abused so that someone can make money off of their weaknesses.
Well it started in Austin. Austin is weird. What does anybody expect. God forbid. This is the dumbest thing I've ever heard of, unless you are a developer. "Creative process". BUNK!!! Only in Austin.
This is my last response to all of this "scam artist", "capitalist pig", "snake oil" nonsense. The developer will have no choice but to sale for less because there is a 1% fee from future sale attached to the property. The free market will most assuredly make sure that happens. If the developer is competing against other "comparable" developments that don't have this fee, don't you think that at the end of the day, you would pay less for that property?! If you don't like it and you have considered ALL factors within a purchase decision, DO NOT buy the property. It is your choice. THIS IS NOT A TAX being imposed on you.
Does anyone, other than Freehold, actually BELIEVE the developers will sell for less, or even put MORE money into the neighborhood because they will receive future payments? Not bloody likely.
This is nothing but the new Bernie Madoff scheme. Sadly, GREED at the base of it all.
Thank you JRB1974. Your the only one who made practical sense out of lawyer talk. The rest of the sheeple, have no clue as to what is about to happen. Freehold and Mark B, your both smart, i grant you that, but your not that smart, for an old man, who has seen this type of snakeoil before. I'll give you a story about a similar event. Remember, not the Alamo, but the toll roads origination? I do. Here's how it went, on the east coast, I-95 Philly to Atlantic City, around 1975. The toll roads would be in service for a period of 10 yrs, afterwhich, their expense would have been paid in full, and maintenance would simply revert back to gas tax, and so forth. So o'l Mikey buys into that scheme and votes for the right to pay to drive. Ten years passes, it's free now right? Wrong, the toll fee not only was not rescinded, it increased fee's, and it's still in service to this day! Now, remember the stipulations for the casinos to operate in Atlantic City. The casinos must donate a percentage of their profit to help restore the state and local infrastructure(s). Well, the citizens voted for the casinos. Result, not 1 red penny, has been spent to build even a McDonalds restaurant. In fact, if you go to certain parts of NJ today, you will see the most deplorable conditions of squaller, since the destruction of nazi germany. The point is like JRB states, its only a matter of time before the money filters into the wrong hands, and not only hurts the homeowner, in the end will cause irreversible restrictions and financial burdens upon everyone. Nice try though. Next time, don't fool with an experienced chessplayer, who has been conned by the best salesmen. And that's exactly what your doing, playing the conniving BS saleman. Take your snake oil and shove it.
This should encourage all potential home buyers to pass on purchasing a new home in one of these ugly, sprawling subdivisions which mow down every tree in sight and pave over irreplaceable undeveloped Texas land. There are many older, established neighborhoods in San Antonio and New Braunfels that would love to have you buy an existing home and renovate them. This way you help curtail sprawl, rejuvenate current neighborhoods, avoid HOA's and help save Texas' open country. Do it for Texas, and keep your money in your own pocket instead of filling the wallets of these heartless, greedy developers and their paid flacks.
Mark B - that is the first time I heard a good reason for it. So shouldn't the fee go to the HOA, not the developer. Like Social Security, in the beginning they may collect the fees and set them aside to be used where they are supposed to be, but how long do you think that will last. Even if they do start off with the best of intentions, it is only a matter of time before that money goes into the wrong hands. Who will be able to track that the communities are getting their fair share of the fees that are collected. Honestly it would be best to keep it out of their hands to begin with.
Mark B1:01 PM
SocialBlunder, finally no venom! I believe the end game is to be able to provide some upfront liquidity to the projects so the first time homebuyers are not financing the entire project. Economically, this may be the way developments should have always been done. The banks are more secure by this asset and the developers are able lower costs of the projects. Maybe even do away with annual amenity fees, monthly hoa dues, etc. Thus making it more affordable and desirable for a potential homebuyer. If the purchaser decides, after taking all factors into consideration (before entering into a contract) and paying a 1% at eventual sale is not in their best interest, walk away. That simple. It is all about upfront disclosure so the consumer can make an educated decision. Unlike, the $8000 tax credits for first time homebuyers and the Fed spending our money to keep mortgage rates artificially low, you have a CHOICE in this decision. You did not have a choice in the others.
Mark B - I don't think that the developers are evil. I would just like to hear a good reason why I should be for this. You seem to be in a SMALL minority for this, but all you do is attack people for being against it. I am open to an good reason for why I should be for this and I am willing to listen. But please present some reason why this is good. Please give me a good reason why I should be for this. I don't care why the realtors and title people are against this. I don't care what other entities get money from the sale of my house. I just want to hear some good reasons why we should allow this to happen. Also, if in 30 years I bulldoze my house and build a new one, and completely relandscape my lawn, do I still need to pay these people even if they have nothing to do with the current "artistic" condition of the property?
