Bugs main point (and Bugs correct me if I am wrong) is that the lenders decision to make the loan is 100% based on the risk that the lender is willing to take. Thus if the buyer receives ANY assistance that the lender has not been made aware of, then the decision to lend has been compromised and is fraudulent. It didn’t matter if it was a credit from the Seller or a check from the buyers rich uncle.
I really feel yours and Bugs statements are valid. Yours was that the house is worth what it is worth regardless of credits and such. However, as appraisers are the front line troops in real estate wars, it is essential for them to get ALL of the facts about the home when they make the appraisals. If there are credits to the home then Bugs will need to know about them as they may affect his appraisal. Maybe the credit will only cover a fraction of the cost of the repair that needs to be made. So the appraisal should be lower.. See what I am saying? Yes the home is worth what it is worth but for Bugs to appraise it correctly he will need to know about any credits and then assess whether they should affect the appraisal or not. Many times I get calls from appraisers asking me about listings I have sold as they are doing an appraisal for a neighboring property. The first thing they ask about are were there credits and what was the exact nature of those credits.
Now your points are also especially valid about lowering commission (sdrealtor insert your expected backhanded compliment here). The seller identifies the commission and the buyer may request that the buyers agent ask the listing agent to ask the seller to reduce the coop commission and perhaps lower his price. The buyer does not negotiate this, the buyer asks his agent to negotiate this with the listing agent. (Note the buyers agent will be none to happy about that and will most likely balk at this request) The listing agent will then discuss this with the seller. Alternately the buyer may ask the buyers agent to simply take a smaller commission, then ask the buyers agent to request to the listing agent that the seller credit the difference back to the buyer as a non-recurring closing cost. This MUST be made aware to the lender and appraiser so that there is not any fraud going on.
There are appropriate documents for doing all of this, doing it above board so that all parties are aware of this. The end result is that if done correctly, there is no fraud, and buyers save money and Realtors get less commission. (sdrealtor insert obligatory insult here)
