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Comment by bhouston | Hacker News Reader

They are a discount buyer, so it is generally a bad deal to use them and you basically shouldn't unless you have no other option. It is similar to getting a pay day loan, or selling stuff to pawn shop or keeping a balance on your VISA. You are going to get a bad deal.

I don't really know what to do about it. How can you ensure people are educated enough to know that a discount buyer is a buyer who will under pay for your house? I guess you legislate away discount buyers completely?

In Canada, they have regulated severely the amount of interest pay day loan companies can charge. This has led to a shrinkage in the number of pay day loan companies. So I guess some similar type of consumer protection laws could be enacted in this space.

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In the cases mentioned specifically, the buyer has broken a law already (at least two are fraud) or the contract is invalid (lack of mental capacity).

This isn't really a story per se. People are doing illegal stuff or stuff that won't hold up in court if challenged. We have a system for it - it works ok, not fantastically. We don't need new regulation for cases like this, we just need better execution on the existing system. Better execution costs more money, and as a society we get to some balance of more taxes v more stuff slipping through.

This is a reasonable take, but I think it's also reasonable to suggest that if current system execution is too expensive then perhaps a new regulation could make it cheaper.

Of course there are perhaps unintended side effects from new regulation, but "this is already a crime, we don't need anything new" isn't prima facie a sufficient argument.

If a lot of a similar type of crime is going unpunished, there may be a reason other than "enforcement agencies are lazy", and perhaps a new law can help.

They are essentially a market maker for housing. You can sell your house to them _today_. It's necessary that they pay you substantially under market. If you want a good price, it'll take you 6 months to sell your house. You're paying a premium for immediate execution.

Once you punish the fraud and crime, there's no problem left IMO. There's multiple of these companies competing and you should price shop before selling to one.

There’s a general problem with low friction transactions being used to exploit people with diminished capacity, particularly when intermediaries are involved (another common one in UK is signing them up for multiple phone contracts) and there may be some regulatory innovation possible in this area. Punishment after the fact is not sufficient if it doesn’t adequately prevent this population being exploited.

I think the important part is that both parties go into the transaction with full information and a genuine meeting of the minds, which is obviously not the case in this market.

I use eBay's "Buy It Now" functionality all the time, in preference to the "Wait 7 days and deal with snipers" auctions. I fully know that I'm trading low-price for low-friction.

That laserdisc player is only jokingly a life changing transaction.

I see no reason to excuse fraud and deception, those are not convenient low friction services.

I see no reason to ignore how there is supposed to be a take-backs provision which they are merely getting around, producing exactly the outcome those provisions were created to prevent.

What is someone who owns a house but has reduced mental capacity supposed to do? The house is worth $500k, someone offers them $300k, the person doesn't have the mental capacity to shop around... I'm just not sure what the right solution here is. I'm afraid it would be even worse if they weren't allowed to sell.

The real problem is that mortgages aren't as good as cash when buying a house. If someone needs to sell quick or if there are issues with the house they have to rely on these discount buyers. The protections that slow down the mortgage process have their use but it's one of those situations where the cure is worse than the disease.

Someone who is selling their house for pennies on the dollar most likely can't afford to police lenders and keep them honest via lawsuits, especially sellers like those in the OP who are mentally disabled.

This. It seems lost just how much enforcement relies on the smallest/weakest amongst us to fight back. That’s probably priced out of those same peoples possibilities. It shouldn’t be like this. It creates a lawless atmosphere tinged with legalese as needed to coherence the victim.

More taxes won't make judges faster or reduce bureaucracy which exist just so some government drones can sit and do bs all day.

A private justice system, competition and a reputation system will help

I think this misses the forest for the trees; the handful of cases where they broke the law are nowhere near as deleterious as the rest where they didn't. I can't think of a better time for new regulation than a hedge fund extracting home equity from desperate people.

What legislation could you make that wouldn't be a case of the side effects being worse than the disease (bearing in mind how often we dont realize there are side effects or their severity)?

Require that cash sales be registered through a state agency that monitors sellers for patterns of fraud. Add a “cooling off period” of 7-30 days where the seller can cancel the transaction without going to court. Streamline the process by which family members can raise claims of mental incompetence. Upon a sale being registered, provide the seller with a computer-generated piece of paper containing an estimate based on recent comparable sales (with a clear warning that this number may be inaccurate) so that they are aware of how much of a discount they may be taking. None of this stuff seems terrible onerous, and better: it would significantly reduce the load on the court system.

It's hard to then deal with the following:

a) a person needs money asap, can't wait for a cooling off period. b) a person has greedy children who expect the house as inheritance, and don't like that mom/dad has decided to sell the house and spend the money cruising around the world so they decide to declare mom/dad mentally incompetent.

None of these are new issues. We've arrived where we are (and that place is different in different jurisdictions) as we lurch back and forth between the least bad solutions.

I'm not a policy analyst, but this doesn't seem very difficult. Market failures caused by information asymmetry can often be improved by mandatory disclosure of some kind. Even if you disagree, the inability of a bunch of programmers to describe an effective regulatory solution doesn't mean one doesn't exist.

Legislating away discount buyers would be like legislating away payday lenders. The only thing accomplished would be to leave a hole in the market which will be filled by shady loan sharks.

Not sure why you’re downvoted because it’s true.

People desperate enough to use payday lenders have no other options. And the high interest rates reflect the risk.

Take that option away and the need doesn’t magically disappear, they just go to black market lenders where there really is no backstop at all.