Another B.S. gimmick by another group of crooks. In Texas, it all depends how much money the crooks will give our Texas Politicians to pass a law allowing Texans to get ripped off. Watch and See!!!!!
SA Air Force Brat12:39 PM
Can always turn it around to homeowner advantage....if they are claiming artistic continuing fees for their "contribution" for improvement...how many times during that 99 year period will you have to reroof, paint/reside, resurface drives, cut grass, landscaping, wallpaper/paint inside, build on additions, etc etc. Anything a homeowner has to do to maintain the existing art or make improvements on it to make it no longer the original builders unless they pay for it. If you buy a house and even if it changes hand 4 or 5 times in that 99 year period...their 1% won't make up for all the maintainance of their "art".
Mark B: How would the transfer fees fund initial development or improved open space without a secondary market? If you can’t sell the transfer fee revenue, how can you use transfer fee revenue to support the loan necessary for the initial development? I do like the idea that developers have a financial stake in the resale value of a home as a way to motivate them to build better neighborhoods and houses or provide better home warranties. 99 years seems a little ridiculous though. I think that limiting transfer fees if home values fall faster than the regional average would be a great idea to keep developers engaged.
Just having fun with this people. Not a PR wonk just trying to give another side. But it appears, by the majority of the comments, all business is bad and "freebies" are good. Developers are evil,the devil, etc. Yet, I am fairly certain that you all live in some sort of structure that was build by someone else. So, if all builders and developers are scum and evil, move into tents on public lands and refuse to go into your offices (they were built by some greedy developer, risk taker, etc). But I am sure that you like your air conditioned homes and offices a little too much to actually stand by your "principles" Actually, I am pretty surprised by these responses from Texas folk. I thought freedom to make an informed educated decision would be supported here if anywhere!
Bankers, and Financiers...Yet another scheme. People need to get real.
Many PR wonks, which I suspect Mark B is, have Google News and Yahoo news alerts that send them an email whenever an article matching certain criteria, is published. This gives them time to get a response together to counter any negative/truthful, claims. The truth is that this is another get rich quick scheme, another indicator of why developers are bad for any community and yet another reason you should NEVER EVER trust any business. You folks are so worried about the government when you need to be worried about the other big brother...the greedy.
The biggest problem with this is that it means no person in Texas can ever own their home free and clear. Taxes are not the same--they're paid to the public entities on behalf of the people to fund public needs. This is a fee that benefits no one except the private developer. And I disagree with Mark B (aka Freehold) that it's necessary for development; developers have not only survived but flourished in Texas for over 150 yrs without this Greed Fee.
"Mark B" appears to be "Freehold" --the only supporter of this idea, other than the developers who are not commenting. Freehold stopped commenting at 8:22 and Mark B picked it up at 8:43.
Bookmark11:22 AM
Mark B10:41 AM, Poor Ann is being blamed for something I posted. I believe in full disclosure, by the seller, as to everything that might be perceived, or is a flaw in the house being sold. I had to disclose that the house was located on a busy street, a landfill was located withing so many miles of the house, a small crack in the foundation, etc. It was a pain but I left knowing that the buyer had all the facts about the house and neighborhood and wouldn't be suing me in the future. Yes, I think that the buyer should be fully informed about what they are buying.
Mark B – I am curious why you are so for this. From what I am gathering, the one percent will be paid by the seller. That means that the developer will not see any money until the buyer sells the property. You say that the title and realty people are against it because they will lose out on what? The way you make it sound, they are afraid people will realize they are paying for something they do not need. Then we all agree we are paying for things when we buy and sell a house that we don’t need. If that is why they are against it then sign me up. And while they are at it, reduce what they take out as well. These fees are going to be messy. It may not be bad if only a developer is collecting, but what is to keep individuals from doing it when they sell their house. The buyer doesn’t pay when they purchase, but when they go to sell they realize that they need to pay more if they want a clear title. Then the title company will have to find the original seller to give them the money and clear the title only to find that they have died and they need to figure out how to pay the estate or the descendants and get a clear title. This is the ugliness the title companies are trying to avoid. Maybe the original buyer gets something for the 1%, but what about the buyer’s buyer? And realtors don’t want the extra aggravation and complication as a buyer or seller agant. So why would I be for this?
Th, Regardless of how you "break it up", 6% is coming off of the seller's side on the Settlement Statement. I never said "one" realtor was getting the entire 6%. I also never said anything about a "get rich quick scheme". I just noted, again, that 6% is coming off of the Seller's side. The buyer is also paying that (in the loan) because most seller's adjust the price of the home to try and compensate for that 6%. We can have this argument all day.
