Fraud Vs Cash Back Deals?
Can some one please explain to me the difference between cash back at closings and fraud?????
Many of the real estate gurus talk about getting cash back at closings and then you hear other people use the word fraud about the same thing.
It seems like many lenders are preferring to fund property where a realtor is involved as opposed to FSBO properties.
If you have a purchase agreement to buy a property for a price that you know you can get a legitimate appraisal with real comps to back it up and then you have an amendment that the seller gets a lesser amount with the buyer paying all closing costs, realtor commissions and any money over and above will be given back to the buyer - is that a legit no money down/cash back deal or is that something else????
Thanks for all input!!!
I think as long as everything is spelled out clearly upfront you won't have a problem. Like the buyer is receiving a $5500 carpet credit at closing, or a $10,000 landscaping credit. How ever you and the seller agree on.
A general statement that all additional money goes back to the buyer I don't think would work.
Negotiate the price with the seller. Then go on to explain that in order to not hurt the future appraisal and the appraisals of other properties you would like to show the difference made up in credits. That will also assist you in getting the proper loan so that you pay the buyer what they are expecting to receive.
What happens if you don't use the money for the stated purpose as outlined in the contract???? I wouldn't think anyone could do anything about it after the fact but just wondering??
if you are given a credit for carpet ect. you may not want to install new carpet after purchase ect. you are not required to it is only a credit....km
do with it what you will......km
In essence, Betsy, Fraud means either not disclosing some material fact or telling the lender something you know to be false. If you don't show the addendum to the lender its fraud.
Commercialking is on it...yeah, sure, the agreement is fine...but what most people do is make the addendum disappear until closing and the appraiser and lender never see it...that is fraud. Most lenders also will only allow you to have the seller pay so many costs at closing, usually around 3%. Anything else reduces the principal they will loan.
What some gurus are talking about by getting cashback at closing is taking out a 2nd mortgage at closing to take out some equity from buying below market.
Ok I understand what everyone is saying except the last post regarding taking out a 2nd. Could you explain a little more please? Who is going to fund that?