Quote:
Originally Posted by JK47
While I agree with your overall point that barring insider trading in real estate is impractical I can't agree with your logic. We arrived at the same answer but your reasoning is, quite frankly, backwards. Your logic above basically amounts to "Prohibiting insider trading would make transactions prohibitively expensive for insiders by allowing the public to bid up the price of parcels" which is actually an argument in favor of barring insider trading.
|
No, my point is that it's not only impractical, but there is no point. In order to "ban insider trading" you would have to make all information public on a regular basis which isn't possible because most property owners don't even have all information on their property. So you would constantly be doing environmental reports and surveys on properties for literally no reason because they aren't even on the market.
Quote:
|
The maddening thing though is that, based on this second quote, is you were SO close to a good answer. The prohibition against insider trading arose with and is linked to the requirement to disclose a company's performance and finances to the public as a condition of marketing ownership of the company to the public via a marketplace where incremental portions of the company are bought and sold. Where insiders have sought public ownership they cannot disadvantage the public by trading their own securities using information they have not disclosed to the public. In the real estate context, in order to prohibit insider trading there would need to be a much greater level of transparency in terms of information on specific parcels and buildings that would be disclosed to the general public. That kind of reporting is simply impractical for the numerous reasons indicated in the second quote above. Real estate is generally held privately and most often wholly and is not owned by shareholders who buy/sell the lots in a marketplace. Thus since insiders have not co-mingled their ownership with members of the public there's no interest served by prohibiting purchases based on insider information.
|
That's my point though, there is no one harmed by a real estate transaction being completed where one party knows something the other doesn't except the disadvantaged party. That's classic caveat emptor or in this case seller. There is some regulation in real estate, but it actually only pertains to sellers, not buyers. If you are selling a property you must disclose known defects to a buyer. Ironically this further surpresses the flow of information because sellers and owners often take a "I don't wanna know" stance on big issues like environmental. They would rather dump the property at a lower price than take the risk themselves that there is something terrible they will discover that they will be forced to disclose to any other potential buyer.
I actually just got a multi hundred thousand dollar discount because of this. They buyer said "look, just waive environmental contingency and I'll give you a discount to compensate for the risk", so I did it and it turns out there's only $35k of asbestos remediation and nothing else. But it could have turned out that I have to set up a super expensive remediation system to remove hydro carbons from the soil under the building.
Prev
Linear Mode
