When my grandparents bought their first home in 1953, they paid their home builder for the price of the home. The buyer handed over the money, courtesy of the bank; the builder handed over the keys to the home. And that was it, transaction finished.
But that scenario may be fading thanks to the latest real estate fee: A requirement to pay the original home builder a 1 percent fee every time the house is sold - for 99 years.
Many condo and townhouse owners are already required to pay a "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.
Bu the new 1 percent fee goes directly to line the builder's pockets for a very long time after the initial home sale. The issue has attracted the attention of consumer groups and Washington, where some representatives are working to eliminate the fees.
The builders think the fee is a great idea, as do capitalists. Freehold Capital Partners, the New York-based financial company that is developing the program, tells CNN it has signed up thousands of developers nationwide, representing hundreds of billions of dollars of development.
The company would monetize that future income, allowing developers to get paid now rather than later. Freehold would bundle together the estimated income from the future fees and sell that package to investors. It estimates this new asset would be worth about 5% of the original home prices.
What do you think? Are you willing to buy a home that has a 1 percent resale fee attached for the next 99 years?