Far better to regulate.

> People desperate enough to use payday lenders have no other options.

Not always true, some folks misuse them for a variety of reasons.

Take the option away in the UK and a friend’s boyfriend wouldn’t have been able to use an app to take out a bunch of short term loans in her name for Xbox games…

So I think sometimes these facilities are used frivolously. You’re right that a portion of users in real hardship would turn to “informal” lending if these lenders were to disappear. But it feels like we as a society should come up with a better solution there really.

>Take the option away in the UK and a friend’s boyfriend wouldn’t have been able to use an app to take out a bunch of short term loans in her name for Xbox games…

There's already a solution there, she could take him to court to recover the money. Your argument is basically "ban X because X can be used in an illegal way".

No, my argument is that not every use of x constitutes immediate, severe need, so the consequences of banning x would not necessarily be to drive all service users of x straight into the arms of loan sharks.

Further to that, my argument is that for people who are in such severe need that they would then turn to loan sharks, there is probably a better solution out there that we as a society should be looking into, than usurious payday lenders.

At no point was my argument anything close to “ban X because X can be used in an illegal way"

This will be a fairly contentious opinion, but I believe if there exists a class of business that is recognizably harmful to that level, which we only keep around so as to prevent criminal alternatives, then such businesses should be replaced by government run services.

In fact, I personally believe this scenario is likely the most essential use for government run services.

I don’t agree with your secondary point, but I agree so much with your primary point that my inner monologue was screaming “just say government, it’s okay, you’re correct and we all know this is where this is heading” as I was reading it.

"which will be filled by shady loan sharks"

You are replacing friendly-looking loan sharks with door-to-door salesmen with clearly illegal loansharks.

For the same reason you don't want cocaine sold near "fun toys for kids"

Each state has usury laws, but there are of course loopholes and exclusions.

https://www.upcounsel.com/lectl-state-interest-rates-and-usu...

In 1980, due to high inflation, the federal government passed a special law that allowed national banks to ignore state usury limits and pegged the rate of interest at a certain number of points above the federal reserve discount rate. In addition, specially chartered organizations like small loan companies and installment plan sellers, such as car financing companies, have their own rules.

That doesn't seem unreasonable. Really, the usury laws should be linked to the federal discount rate anyway.

If 20% is usury when the law was written and prevailing rates were 10-15%, 19% shouldn't be allowed when prevailing rates are 0-5%

>That doesn't seem unreasonable.

Sort of:

The 1978 case Marquette National Bank v. First of Omaha Service Corp. unanimously held that nationally chartered banks may charge the highest rate allowed in the bank's home state. This is why so many banks are located in states like Delaware and South Dakota, which have very liberal or nonexistent usury laws. So even if you live in a state that has a very low usury limit, it typically has no bearing on the interest you pay on your credit card.

https://caselaw.findlaw.com/court/us-supreme-court/439/299.h...

1) Professional buyers are defined as any person not kin or well known to the seller that has bought another property within the last 3 years.

2) Professional buyers contracts must allow a 30 day cooling off period in which the seller may back away from the agreement without punishment.

3) The 30 day cooling off period is initiated by the buyer prominently posting the offer in the local MLS service or similar prominent and accessible system. The buyer is responsible for ensuring any alternative offers during this period are conveyed to the seller.

4) The buyer and seller may avoid the 30 day cooling period by having a certified appraiser conduct an appraisal of the property and executing the sale at no less than 6% below appraised value.

I could throw in a couple other clauses in there to take care of people "brokering" regular sales to straw buyer or about requiring disclosures that recommend sellers consult with family and/or homeowner advocacy group within the 30 day cooling off period, but that is the crux of it.

This wouldn't eliminate the industry, but it would limit the actions of the worst offenders. Offers dramatically below market value should get counters. The worst consequence seems like it would be that the seller will get absolutely swarmed by realtors trying to convince them how much more money they would get with them.

In response to this article the company promised to stop suing customers to force them to follow through on sale contracts. That sounds like a constructive change.

That sounds like backing out for fear that regulation, resulting from popular pression, will mean that selling to folks with dementia will land you in jail.

If you think a promise sounds like change, I don't know what to tell you. These behaviors were already "against company policy"

Fyi it did Jack squat to payday loans, there are more and more stores opening all the time and they pivoted into term loans.

Can't fix any of this until the fiat network is fixed.

In Canada it's the big 5 banks that provide the liquidity to the payday loan network.

It's entirely possible to get it down to $5 per $100..which is still a shit deal but way better than $23 per 100 but ain't gonna happen while the big 5 is making bank

> a bad deal [...] similar to [...] keeping a balance on your VISA

Huh? Elaborate?

Interest rates of the average VISA card are insane and most people can get a better loan product if they need the money. VISA makes tons of money for being convenient but insanely expensive.

https://wallethub.com/edu/cc/average-credit-card-interest-ra...

Cool. I’m sure the cross section of people who would be victims to discount real estate buyers and visitors of this site is basically one circle.

I’m sorry but your comment is weirdly unconstructive.

How about this:

What interest rate is too high? What price for your home is too low?

They both depend upon your circumstances and your view of them.

There is a set of circumstances rationally viewed where you can pay a very high interest rate or take a very low price for your home.

If you're acting irrationally then you have problems - the question is should we try to help you with your problems or removing some of the ways you might act irrationally, keeping in mind that in doing so we're stopping some rational people from doing something they want that is by definition rational.

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