patrick.net

4X says

6. Mortgages cannot be sold or securitized - to force lenders to use prudent borrower standards, since the original loan creator will be on the hook for default
That alone would pretty much do the job. Here’s why:
1. Banks would want down payments, and very large down payments for rental houses.
2. Banks would want accurate appraisals, and thus would get them.
3. Banks would only want to finance the actual collateral. Extra fees such as points and Realtor commissions would not be financed. That would put downward pressure on these fees since they would be actual cash at closing, not rolled into the loan.
It would be tough to pay $300k for a home when the bank will only loan 80% of the $250k the bank says the house is worth. People will be more sensitive to a 6% commission when the entire amount is due at closing. No point in false bids and other scams since driving the house price above the loanable limit is useless. Good luck getting anything like that passed. Obama and Congress are owned by Goldman Sachs, and GS makes big money from securitization and has a vested interest in inflated house prices. We will most likely see increased efforts to aid securitization at tax payers expense, along with reduced down payments or downpayment assistence.
Crap, I am starting to see the true 2 party system: THE GOVERNMENT versus THE PEOPLE
…there goes my progress and the change I was promised.

this is a great post.

That was from an earlier post submitted by someon else above.

@BAP

I am a true “throwback”. I say no gov in personal business .. period. A hand shake between the buyer, the seller, and the banker should get it done. So, I would support removing HUD first thing. Next, burn down the ACLU offices and jail all lawyers that do and have worked for them for 5 years, hard labor, busting rocks at Club Gitmo. And then those other agencies too.

I agree with the exception that we need large corporations to show leadership and set standards for the smaller ones. IE Microsoft leading the way with green efforts. I think these standards would only become popular if large corporations drive them within their Ethics & Compliance organizations and along with government legislation that provide tax incentives. Businesses only pay 300b in taxes per year...not a lot compared to the 2 trillion you and I pay in taxes so I assume if we cut taxex by 50% we would incourage more investments in the US and allow companies to enjoy increased net gains on the financial statements.

This leads me to another point on tax breaks. Ultimately, I would like to see less taxes on businesses so that we allow them to reinvest in growth but knowing how a CEO thinks this would not be realistic without oversight. For example, if a large corporation were to receive a 25% tax break, i assume this would reflect positively on their financial statement s with a majority of the tax savings going to the shareholders pockets for the first year but during the following years I also foresee most corporations reverting back to reducing costs (people) because they cant somehow figure out how to increase market share. So, the first year of tax reductions would make the books look good, therfore increasing their stock prices. But, during subsequent years these same corporations would be right back to their initial challenges which were increasing market share and revenues.

Your thoughts?

too deep into tax stuff for me. If will follow Shakspears advice and kill the lawyers first, then we might be able to build a better mousetrap. I am a flat tax supporter (based on my limited understanding) --- so if everyone paid 15% (pulled from the sky) on any increase in worth (or wages if you work for wages), then so would Corps and the stock holders ... almost a double dip for taxes since the stock holders are part of the entire entity and also would pay individually too.

Anyways, I'll have to take a back seat in this one. I know I can't argue my point about flat taxes well enough to support my view. I just "feel" (I know, I know) that it is only fair if each person tosses an even percentage of their income into the pile ... and that is because each tax payer only gets one vote. If your vote was weighted by your tax rate, then we would have a really fun situation. lol

LOL...me too. Anyone know anything about the flat tax rates that have been proposed in past?

Based on what you've just said, you're just as bad as the current system. Why should someone pay 15% if they get the same services as someone else? If someone orders a hamburger and it costs them $5, a rich individual shouldn't pay $10M for that burger. A flat tax system is flat. $5000 per person.

How about taxing on a disposable income level instead? If you're able to save money, then you've got lots and should be hit with higher taxes. Someone just making ends meet shouldn't have any taxes!

