scheming concept for good deal

[SK in CV]

[quote=clearfund]
Yes, from your IRA you can only borrow up to $10k ($20k if married) in for a downpayment on a home. If its an IRA you will be subject to taxes on the withdrawl, however, the IRS will waive the early-withdrawl penalty. $10k helps, but isn’t a miracle.

[/quote]

This isn’t exactly right. It is not a loan at all, it’s a penalty free withdrawal. A taxpayer in the 28% tax bracket will only net $7,200 (ignoring state taxes for the moment). A pretty costly way to acquire a home, and at least with our local prices, it doesn’t really help much with the acquisition. So you’re right on the last part. It isn’t a miracle. It’s likely to be somewhere between $7000 and $8500 that costs you $10,000. Loan shark kind of cost. Pretty high vig for your own money.

And there are other requirements. It has to be for the purchase of a first home.

[Anonymous]

[quote=scaredycat]but what if you want to sell? You have to keep that mortgage in place […][/quote]

The seller would need a note for security, and the value of that note would be 90% of the asking price. So if you sell, you would need to recover the value of this note. So either your or the next buyer would be essentially stuck with the full asking price of the original owner, unless the note was assumable.

In your plan, you are effectively trying to reduce the asking price by applying the time value of money on a 30 year note and hoping that the seller is ignorant of the substantial discount you are really asking. So, yes, I think you would have to make sure the note is assumable or else you are possibly risking losing your discount if you need to sell. Perhaps there is another way to safeguard against this, but I can’t think of one.

If you ever pull anything like this off, you would certainly become a hero of mine.

BTW: You absolutely cannot do a “side deal” with the listing agent without breaking some serious conflict of interest rules.

[Anonymous]

[quote=scaredycat]but what if you want to sell? You have to keep that mortgage in place […][/quote]

The seller would need a note for security, and the value of that note would be 90% of the asking price. So if you sell, you would need to recover the value of this note. So either your or the next buyer would be essentially stuck with the full asking price of the original owner, unless the note was assumable.

In your plan, you are effectively trying to reduce the asking price by applying the time value of money on a 30 year note and hoping that the seller is ignorant of the substantial discount you are really asking. So, yes, I think you would have to make sure the note is assumable or else you are possibly risking losing your discount if you need to sell. Perhaps there is another way to safeguard against this, but I can’t think of one.

If you ever pull anything like this off, you would certainly become a hero of mine.

BTW: You absolutely cannot do a “side deal” with the listing agent without breaking some serious conflict of interest rules.

[Anonymous]

[quote=scaredycat]but what if you want to sell? You have to keep that mortgage in place […][/quote]

The seller would need a note for security, and the value of that note would be 90% of the asking price. So if you sell, you would need to recover the value of this note. So either your or the next buyer would be essentially stuck with the full asking price of the original owner, unless the note was assumable.

In your plan, you are effectively trying to reduce the asking price by applying the time value of money on a 30 year note and hoping that the seller is ignorant of the substantial discount you are really asking. So, yes, I think you would have to make sure the note is assumable or else you are possibly risking losing your discount if you need to sell. Perhaps there is another way to safeguard against this, but I can’t think of one.

If you ever pull anything like this off, you would certainly become a hero of mine.

BTW: You absolutely cannot do a “side deal” with the listing agent without breaking some serious conflict of interest rules.

[Anonymous]

[quote=scaredycat]but what if you want to sell? You have to keep that mortgage in place […][/quote]

The seller would need a note for security, and the value of that note would be 90% of the asking price. So if you sell, you would need to recover the value of this note. So either your or the next buyer would be essentially stuck with the full asking price of the original owner, unless the note was assumable.

In your plan, you are effectively trying to reduce the asking price by applying the time value of money on a 30 year note and hoping that the seller is ignorant of the substantial discount you are really asking. So, yes, I think you would have to make sure the note is assumable or else you are possibly risking losing your discount if you need to sell. Perhaps there is another way to safeguard against this, but I can’t think of one.

If you ever pull anything like this off, you would certainly become a hero of mine.

BTW: You absolutely cannot do a “side deal” with the listing agent without breaking some serious conflict of interest rules.

[Anonymous]

[quote=scaredycat]but what if you want to sell? You have to keep that mortgage in place […][/quote]

The seller would need a note for security, and the value of that note would be 90% of the asking price. So if you sell, you would need to recover the value of this note. So either your or the next buyer would be essentially stuck with the full asking price of the original owner, unless the note was assumable.

