I know this makes me sound like a homer for the industry which I am really not. However I want to analyze some of this more in depth. Hopefully other agents, appraisers and others can correct my analysis where I am wrong.
– First off call me stupid…. Lets go to the example where a home sold for 500k but the buyer didn’t have the downpayment… if someone cannot afford the downpayment, if they are getting the money back from the seller AFTER closing, how did they get the escrow to close at all? I do not see how the transaction would have made it through underwriting.
Bugs, SDA you guys have any comments on that?
Okay so following the logic posted, the buyer would instead get a loan for 530k and get 100% financing, and then out of escrow after closing the seller would cut the buyer a check for 30k. Hmmm… Okay well why wouldn’t the buyer simply buy the home for 500k at 100% financing? Why would the buyer incur a higher property tax assessment, why would the seller possibily incur a higher cap gains tax (if it was an investment property)?
Alex good for you for spotting that trick the Realtor was trying to pull on you. Pardon my skepticism but I don’t believe it would have ever worked anyways. If the house was selling for 700k then the most most most you could have got back would have been 21k as a credit. I don’t see how underwriting would have passed this transaction through. Furthermore you would have had to be very careful how the verbage was in the contract.
Guys I am not saying fraud doesn’t happen because it does…and there are a TON of sleazy agents, even brokers and even appraisers… then go to the lending industry and oh man… talk about a can of worms… I am just throwing in my two cents… I applaud you guys for saying no to this sort of thing. I recall Powayseller told me someone close to her who was selling a home encountered a buyer who wanted to pull some shenanigans like this.
It is bad for the industry. My point here is that it really does not benefit anyone, buyer or seller. I am not trying to discredit or discount that it didn’t happen to any of you.