In the end, it's all about the same, and it's about feeling somewhat fairly treated. Whichever method is being used, someone will feel somewhat cheated. Accepting 15% shows that you're okay with paying more as you make more, even though you're only getting 1 vote. You're okay with paying more for a hamburger than your neighbour if you can afford it, which is odd, most people would be upset at that.

Really, it sounds like you're upset more with people who are finding ways to pay less than you, while making the same or more than you. That is a different problem altogether.

Sorry if I sound like a broken record sometimes, but the only fair tax is a tax on land values.

* All stuff we use comes from the land, ultimately.
* If you want to be taxed less, use less stuff and own less land. It's totally fair.
* No one made land, so no one should have the right to eternal rent from land.
* If you make or buy a building, good job, you should get the rent from the building.
* The tax cannot be avoided since land cannot be hidden.
* It has the nice effect of preventing heriditary aristocracies.

http://en.wikipedia.org/wiki/Land_value_tax

Interesting idea. People will change the way they live in that case, and the rich will stay rich and aristocracies will remain.

Less land will be used, but it will be used more effectively. The rich will find ways to devalue their land, or put up high rise structures. They won't just allow all of their income to be taxed away. It just wouldn't happen.

A new system sounds good, but it will just create a new set of problems that people will find a way to circumvent. The rich from the 1700's are often still rich today, even though tax laws have changed. They find ways.

Under a land-value tax, it will certainly still be possible to be rich. I don't have a problem with some people being rich, as long as they earn their money fairly and contribute their fair share of taxes.

A single tax on land-values would solve more problems than it creates. Just think - no income tax, no sales tax, no paperwork, no tax evasion, no IRS!

I'm not sure what new problems a single tax on land would create. I suppose there would have to be tarriffs on imported goods that did not have such a tax, or places like China would put most US industry out of business. But wait, that's already happened, hasn't it?

How about how land is valued? If the rich own enough land, they will figure out how to make transactions that devalue the land, while keeping the value.

I will sell you 5 acres of 500 acres in Palo Alto property for $1 and this rock for $50M.

Since he ownes the other 450 acres he's likely to be able to control the value of that land, which will require special people coming in and "appraising" that land. And we already know how that works out.

Companies would change their dynamics, buying property on the outskirts of cities. When people moved closer and built up the land value they would move away causing the loss of jobs and all land around it, only to pop up somewhere else. All to avoid paying taxes. It would be worse than it is now!

pkennedy says

How about how land is valued? If the rich own enough land, they will figure out how to make transactions that devalue the land, while keeping the value.

Let people bid on land-value taxes, with the highest tax bid given the legal right to buy the land at the proportional price. So if the tax is, say, 10% of land value, and some rich people are keeping a million-dollar lot down to half a million for their own benefit, you can just come in and bid $100,000 in tax and get the legal right to buy the land from them at a million dollars.

No appraisals required! Let the market do it. The key is OPEN public records of who owns what, and what tax they paid on it. We still don't really have that.

pkennedy says

Companies would change their dynamics, buying property on the outskirts of cities.

They already do that. Land in the center is already more expensive than on the outskirts. Nothing new. The only difference is that the land-rent would go to taxes rather than to a landlord.

People would find new loop holes for this type of land valuing system. Regardless of how they did it, it couldn't be implemented here. The country has been using a different system for the last several hundred years, and a change like this would require people to rethink their investments. Depending on how it got implemented, it could cause masses to go bankrupt over night. Or more likely, the smart ones would figure out how to abuse the system right off the bat and make off like bandits while the every day citizens would be left holding the bag. It would be chaos. And chaos leads to mistakes. Some investors would make mistakes and lose everything, while others would likely walk off like bandits, owning much of the land. The only people who would lose out, would be those that don't understand the new system, roughly 99% of the population.

Suppose someone amassed a large contiguous piece of land. How would one go about bidding on just a small piece of it? How would one ensure that there was road access to the property? How would public lands (such as city streets) be defined?

justme says

Suppose someone amassed a large contiguous piece of land. How would one go about bidding on just a small piece of it? How would one ensure that there was road access to the property? How would public lands (such as city streets) be defined?

