[Colorado-Valley]

A realtor told me the other day that my house is probably worth $450,000 right now because of its size, design, location and views of the Rocky Mountains.

Well, I only spent $93,000 — and a lot of sweat equity — building it a couple of years ago.

The thing is, I follow economics a little and know that we're in a speculative-bubble frenzy caused by the Federal Reserve lowering interest rates to one-percent after the stock market crash in 2000. That staved off a Depression for the time being, but it also created an enormous amount of extremely overpriced housing that people have speculated up to almost impossible levels.

Well, I know that speculative bubbles end very badly, and that my house will probably be worth only $150,000 to $200,000 in a couple of years as the bubble deflates back to normal prices.

Most Americans don't understand speculative bubbles and don't understand that the coming deflation could easily put them into bankruptcy.

Now I could keep my mouth shut and take a $350,000 windfall profit, or I could explain to potential buyers about the artificial bubble and that they should probably think about renting for a couple of years until prices come back down.

The latter seems like the ethical thing to do, but it also flies in the face of the American business model, which goes something like "A fool and his money are soon parted."

So what do you think? Are ethics considerations applicable to people who are too ignorant to understand even basic economics?

Am I responsible for them or should I just try to get rich?

[blukatzen]

How much LAND are you on? That would be the most important factor after TSHTF. A house is one thing, but land is what you use as your main resource to keep going afterwards.

[Colorado-Valley]

$this->bbcode_second_pass_quote('blukatzen', 'H')ow much LAND are you on? That would be the most important factor after TSHTF. A house is one thing, but land is what you use as your main resource to keep going afterwards.

[Grifter]

$this->bbcode_second_pass_quote('Colorado-Valley', '
')But then my new neighbors might decide to lynch me after their big house loses all its value.

[MD]

Just because you are certain the bubble will pop, some enterprising optimist will be equally convinced that you are the fool.

Take his money, and let time prove the real fool!

Bravo for pointing out the ethical dilemmas of free trade.

My favorite example is the $25 garage sale bargain that then auctioned at sotheby's for $250,000. Situations like that should give pause.

Today finds like that are celebrated as great victorys. In the past, such were much more likely to be considered "ill gotten gains". I prefer the past in this regard.

Back to your house example. Let's say you warn the buyers, and even agree to a lower price. What if you then prove wrong and the price goes up another 30% over three years? Does your buyer then owe you more?

[sch_peakoiler]

$this->bbcode_second_pass_quote('MD', 'J')ust because you are certain the bubble will pop, some enterprising optimist will be equally convinced that you are the fool.

Take his money, and let time prove the real fool!

[RacerJace]

Another thing to consider is that market price is determined by the existence of a willing buyer. That's economics 101. If you sell below market price then you maybe the fool.

Economic systems (especially capitalistic systems) have no morals.. Morals are part of the social system and are based on emotion and cultural norms. However you can use an apeal to emotion to influence a buyer and that in my opinion is immoral. All gun salesmen use emotion as their no.1 weapon.

Obvouisly it's not black and white. The more buyers you get for a set price (in a given time period ie higher demand) the higher you can set the price. And each buyer has a different perception of value, so one may pay anything for the view whilst another will see a fresh water supply and relative isolation as high value.

One last thing... don't trust real estate agents. All they want is to maximise their comission. So it is expected that they want to maximise the price and the rate of sales (turnover). Only when/if you put the property on the market you will find anything from many buyers straight away (price too low) to the sound of silence (price too high).

Sorry if this comes across as patronising... it's not meant to be.

[Tanada]

If it makes you feel bad then offer the house at a 10% discount from market price, then you have your profit and the buyer has his house. If the market crashes right after that then the buyer can tell himself he wasn't a blind fool because he talked your price down, and if the market goes up, well you still made a very healthy profit didn't you? Don't be like the contestant on Deal or No Deal who just has to open one more case and ends up loosing a great offer as a result.

[mekrob]

$this->bbcode_second_pass_quote('', 'B')ut then my new neighbors might decide to lynch me after their big house loses all its value.

[Fergus]

Taking advantage of someone is selling them something you know is not worth the price. The realtor came to you and wants to put money in your pocket. The realtor is the swindler, he knows whats going to happen, or should. You are just an opportunist in the right place at the right time with a product he can sell. Let the buyer worry about the economics of it all. Take the money and build that solar cottage and bay gold and silver with the rest of the money.

[Zardoz]

$this->bbcode_second_pass_quote('Colorado-Valley', 'A')m I responsible for them or should I just try to get rich?

[Pablo2079]

Look at it this way.... they are buying the house with a currency backed by the full faith and credit of the U.S. Government.

