I have 2 friends who recently bought or sold houses. In 3/3 cases, cash back was involved.
In the first, it was a 545K sale in Escondido. Cash back was 5K.
What was really intestesting was the condo this guy sold at the same time to move into the 545K house. Listed last year at 390K. Sold for 350K with 10K cash back (for the bears on the site, that’s well over a 10% decline). Buyer even lobbied for a higher sales price with more cash back because they were taking out a 100% interest only loan apparently at their limit. Needed Cash back for closing costs. I told my friend this was very shady. I was glad to hear, though that they reported it to the lender. Problem became that the lender saw the amount as excessive, so they were in escrow and the lender says it’s too much, deal is off if it’s that much (I think 2% was their limit).
The solution: Extra cash given to broker who then rebates back to the buyer his/her sales commission.
Very, Very, Very shady.
The third was a roughly 540K sale in 4S. Cash back was nearly 5K, and there was also an allowance for new carpeting.
Base on these data points, and the house I am renting: listed for 600K at bubble peak, trimmed to 570K, didn’t sell, comparables at 500, zillow at 480, I think the market in RB is down a solid 10% from peak when all this washes through.
