Political Bullsh!t

Learn when to sell grandma’s home. It’s a lesson that could save the next generation

She told NPR she’s now hoping to sell the home, feeling like she’s done what she intended to do. “We’re city people,” Harris said. “We didn’t get 40 acres and a mule, (and) we had no place to call home, except this corner in Petworth. I always wanted my family to have someplace where they can say, ‘Yeah, that’s where I’m from. That’s my home.’

And that’s why I held on to it.”

She said she’s now selling it to downsize to a condo. “In all likelihood, we will offer it to family first at market value,” Harris told NPR, admitting that she doubts her husband’s daughter will be able to afford it.

It’s not a unique conundrum for Black homeowners looking to sell in this market. “The pandemic ignited a home-buying frenzy as the decade-long housing shortage converged with historically-low mortgage rates, shifting workplace dynamics and new opportunities for young buyers to pursue their first homes,” senior Forbes contributor Brenda Richardson wrote.

Thomas Holley, the longtime owner of a Crown Heights brownstone in New York, told The New York Times he is planning to purchase a condo in Florida and would like to sell his home to another Black person, but gentrification has caused home prices to inflate beyond what is attainable for the Black people he knows.

The dwindling number of Black homeowners in communities like Holley’s can have real social effects. “I noticed a neighbor putting up something out front and I was curious,” Holley said of his experience with a white neighbor. “I went over to strike conversation and before I could finish a sentence, he told me that he didn’t have any money.”

Even before gentrification and its effects were commonly reported on, developers looking to establish middle class communities sought to separate them from Black people. In Detroit, Teresa Moon, president of the 8 Mile Community Organization and a community resident for 59 years, said she learned in school that a wall she could see from her childhood home was built in 1941 to keep Black people outside of a neighboring all-white community. She told WBUR the wall was built when a developer seeking to build houses couldn’t access the capital he needed because Black people lived near the area he targeted. “Our parents didn’t talk about it,” Moon said. “I guess it was taboo to say what it was. When I was about 12 or 13, I found out … We found out it was a segregation wall. And why it was put up, you know, to separate Black people from white people.”

That history of discrimination has had trickle-down effects. The Brookings Institution, a research think tank, published an analysis in 2020 examining the wealth gap between Black and white Americans. The typical white family brought in $171,000, almost 10 times what the average Black family earned in 2016, the institute reported.

Sunny Jones, a real estate agent in southern Los Angeles, told NPR some Black homeowners realize the complexity of rising home prices and are “flabbergasted at how much more their home is worth than when they purchased their home,” she told NPR. “Some people are just excited that they made a smart investment and get to basically capitalize on that now,” Jones added, “and then others … they know what that means, and that might price even their own kids out of the market.”

Jones told NPR she tries to encourage thoughtful financial decisions that keep in mind a home’s worth and its ability to create generational wealth. “When that property is passed on to the next generation, it’s important that that person receiving the property has some sort of financial education on what makes sense, in order for it all to have been worth it,” she said. “I’ve seen some really sad stories about what happens to grandma’s house and what happened with the proceeds from the sale. And then I’ve seen some really good stories where it did exactly what it was supposed to do.”

And that is to arm families with enough cash to invest in ways that produce greater returns than holding that family home. If selling is a better means to accomplish generational wealth, then do sell, and do sell smartly. That sometimes means ignoring those cold calls from investors and opting to sell on the open market, where homes typically go for more. It also means ensuring a will, or better yet, a trust is in place to protect gains from the sell.

Danaya Wright, a law professor at the University of Florida, told NPR that in his research of what becomes of properties when owners die without a will in place, the homes of owners with no will in place sold for “significantly below fair market value … They were much more likely to be lost at foreclosure and tax sale — four times more likely, for instance,” Wright said.

A trust protects the property from losing value while legalities are worked out among siblings, for example. Wright explained that typically in a trust, a successor trustee is assigned, and that person has the legal right to sell or transfer the property in question.

“Even if Grandma said, ‘I want my house to be sold and split three ways among my three kids,’ it can be done. It can be done right away so that the house doesn’t deteriorate. And we’re not relying on those three heirs to actually do this process. We’ve got a designated trustee who’s going to do it, and it’s one person,” Wright told NPR. “As a legal matter, it’s much easier for that person to do.”

Wright’s advice is particularly relevant as we move further into the year 2022, during which experts are predicting a “whirlwind” housing market with home prices expected to increase another 2.9% on top of highs in 2021, Forbes reported. Hispanic homeowners are expected to grow by 4.8 million and Black homeowners by 1.2 million, according to an Urban Institute report Forbes cited. “Despite home-buying optimism, there are still barriers that exist to prevent people—particularly Black and Latin/Hispanic communities—from accessing and sustaining homeownership,” Richardson wrote. “Many of these families may be home buyer-ready today, but the challenge is making sure they know that—and ensuring that we have the home financing products and services that fit the needs of this new set of home buyers.

Sean Grzebin, head of consumer originations for Chase Home Lending, recommended a Beginner to Buyer podcast launched last year. I haven’t listened to that one, but I can highly recommend the multifamily investing course from entrepreneur and real estate investor Jullien Gordon. It’s not free, but it’s been well worth it for me along my journey to home ownership. The BiggerPockets wealth with real estate investing podcast is a free resource I use often as well. What I’ve learned so far is that buying a home is not easy. It takes a concentrated effort to save the needed funds, and it takes a resource that is even more valuable than money. That is time—time to research lending options, time to get prequalified, and time to view homes. Being the spark that can offset the financial trajectory for multiple generations is not going to be easy, but it is worth it. 

RELATED: On my way to being a first-time homebuyer in Georgia: Here’s how I won the contract in a wild market

RELATED: Black homeowner went to ‘strike conversation’ with neighbor. He responded he doesn’t have any money

RELATED: Turns out, fighting the temptation to strip property from Black families isn’t asking too much

RELATED: Homeowners associations are just as problematic as they’ve always been. Twitter users show why



Source link