In your plan, you are effectively trying to reduce the asking price by applying the time value of money on a 30 year note and hoping that the seller is ignorant of the substantial discount you are really asking. So, yes, I think you would have to make sure the note is assumable or else you are possibly risking losing your discount if you need to sell. Perhaps there is another way to safeguard against this, but I can’t think of one.

If you ever pull anything like this off, you would certainly become a hero of mine.

BTW: You absolutely cannot do a “side deal” with the listing agent without breaking some serious conflict of interest rules.

[scaredyclassic]

the violation of the conflict of interest rules would only be a problem for the agent, right? buyers and sellers can each try to get the agent to work in their own best interest, if the agent is representing both parties?

Also, i was thinking that even if the seller is aware of the discount, he might be thinking, if the note is non-assumable, that at some point i’d default and he’d get the property back anyway, liek a long term lease…

[scaredyclassic]

the violation of the conflict of interest rules would only be a problem for the agent, right? buyers and sellers can each try to get the agent to work in their own best interest, if the agent is representing both parties?

Also, i was thinking that even if the seller is aware of the discount, he might be thinking, if the note is non-assumable, that at some point i’d default and he’d get the property back anyway, liek a long term lease…

[scaredyclassic]

the violation of the conflict of interest rules would only be a problem for the agent, right? buyers and sellers can each try to get the agent to work in their own best interest, if the agent is representing both parties?

Also, i was thinking that even if the seller is aware of the discount, he might be thinking, if the note is non-assumable, that at some point i’d default and he’d get the property back anyway, liek a long term lease…

[scaredyclassic]

the violation of the conflict of interest rules would only be a problem for the agent, right? buyers and sellers can each try to get the agent to work in their own best interest, if the agent is representing both parties?

Also, i was thinking that even if the seller is aware of the discount, he might be thinking, if the note is non-assumable, that at some point i’d default and he’d get the property back anyway, liek a long term lease…

[scaredyclassic]

the violation of the conflict of interest rules would only be a problem for the agent, right? buyers and sellers can each try to get the agent to work in their own best interest, if the agent is representing both parties?

Also, i was thinking that even if the seller is aware of the discount, he might be thinking, if the note is non-assumable, that at some point i’d default and he’d get the property back anyway, liek a long term lease…

[Anonymous]

[quote=scaredycat]the violation of the conflict of interest rules would only be a problem for the agent, right? [/quote]

I thought you were the attorney here. 😉

I can’t claim expertise on all the nuances of agency rules with regard to RE licensing — perhaps one of the XXrealtor members can chime in here…

I do have some book smarts, however, and I do know that dual representation is tricky for the agent and that they must be very careful. I’m pretty sure that taking an undisclosed commission from one party would break a rule. Perhaps it would only be a “problem for the agent,” meaning the buyer would not get into any trouble if the violation was discovered later. And I would guess that it would be easy to hide. But you would be crossing a line.

[Anonymous]

[quote=scaredycat]the violation of the conflict of interest rules would only be a problem for the agent, right? [/quote]

I thought you were the attorney here. 😉

I can’t claim expertise on all the nuances of agency rules with regard to RE licensing — perhaps one of the XXrealtor members can chime in here…

I do have some book smarts, however, and I do know that dual representation is tricky for the agent and that they must be very careful. I’m pretty sure that taking an undisclosed commission from one party would break a rule. Perhaps it would only be a “problem for the agent,” meaning the buyer would not get into any trouble if the violation was discovered later. And I would guess that it would be easy to hide. But you would be crossing a line.

[Anonymous]

[quote=scaredycat]the violation of the conflict of interest rules would only be a problem for the agent, right? [/quote]

I thought you were the attorney here. 😉

I can’t claim expertise on all the nuances of agency rules with regard to RE licensing — perhaps one of the XXrealtor members can chime in here…

I do have some book smarts, however, and I do know that dual representation is tricky for the agent and that they must be very careful. I’m pretty sure that taking an undisclosed commission from one party would break a rule. Perhaps it would only be a “problem for the agent,” meaning the buyer would not get into any trouble if the violation was discovered later. And I would guess that it would be easy to hide. But you would be crossing a line.

[Anonymous]

[quote=scaredycat]the violation of the conflict of interest rules would only be a problem for the agent, right? [/quote]

I thought you were the attorney here. 😉

I can’t claim expertise on all the nuances of agency rules with regard to RE licensing — perhaps one of the XXrealtor members can chime in here…

I do have some book smarts, however, and I do know that dual representation is tricky for the agent and that they must be very careful. I’m pretty sure that taking an undisclosed commission from one party would break a rule. Perhaps it would only be a “problem for the agent,” meaning the buyer would not get into any trouble if the violation was discovered later. And I would guess that it would be easy to hide. But you would be crossing a line.

[Author]

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