At time of resale, the Home Trust and homeowner(s) jointly calculate the resale formula to determine the new sales price of the home with the restriction that the current owner must sell to other income-eligible applicants.
The resale formula is determined by (a) using the change of percentage of increase of Area Median Income (AMI) from time of purchase to time of sale.
To understand the resale formula using the AMI, use this formula to calculate: Original Price + % ( AMI increase) of Original Price = new Sale Price. To illustrate: suppose the AMI has increased 10% since the date the house was purchased. If the house initially sold for $136,000.00, you would calculate 10% of that amount, which would equal $13,600. You would then add the original purchase price, $136,000 and the amount of increase, $13,600, to come up with the sale price of $149,600.00. $136,000 + $13,600 = $149,600.
Please note: The seller of the home is entitled to all of the proceeds of the sale of their house, minus outstanding mortgage loans and costs of any repairs necessary to return the home to the Home Trust’s standard for resale.
ONLY by restricting the resale price in this way, can the home can be kept affordable to those earning island wages, FOREVER!