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Council wants to help homeowners resist ‘predatory home flipping’

Tuesday, May 1, 2018 by Jack Craver

City Council Member Delia Garza has no interest in selling her home in Southeast Austin, but she was intrigued by a letter she received in the mail recently from somebody interested in buying it.

An ominous all-caps headline on the yellow card reads, “THIRD NOTICE” – language one would expect on an overdue bill. Below that, it says the following: “Attention: Delia – I urgently need to talk to you about your property.”

“When I read it, I said, ‘Did I get a ticket? Did I not go to jury duty?’” Garza recalled during a Council work session on April 24.

Garza has received complaints from constituents who have been getting similar mail offering them quick cash for their homes. Signs have also been popping up around town offering easy home sales.

For those who are considering selling their home, the mailers and signs typically promise them a faster and less stressful alternative to the conventional home-selling process, which even in a real estate market as hot as Austin’s can take many months.

One mailer that Garza highlighted listed a number of enticing benefits: “Close in 3 Days. We PAY closing costs. ANY condition OK. Tenant-occupied OK.”

Garza is concerned that home flippers may be pressuring or deceiving homeowners into selling their properties for much less than they’re worth. She would also like to encourage homeowners to sell their properties to other families, rather than investors.

Last week, Council unanimously approved a resolution authored by Garza that directs city staff to develop an educational campaign, tentatively named “Families Not Flippers,” to educate people about the home-buying and home-selling process. The resolution suggests a number of potential education strategies, including outreach to “vulnerable populations that are at risk of being targeted by home flippers” and a hotline to refer people to real estate agents and legal information about home selling.

The resolution directs city staff to seek insight from a number of community organizations that specialize in providing legal assistance to low-income people: Texas Appleseed, Texas Fair Defense Project and Texas RioGrande Legal Aid. It also directs the city to collaborate with the Austin Board of Realtors, whose members obviously have an financial interest in reducing the number of home sales that take place without their involvement.

City staff is to report back to Council at the end of June with a list of potential policies Council could implement to realize the goals outlined in the resolution.

“The purpose of this resolution is to empower families with the information they need to make the best decisions for their future – whether that means selling at fair market price, choosing to sell to a family instead of a flipper, or choosing to stay in place and accessing capital with reasonable loan terms,” said Garza in a statement.

Even though Garza described the businesses she has targeted as “predatory home flipping” using “high-pressure, deceptive and/or exploitative practices,” she has not suggested that the practice is illegal or hinted that there are ways that the city could prevent or punish behavior. Instead, her emphasis is on preventing homeowners from falling for bad offers.

In the same statement, Council Member Greg Casar described the resolution as one part of a broader “Housing Justice Agenda” that he, Garza and Council Member Pio Renteria recently unveiled. Other parts of the agenda include passage of a $250 million to $300 million bond to fund income-restricted housing and increased tenant protections, such as a requirement that landlords pay certain relocation costs when they displace tenants by redeveloping a property.

U.S. Air Force photo by Staff Sgt. Teresa J. ClevelandThis article has been updated to correct a quotation. 

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