Comments11:01 AM
Great Article! This should be helpful to people that don't know to look out for parasites like Joe Alderman and his type of lawyers, employees etc. I wouldn't buy a house with one of these fees, but great job by the EN making it public to those who might fall prey to these con men. I love it when people like this get exposed. Enjoy this beautiful day!
Mark B no Realtor is getting 6% commission. First the commission is split between the listing broker and the selling broker so the most available is 3%. Then the agent usually has to split with their broker. When you look at all the expenses that the agent bears then it is not really as much of a get-rich-quick scheme as you would like to make it seem. I don't think many people want to give up the protection that title insurance gives them. I am sure you can do your own title search and be assured that there will never be anything come up that will cloud your title but most people can't and are willing to pay for the protection this buys them.
Sure, land development is a creative process: Take a beautiful piece of land and scrape it clean of all vegetation. Put up streets and houses and put two spindly trees in each yard and an ugly bush or two next the house. Then collect over and over again for having done so. Ridiculous!!! I'll never buy such a place.
skywatch10:48 AM
Hmm. A novel way to scrrew the Texas consumer.
Freehold and Mark B ... development partners who want a piece of the pie for the next 100 years.
Mark B10:41 AM
Per Ann: "The only thing I agree with is California's Disclosure Laws as they are very stringent and the buyer is fully informed when agreeing to buy a house." Then you agree with what FC is trying to achieve in all states. Again, noone is trying to "sneak" some fee into a real estate transaction without the knowledge of the buyer.
rjhancox10:38 AM
Why stop at real estate? Why not charge a transfer fee for a car or a boat? How about a washer and dryer or a refrigerator? To use the parallel of music and books is absolutely ludicrous. If I write a song or a piece of software, it's way too easy for people to make a copy of it and give/sell it to somebody else. That's why there are royalties and copyrights on this type of material, to protect the "developer" from other people profiting from his creative work. If I make a car or build a house, nobody can make copies of it and give it to their friends. There's no danger of other people selling, and reselling, my product without my consent. They'd have to buy my product, one at a time, and sell them, one at a time, whereas a book or a song is bought once, easily copied and resold, and the "developer" only gets money from the original sale. This transfer fee idea is a slippery slope waiting to happen. If lawmakers allow this to flourish, the principle will spread to other markets and it will never go away.
ann10:23 AM, good point. Hawaii charges a fee, years ago it was $300.00, called a shipping fee. Each time the car was sold, whether it was the first time or the 10th time, the fee was collected. If you wanted to sell your car, the buyer had to pay. Thanks for reviving a bad memory. LOL
Freehold Capital Partners is doing to homeowners what the city does to people who sell the same car over and over!!!
Freehold8:06 PM, sounds as if you are a Californian. If so, please stay there. The only thing I agree with is California's Disclosure Laws as they are very stringent and the buyer is fully informed when agreeing to buy a house.
freehold you better take this cr^p somewhere else. We don't tolerate people screwing with our property in Texas! This may work in california but not here.
Mark B9:55 AM
Well I am glad to see you took my advice to take some time and investigate the other side of the issue! You do understand that this is not a "tax" don't you? You have full control to negotiate the contract sales price, come to an agreement or walk away. No entity is forcing this purchase decision on you. But, unfortunately, in America these days, anyone who has an idea is a "scam" artist. Oh yeah but you resorted to calling me an "idiot" as your argument. So I see that this is pointless to have a constructive conversation. So go on about your day being angry and believing everything your hear and read.
westfield9:30 AM
After we moved to San Antonio we quickly learned that developers do all they can to maximize profits to the detriment of the buyer. We chose NOT to buy a home recently builtl by a developer and we are glad we did. I think people living here in SA are content to live in newly developed subdivisions with houses crammed onto a small piece of land. They are content to buy poor quality, lack of privacy and sterile neighborhoods just so they can say they bought a "new" home.
Why in the world should 1% OR ANY PERCENT of my home's value go to a prop up a do nothing organization? What are they doing for me? Mark B, your either an idiot, or on the take. I'm opposed to the idea because it has no advantage for the homeowner, it's just another needless TAX or 'revenue stream' design to pilfer my pockets! Freehold Capital Partners is a freeloading organization that is trying to make money off the backs of honest people and they offer NOTHING in return.
wildberry_lm9:25 AM
Name names people - so that others can make their own decision about agreeing to the "hidden fees"...shady is as shady does..
