What is the Resale Formula – and how does it work?
This is the formula that describes the “good deal” that each land trust homeowner passes along if they ever sell their home. The formula is set so that the resale prices of our homes increase at the same rate as wages. Therefore, when you sell your land trust home, you get (a) what you paid for it, plus (b) 25% of the increase in the market value of your home. • EXAMPLE: You buy a home from the land trust in 2001 for $100,000. At that time, the house had an appraised value (i.e. market value) of $115,000. In 2007, you want to sell the home — and now it has an appraised value of $215,000. Plugging these numbers into the resale formula, this house could be resold in 2007 for (a) original purchase price ($100,000) plus (b) 25% of the increase in appraised value ($100,000 divided by 4 = $25,000) for a total resale price of $125,000.