When the U.S. dollar collapses, would you then hold the buyer responsible for that? I say take what you can get for it..... you can't be held responsible for the market and the buyer can't be held responsible for the future "value" of the currency they used to purchase the house. There are too many factors involved to attempt to come up with a "fair" price for the home.

Sleep with a clear conscience.

[NEOPO]

Bravo for having some shame in your game i.e. a conscience...
Such a rare thing these days.

how does it go? "fools and their money are soon parted"...something like that
I made my own "fools and their money are lucky to be together in the first place!" and I think I like it better.
Sad but true.

Actually we have a system in place that keeps most of us running on the treadmill to nowhere so are we all fools or just very manipulated by our own system?
Considering that alot of money wont get us jackshit when/if the economy collapses it might be a good wait before we know who the real fools are.

I use to play some pool (understatement of the year!) and one of the first lessons I learned was taught to me by an old player who could barely walk around the table.

I felt sorry for him and then he taught me another lesson.
Yes 2 lessons in one fell swoop.
He was whoopin up on me - had me down $40 - a "crip" kicking my young and dumb ass so I asked to adjust the spot and he started to walk out (the stall) so i said ok no problem lets continue and then he continued to take my remaining $40 !

hmm maybe it was 3 lessons:
1. never underestimate your opponent
2. never feel sorry for your opponent
3. dont fall for the stall

Its the "killers" touch.
"We" might not see everyone as an enemy/competitor yet "they" have the mindset that we are the enemy thus to keep things balanced we must also see them as the enemy.....er something like that.
Ok I agree - let's use the word competitor.
and all this wrapped into one sentence "Yes take advantage because they are most definately trying to take advantage of you"

Isnt that about right - everyone is competing in one way or another against everyone else?
I dont feel that way and honestly despise money yet it is the game that we were all born into and we are all involuntary players so whats a mofo ta do but play or die?

Take the money and build an eco village duh!!!

[mmasters]

Sell it and use half the money to build a little PO fortress on a prime spot on the rest of your land. Then take the other half of the money and put it in gold. You will be set.

Then be considerate and ready to help your neighbor out when TSHTF.

[davep]

I think the important point here is that the potential buyer is in the market anyway. If they didn't buy your place, they'd still buy something else at an inflated price. Why shouldn't it be yours?

[dissimulo]

I sold a rental property to just such a "fool" in 2005. Since then, it appears the property has appreciated another five percent.

I could not be more delighted to have locked in my profit and put it to good use. The new owner could not be more delighted to have a solid rental that has continued to appreciate.

You can't time the ups and downs of the real estate market, so you can't time the evolution of foolishness and genius.

If you can build a house you want to live in for less than the profit and have money left over, selling would seem to be the wise decision.

[spear]

1)Do you need the money?
2)Do you want neighbors?
3)Do you want to build another house from scratch again?

Maybe an option to consider is subdividing a few acres which are idle and selling them off as lots to people in the 'know' if you need to generate some money for other investments.Then you dont have to build again.

100k for materials,200ksweat equity.When you think about it,the profit is 150k of a diminishing currency,a new neighbor and all his clan,and you have to build another house .
By the time the deal goes through,the 150k will have 10percent less buying power,cut in the realtors,lawyers and all the other payouts,what do you really think the profit will be in the end?
Just over 100k plus cashing in on your sweat equity.

I sold a house I had in the city a couple months back,but that house was a liability.I sleep much better now.
Dont get me wrong,the money is nice and I put a LOT of it in gold coins and some essentials.I even have enough left over to invest in some stocks.Shit Im even thinking of selling the other one in the city and bet it all on the dollar diving,but to sell the homestead and start from scratch again?I dont know.

I cant see any ethics problems here though.You put up cash and labor and want to sell at a profit.

Let me rephrase it another way.

Do you really think that money is going to save you?

[DesertBear2]

Just a few "ifs".....

1. If you reduced the price by 50% to $225,000 in order to give the buyer a better deal, he might just turn around and sell the property to somebody else for the full $450,000 a month later.

2. If you reduced the $450,000 price by 50% to $225,000 as above. What if the RE market collapses and drops the house value to $175,000? Then the buyer will still be mad that he paid too much.

3. What if the dollar collapses and the Fed/US Gov decides they have nothing to lose by unleashing the inflation machine? The nominal value of the RE might keep going up and the house might be selling at much more than $450,000 by next year. And you would have depreciating dollars in your accounts.

It's probably best for you to avoid guessing about future market conditions and to avoid monkeying around in the RE marketing process. Your guesses as to future prices would probably be wrong anyway.

The best course might be to just use a RE firm to do all marketing and contracts etc. Let them set the price and be the middleman between you and buyer. You should just turn it over to them and stay as completely out of the process as possible. Let the "professionals" handle everything- including the anger of the buyer if the price later drops