Mark B8:58 AM
It is also quite obvious that the readers are taking the writers words as the 100% truth about Freehold Capital. Did you ever stop to think that maybe there is another, logical side of this argument? That as a new homeowner you may actually "like" the idea of buying a home for less today and "agree" to pay a 1% fee when you eventually sale? Instead of being "sheep" and reading something and immediately buying in at face value, do a little research (but that actually takes work). Usually you will find that there is an agenda when the two major real estate trade groups are working together to "ban" something. The title industry is fighting hard to keep its stronghold because consumers and states are realizing that they are paying thousands of dollars at a purchase and subsequent refinances for insurance that they really don't need. And we all know the realtors have a very lucrative deal going (6% and higher commissions). So again, lets look at the opposition as well and ask ourselves why are they so opposed to a new idea?
Its interesting that the opposition comes from title companies. The reporter obviously hasn’t read “The Fleecing of America†written by a STATE BAR.
Or look at the Congressional report at Its always useful to look at the source of the opposition. Title companies are concerned that they will miss the fee, and have to pay a claim based on their own negligence. It has nothing to do with consumers. Realtors are concerned about their commissions. Nothing more – nothing less.
If this is allowed to continue, we the homeowners, need to petition our Legislature to pass a law that the original developer or their successors, be responsible for any structural and/or slab failures within that 99 year period, with no additional cost to the home owner. See how long developers are willing to steal 1% from each potential homeowner, if something like this passes.
My home was built in the 80's and the builder at the time used substandard material lines for sewage (standard industry practice). Now thirty years later all the lines are busting. Shouldn't the builder be required to replace all the lines free of charge if they still have a "link" to my property. It's only fair I think if they want transfer fees for 99 years.
jport19757:53 AM
Parasites.
Don't give Obama any ideas, he will want to stick it to the Rich developers next.
Heck, why limit it to 1%? Write in a 10% payback and finance the mortgage yourself to make sure someone goes for it.
greenspan5:37 AM
Sounds like something Perry would do.
One more reason to never live under an HOA.
Anymouse3:24 AM
Why is this so abhorrent to people? It appears there are a few commenting that simply read the presented contract and not merely come to meet at the title companies office, whilst signing all closing documents. How many of you read the mandatory arbitration in lieu of civil court? Is this ok and the 1% just really evil?
Sadly, this is a natural outgrowth of HOAs and other restrictive deed covenants. If some private organization (HOA) can tell me what I can't/can't do with my property and my home, and set up a private tax on me that I must pay, then I'm a compromised owner. This is just one more compromise.
Are you kidding me? Who is this guy Alderman and why isn't he in jail? You mean my unborn grandkids will be paying this fee in 2095? And you say he took this stupid fee off his own home so he could sell his own house? Excuuuuuuse meeeee! He must be a little defensive--five straight posted comments in 30 minutes!
Sage9:21 PM
If you sign a contract to buy property, put the following in your offer: "Offer contingent on the removal from the public record of any document requiring the payment of a transfer fee by any party." The free market will kill this program once it becomes clear that the public rejects the idea.
This is absolutely a ridiculous. I'm as pro-market and pro-business as just about anyone out there, but this even reeks of bald-faced greed and putrid corruption to me. The sooner these are banned the better. I'm a doctor...with their line of thinking, if I save a life should I be entitled to a percentage of my patients income for the rest of his life? Does Ford deserve a cut when you sell your car? Only the government has the balls to lay claim on people and property like that.
The fee is subordinate to mortgage holders (such as the U.S. Department of Housing and Urban Development, Fannie Mae, Freddie Mac, etc.). As such, a transfer fee has no more impact on a government insured mortgage than any other fee (such as HOA fees).
"You can’t put all of the costs on home buyers and still sell at an affordable price." California Building Industry Association. Source: BUILDERS, REALTORS SQUARE OFF ON TRANSFER FEES. May 16, 2007. Inman News.
"To the extent the existence of a [transfer] fee impacts the value of property, as long as the fee is fully disclosed the market will adjust to the fee.†(-Cal. Senate Staff Analysis. April 17, 2007).
Freehold8:00 PM
The Texas statute provides that a "transferee" (Buyer) cannot pay the fee (and even this limitation only applies to residential property). This was to ensure that a buyer did not arrive at the closing table with insufficient funds to close. A comprehensive legal opinion from a national law firm (and virtually every Texas attorney that has looked at the statute) has concurred. The 5% piece to charity has little to do with complying with the Texas statute. All patent claims are deemed "abandoned" when a continuation patent is filed, because the continuation patent picks up same claims.
hardwater7:57 PM
This is criminal. In the old west these sob's would be hung. I would never buy in a neighborhood with this RESTRICTION.
Thieves and Crooks! That's what these people are! Our legislatures need to put this up to a vote by the people!
Absolutely ridiculous! Greedy Bast**rds!!!
SENTINEL7:00 PM
So, if I need to remodel the home the developer had built, and they are entitled to a "transfer fee" when I sell, are they going to help me pay for the remodel? No, of course not! Thieves!
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