Originally published at: https://boingboing.net/2019/08/21/plot-of-land-listed-for-1bn.html
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I’ve read that three times and I still don’t understand.
Who did the what with the what?
Anyone?
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Late stage capitalism!
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I didn’t understand either, but I assume it translates to, “some rich people just made themselves richer.”
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So let me see if I get this straight:
Beaver owes Wally $20 and is auctioning off his wagon for $100 to cover the debt and make a profit.
Ward auctions off the wagon to Beaver’s friends; Lumpy, Stinky, Chewy and Dorp.
Beaver’s friends first have to empty their pockets to show Ward they indeed have at least $20 to cover the debt.
None of Beaver’s friends have the $20.
Wally then decides he’ll take the wagon for 20¢ and forgive the debt Beaver owes him.
Wally will then own a wagon worth $100 that he paid 20¢ for and be $80 richer.
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I read it as "the lender is owned 200$ million by seller. Lender refused 150$m offers (which would have left seller owning 50$m still) and instead put in a 100$k bid (reducing 200$m debt by 100$k) and left the seller still holding the bag for 199.9$m dollars.
Or as you said “some rich people just made themselves richer.”
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And if I RTFA, the buyer (as holder of the debt) “forfeits the $200 million owed”. Of course, the LOAN was only 45$m…the extra is fees, surcharges, interest, et al. So really, they’re wiping the 45$m off the books, sorta. Still a fire sale for a 1$ billion asking price…
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If it was actually worth $1 billion, then someone with say $300 million would have scooped it up, paid of the $200M debt, and then flipped it to double their money.
But like a lot of things, what people ask for and what is worth is often two different things. I mean, if it was worth $1billion, how did it get bought for $45 million the first time?
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Man, that’s a very small double bass.
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I also am mystified. I need some diagrams, or little dollar sign models. Something more than these puzzling sentences which fail to convey understanding.
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Is this a sneaky-but-legal tax thing? Normally if ~$200m in value changes hands, the state takes a bite. Even at the peon level it’s often a little different in real estate, but if this was a clever workaround for that, why $100,000 instead of $1?
I won’t rest until I get answ… eh, actually, I’m not that curious.
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This headline is inaccurate. Someone paid $100k to assume the $200MM debt.
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Almost exactly what I read there. Except that 20c, which in theory Wally would pay to Beaver? Beaver doesn’t see a penny of it, because Wally just takes it out of the $20 that Beaver owes him. So Wally then owns a $100 wagon that he bought for a $20 debt, which now disappears.
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This all sounds like Eddie Haskell should be at the bottom of it somehow.
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I guess that the purchaser (who is also the creditor) is gambling that they can sell the land, get back their $200m loan plus the $100k paid at auction, and still turn a heft profit.
This is only seems like a remarkable story because it contains a bunch of fictitious numbers. The listings of $1b or $650 or even $400 are absurd and bear no relationship to reality. This is just an example of a lender taking possession of a property on which the owner owes far more than its worth, which happens all the time.
I could take out six mortgages on my house, get deeply underwater, then list my house trillion dollars–that doesn’t make it remarkable when the bank repossesses it for an infinitesimal fraction of that asking price.
If the wagon was actually worth $100, then there would have been plenty of other bidders. It wasn’t, hence the wagon going back to Wally and him eating the original debt.
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Seriously, can someone break down the tldr into about 9 words or less?
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Lender repossesses wildly overvalued property and writes off debt.
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Real estate deal.
See Think Like a Billionaire: Everything You Need to Know About Success, Real Estate, and Life for details.
ISBN 978-0345481405
