Profit from home sale

I was reading the blog of someone who thought that according to her interpretation of St. Thomas Aquinas it would be very sinful to make an enormous profit from the sale of a home (Example: During the housing bubble selling a home for double what you bought it for a few years earlier). This person seems to think everyone involved in such a sale would be guilty of fraud (selling a home for more than its worth) and therefore bound to restitution.

This cannot be right can it?

No, it’s not necessary to wait to sell a house until you cannot make a profit from it or benefit from the current market. Markets go up and down through no fault of the seller. If people want to buy a house way over market value they are free to do so, no one is forcing them into it. The only danger is when the market prices fall and the purchaser finds himself “under water.” This happened to a lot of people in the 80’s, and it’s sad, but it’s not the seller’s fault. If a seller wishes to, he can sell the house for less than current market value, of course, but it’s not a sin if he takes what he can get for it. It’s the law of supply and demand at play.

I thought so too, but this is what she then says…

"Aquinas asks first whether it is lawful to sell a thing for more than its worth. This might strike us as odd if we think that things don’t have any inherent value outside of the value the market assigns. Aquinas thinks the value of something depends on their usefulness to a person and that just exchange serves both parties equally. Now, if the thing being exchanged is faulty, either because it is broken or because it is not worth as much as may be claimed or because it is of lower quality than may appear, the sale or exchange of that thing is unlawful. Aquinas says that in all these cases, “not only is the man guilty of a fraudulent sale, but he is also bound to restitution.” Even if the person selling the faulty good is ignorant of the fault, he is still bound to restitution. This ensures that the common good is protected by restoring equality where inequality exists. This means that houses that were sold for more than they were worth were fraudulent sales, even if the real estate agents and lenders and home owners didn’t know that the homes they were selling were overvalued. It also means that the people who profited on these sales are bound to restitution. Banks and companies that profited off of mortgage-backed securities that were bought and sold for more than they were worth rightfully should pay to restore equality.

But somebody may respond that it is perfectly reasonable to sell something like a home for more than it is worth, if a buyer exists who will pay the price. Aquinas disagrees. First, he distinguishes between two types of exchange. The first is natural, as when one thing is exchanged for another, or for money equal to the value of the good exchanged. The second type of exchange is the exchange of money for money or money for a commodity not on account of the necessities of life, but rather for profit. This kind of exchange “is justly deserving of blame, because considered in itself, it satisfies the greed for gain, which knows no limit and tends to infinity” (Q. 77, art. 4).

everydaythomist.wordpress.com/2008/10/08/can-aquinas-shed-light-on-our-current-economic-predicament/

Except that you aren’t selling it for more than it is worth. Who decides value? The buyer does if he or she is not being coerced. It is a mutually agreed upon fair price in a free market. This transaction seems “natural” to me. Prices rise and fall, as noted above. Even the government cannot correctly keep pace and if you doubt, check your PT vs. what a realtor thinks you could realistically get. In fact, that a realtor, buyer, seller, loan assessor and tax assessor would all have slightly different figures would back this.

The second type described sounds more like profiteering. If you could somehow constrict the supply of for-sale homes, that would be justly deserving of blame.

Agreed. A thing is worth what someone is willing to pay for it-- given their assumptions/knowledge of the condition of that item be it a car, house, tv… whatever

It would be immoral (and more in line with what Aquinas was talking about) if one hid facts about the home from the buyer. That is, faults that were not readily apparent which would in fact lower the market value if they were known by the buyer.

  • Items that were installed or modifications that were not done to code.
  • Nuisances like noisy neighbors, aircraft overflights, seasonal flooding, homeowner association or government restrictions on property use.
  • Flaws in construction that needed to be repaired (cracked foundations, improperly installed wiring, plumbing or appliances)
  • Problems with major things like the roof, AC, heating system

You could say that it is a buyer beware transaction and they should have inspected these things themselves-- but, if you knew and didn’t disclose them to the buyer I would say it is immoral.

ETA: another example. Fine art is sold all the time at extraordinary prices. Almost obscene… a good artist can often copy those items almost exactly. The two things are virtually identical but it’s the authenticity of the work that adds value to one and not the other. So, is it immoral to sell the original for so much more than the copy? I would say no. While it would certainly be immoral to forge/represent a copy as an original work of someone else.

I don’t think profit on a home sale applies to what Aquinas was saying. It might apply to a used car salesmen knowing that a vehicle is a lemon and selling it as if it’s not or perhaps even turning the mileage counter back to deceive the customer.

A house’s worth is what the market dictates. :shrug: That seems pretty clear to me.

There is nothing wrong with selling a house for whatever the market will bear (absent something such as fraudulently misrepresenting or hiding facts you know which a buyer would want to know).

In addition to the points others raised, here’s another point: Say I buy my 3-bedroom, 1 bathroom house for $100,000. In 20 years I sell it for $300,000. Have I made a $200,000 profit? NO, I have not. Why not? Because if I want to replace my 3 bedroom house, I need $300,000 to do it. Values are relative over time.

Plus, something alot of people dont take into consideration…

My ex-wife and I bought a house over 10 yrs ago, the list price was $107,000. We had a 30 yr mortgage with monthly payments of $975…so if we had stayed in the house and paid each and every payment until we paid it off, we would have paid out of a total of $351,000. for that $107K house.

So even if we sold the house after paying it off 30 yrs later, for us to make ANY profit at all, the house would have had to tripled in value, I doubt it would increase that much in value, even over 30yrs!

It is NOT sinful to make a profit from selling your house, no matter what the profit is.

The only problem I can see is if you knew there was something wrong with the house and did not disclose that information which would decrease the value of the house. If you disclosed everything you knew and the buyer still wanted to pay, then you are selling it for the value the buyer feels it is worth.

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