So maybe the valuation by tax bidding would be a battle among the rich in the case of a big piece of land. No different than now. Road access? No different than now. Public lands would also be defined the same as now.

Nomograph says

The reason that a land tax will *never* happen is that land is attached to the buildings and improvements that rest upon it. If you think they can be magically decoupled, you are incorrect.

Who said they had to be decoupled? So the value of the land rises if you build on it. That's the same as now.

I'm proposing that there be a single tax on land values. Improvements would not be considered by the taxing agency, only the land value. Yes, the land value does vary with improvements, but that's not the taxing agency's concern.

So the land-value tax would be:

1. Simple, because it's the only tax. No income, sales, or other taxes. No paperwork, no IRS.
2. Unavoidable, because you can't hide land.
3. Fair, because proportional to land use.
4. Least harmful to the economy, because it doesn't discourage work like an income tax does.

Nomograph says

Are you proposing that anyone can buy the land out from beneath someone else without their consent by agreeing to pay higher taxes? If that is correct, this is pretty much the worst idea ever.

I think government-guaranteed mortgages are the worst idea ever.

But OK, it would bother people if a richer person or a more productive business could pay more tax and take over "their" land. You do have to pay your property taxes now, or someone else can come along and pay your back-taxes to take over the property. So that much would not change. I was just thinking of using land-loss as a penalty for those who deliberately under-value their land to evade taxes. Needs a little refining. Maybe you have the answer?

@Patrick

I'm not sure everyone would agree that it's fair. Wouldn't it hurt seniors? and lower income folks? Everyone has to live somewhere and making this the only tax would almost certainly raise housing costs (owning or renting).

I think this is all nonsense - Truth is people in power are not going to listen to Patrick, they are screwing us os be screwed smilingly! And where is Patrick right? For past one year he is saying prices will go down, instead in bay area they have bounced back, accept the truth,
And the most evident keep paying stupid finance charges and interest to banks who are screwing us all

liveconfused says

instead in bay area they have bounced back, accept the truth,

ahem ~bullpoopy~

Bap33 says

liveconfused says

instead in bay area they have bounced back, accept the truth,

ahem ~bullpoopy~

Bap33 is right, prices have most definitely not bounced back in the Bay Area. Year-over-year comparisons of the same month (the only price change with meaning) show that prices are still way down from a year ago, enough to wipe out even a "safe" 20% downpayment in most areas. I posted a data link about it recently.

Re the land-value-tax:
tatupu70 says

I’m not sure everyone would agree that it’s fair. Wouldn’t it hurt seniors? and lower income folks? Everyone has to live somewhere and making this the only tax would almost certainly raise housing costs (owning or renting).

We should distinguish between seniors and poor folks. They are definitely not the same crowd, even if there is some overlap. My old boss's boss at Schwab is a senior, but he's rich, and he leaves his $2.5M house in Palo Alto empty and lives in San Francisco at his condo with a view of the GG bridge, because, as he put it, he "bought so long ago that I don't pay any property tax. Prop 13 guarantees that YOU pay my property tax for me, so I can leave it empty."

So if you're rich, even though a senior, tough, you should have to pay your fair share of the land-value tax, unlike the system we have now.

If you're poor, you'll probably live in a place that cheap enough that your land-value tax will be small.

justme says

Suppose someone amassed a large contiguous piece of land. How would one go about bidding on just a small piece of it? How would one ensure that there was road access to the property? How would public lands (such as city streets) be defined?

Allow me to clarify and expand: Suppose someone amasses a large contiguous piece of land by putting it together from smaller pieces. Suppose the land has a hole in the middle which is YOUR land. What does that do to the access, and the general usability of your land?

Another case: What if Tony Soprano comes to you and says that he will bid (buy) your land away from under your feet unless you pay him protection money? How much (%) would you be willing to pay to avoid the hassle?

