blockbuster law? Question. - Posted by mark

Posted by Rob FL on May 15, 2000 at 08:55:57:

You may want to check your state laws at, but I seriously doubt this is true info.

The term “blockbusting” has nothing to do with flipping real estate. It is a term used to describe the discrimanatory of action of encouraging people to buy or sell properties in a certain neighborhood because of changes in the demographics (minorities moving in).

blockbuster law? Question. - Posted by mark

Posted by mark on May 15, 2000 at 07:32:55:

I’ve got a realtor getting a little frantic about the flipping deals we’ve done lately. Actually I think he’s got a problem with some other deals he’s done. Anyway, he’s telling me there’s a blockbuster law that states you can’t sell a property for more than 75% over what you purchased it for. To me, that seems ludicrous and I’ve never heard of it.

Is there any law against, for instance, buying a property for 20,000 and selling it for 50,000, backed by a legit appraisal and all other docs in order? Thank you for your help.

Time for a new agent. (nt) - Posted by Jim IL

Posted by Jim IL on May 16, 2000 at 24:39:46:


Not even close - Posted by John Behle

Posted by John Behle on May 15, 2000 at 22:36:27:

Your real estate agent is very in-adequately trained - to say the least.

Blockbusting is illegal and has nothing to do with flipping properties. It is as described below - using discrimination to lower property values.

There are laws related to inflating property values fraudulently through “flipping”. There is nothing illegal about buying a property cheaply and selling it at market. Nor are there laws prohibiting a knowledgable buyer from paying more than market if they want.

It only becomes illegal when there is mis-representation as to property values, loan fraud or artificial inflation. For example, there has been a great deal of artificial inflation through flipping to straw buyers in the New York area in the past. The building gets sold between associated people and companies over and over at higher prices to inflate values. Many times the building would then be torched.

“Flipping” in the way it is talked about here in this forum and “flipping” as lenders, news media and etc. understand it are not the same. Finding a bargain and selling it at or below market or even for a little bit of a premium by offering easy terms IS legal and always will be in a free country.

I’ve been an agent and broker for 22 years and teach courses in real estate law for our state.

some laws may even be local… - Posted by David

Posted by David on May 15, 2000 at 10:08:37:

in Philadelphia as a reaction to block busting, it was illegal to have for sale signs or sold signs on houses in the city. the idea was that many signs would panic block busting. since then it was partially recinded and you could put either a for sale sign or a sold sign, but not both. just several weeks ago the city code from the 60’s/70’s was again amended to allow both for sale and sold signs. its the "sign’ of the new millenium!

I think it may be possible - Posted by Glenn-OH

Posted by Glenn-OH on May 15, 2000 at 09:30:40:

If I remember back to the seventies, the practice of blockbusting was to move a minority family into a white neighborhood. Then the bigoted owners were targeted to sell their properties at a below market price, due to their perception of lost value (which was strongly encouraged by the instigating party). The instigator would then by the properties cheap, and sell them at FMV. Thus, if someone bought and resold at over a 75% markup, the suspicion was that blockbusting was occuring (why else would a seller sell so cheap). Thus a law such as this may still be in place - not to punish honest transactions (which it does) but to hae a recourse against unscrupulous marketing. Check your laws - it may exist.