I think any land-rent system (which is what a land-tax system really is) is rife for exploitation and instabilities.

Anyway, the property is sold on 10/20/09 at $651K.

I guess there still are some people out there willing to pay the amounts for that kind of property.

How do you know that was the sale price? Don't believe any realtors!

by clicking the link CrazyMan had provided at post #3.

@justme,
I'll give it a shot.
The parcels are set on a map and recorded per county. It would not matter if it were 53 connected APN (assessors parcel numbers) or one as big as 52 with your 1 in the center on an island (land locked), the existance of any easments or access roads would be recorded on the map just as obvious as the lines for each property boundry. If you look at a checker board type of map, any land-locked parcel has a (normally 10 foot minimum) easement for access in as direct a line as possible to public road. That easement might be 50 miles long, and have other easements tie-into it along the way ... alot like the dirt roads that The Duke's of Hazzard drive on from Uncle Jessie's to the paved road.... but they are privately held access road, normally gated and locked by the owner's, not far from the public road.

A person can buy your entire town, do a bunch of "lot line adjustments" and create one huge APN - (planning department and General Plan would not allow, but we are just making cinversation here) - and you could be wrapped up entirely by this person's land and all you would have a right to is the same public road you acess now. If the public road is bought up and removed, the new owner would have to provide an access route that is as direct as possible, and all-weather, and is now part of your property profile (or, the county would be made to maintain it.)

In all seriousness, your question is a valid one. A corrupt group of RE professionals makes up most planning commisions. The Gneral Plan is changed by the highest bidder. The way growth is made to flow is the most obvious "good 'ol boy" system on this palnet.

Nomograph says

Do you actually think the two lots will be valued the same when they sell? Sounds kind of silly to me.

The value of a lot is mainly its location value and its present and future zoning. This is a smoothly continuous value that does not change materially from lot to adjacent lot. (There are environmental differentials -- views, insolation, etc. that alter this somewhat, though.)

Back when I was living in Tokyo they were building this monstrosity near my apartment:

back then I didn't have the economical basis to understand the injustice -- the new building was going to steal everyone's light but . . . that's life, right?

Now with my Georgism I understand that insolation is community good and if your building is going to take it from its neighbors there should be a set tax burden to compensate them directly. This would naturally encourage building to conform to sky exposure plane zonings.

So if you’re rich, even though a senior, tough, you should have to pay your fair share of the land-value tax, unlike the system we have now.

Patrick, I'm a 100% LVT proponent but I don't see the value in aggressively taxing owner-occupied single-family homes.

The first priority is commercial land and non owner-occupied rental properties.
Secondly we can look at taxing residential property above a threshold size & value (compared to their zoning).
But at any rate I think any tax on owner-occupied can be just assessed via liens, like the PTP was:

http://www.sco.ca.gov/ardtax_prop_tax_postponement.html

Suppose the land has a hole in the middle which is YOUR land. What does that do to the access, and the general usability of your land?

LVT regime doesn't arrive ex-nihilo on virgin land. All it really is is a split-tax. Don't tax buildings at all. Tax the land at some proportion of what the land would collect in rents if it were built out to its current zoning. It's really not a big deal, administratively.

I think any land-rent system (which is what a land-tax system really is) is rife for exploitation and instabilities.

Instabilities compared to the jam-job just accomplished this decade by the FIRE sector?

http://research.stlouisfed.org/fred2/series/REALLN?cid=49

LVT is an incredibly beautiful tax regime. It aligns with my left-libertarian principles perfectly -- ideally we all should able to profit from our labor, but since nobody made the land profiting from its ownership is a form of social injustice, an injustice that has been ongoing for centuries.

http://geolib.com/essays/sullivan.dan/royallib.html

Aside from moral considerations, the sheer practicality of the LVT on development is compelling. By reducing the up-front acquisition cost of land we can invest more in capital improvements, using the urban land we have more efficiently.

Just hire a lawyer to represent you and submit your offer. That's what I did some years (decades) ago.

Who cares if everyone else is put off by your buyers' agent being a lawyer? It's your money.

Did Yellowstone live in America for the past 20 years? This is the oldest car salesman in the book...

"there is an unknown bidder who wants it just a bit more than you do, and if you don't pay more in next X days you will not get it". It's a lie creating a sense of urgency under false pretenses to see if you are willing to give them more money for their junk. If I were this Yellowstone person, I would drop that agent, and drop the bid completely.

Besides 650,000 is a lot of money and he is not getting a mansion for that, just a measly 1200sf house.

It does come across to me that "Yellowstone" person is a bit naive. He even bid up $650,000 because an agent told him its worth that much. He didn't actually compare incomes in the area.

The house is still for sale. So the realtors were definitely lying about the other offers.
Business as usual.
When will it finally become illegal for realtors to block all access to the actual seller and to other buyers?
Why don’t we finally get an open market for real estate sales, with all bids and asks publicly listed?

They will never let it happen. Profit comes from others not knowing how low they can bid.

Don’t believe any realtors!

Do you believe the same for politicians? You know, the people that start wars for reasons beyond the propaganda? At least Realtors (small R symbol here) aren't killing innocent people. Why is it that politicians get such an easy pass?

RayAmerica says

Don’t believe any realtors!
Do you believe the same for politicians?

Where I live RE firms pretty much run the town politics. Corruption pretty rampant!

Anybody notice that the selling agent works for the same brokerage as the listing agent? Why even request the letter?

And I'm willing to bet everyone overbidded because their agent recommended it.

Spam Zombie! KILL IT WITH FIRE!

Although, it looks like the house closed less than 2 months after listing, so they probably did have other offers, and spent a few weeks playing them off of each other.

why don't people just use a real estate lawyer? It will be much cheaper than paying some middle man 3% just because they have a pulse.

Either way, you dodged a bullet there.

sfbubblebuyer says

Although, it looks like the house closed less than 2 months after listing, so they probably did have other offers, and spent a few weeks playing them off of each other.

Oldest trick in the book, yet so many people fall for it so easily.

EMan says

why don't people just use a real estate lawyer? It will be much cheaper than paying some middle man 3% just because they have a pulse.

Either way, you dodged a bullet there.

I do not understand the process an making an offer in CA, so I refer to the model used in AZ:

The listing agent is given 6% of the selling price if they complete the entire transaction as per the listing contract. If MLS is used, reciprocity of 3% goes to the buyer agent.
Someone is required to open the door to view the property; this is usually the seller or buyer agent. I do not know of any lawyers that provide this service.
If the buyer is to make an offer, a standard real estate contract is used that can be modified with additional language and/or addendums. A date/time is set to receive a response.

A lawyer or title service can provide services during the escrow process, but this is after the offer is accepted. Therefore, I do not see how you can use a lawyer and save 3% of the sales price.

Edzakory says

I do not see how you can use a lawyer and save 3% of the sales price.

you have to present the offer when the listing falls off contract basically and the listing agent is not longer legally in the picture.

CAR forms are not required to buy a house. Realtor®s just inserted themselves into the process.

Troy says

CAR forms are not required to buy a house. Realtor®s just inserted themselves into the process.

100% correct-a-mundo

Edzakory says

Someone is required to open the door to view the property; this is usually the seller or buyer agent. I do not know of any lawyers that provide this service.
If the buyer is to make an offer, a standard real estate contract is used that can be modified with additional language and/or addendums. A date/time is set to receive a response.

A lawyer or title service can provide services during the escrow process, but this is after the offer is accepted. Therefore, I do not see how you can use a lawyer and save 3% of the sales price.

What stops you from negotiating 3% off of the sales price for not having a buying agent? Other than cartel-like behavior by realtors, of course.