Posted by Dimpil on October 10, 2003 at 05:51:33:
Yes. It’s when you don’t have repairs to do and say you do. That’s fraud. It’s when you up the purchase price and the seller gives you the money back and there are no repairs do to.
Generally if there are repairs the lender will want to escrow for them and you present invocies for the work. What is left over is yours in most cases.
Are repair credits legal? - Posted by fin
Posted by fin on October 09, 2003 at 23:34:44:
After reading through the search archive, i am still not sure if repair credits are legal. This might be my first deal, and i want to do it ‘right’. Here is my situation.
I found a triplex listed on the MLS for 96,000. The building has been empty for a while and it does need a bit of work. Flooring, painting, wall patching, new kitchen and appliances. i guesstimate the repairs to be around 20,000.
After running the numbers, we feel we could have ok cashflow after we fix it up and rent it out. The agent was open to discuss with us about raising the price and getting some repair money at closing.
My understanding is that if everybody (lender, realtor, seller) is aware of this and the contract price is at or below after-repair value and we can itemized all the repairs, we can LEGALLY receive ‘repair credits’ at closing. Is my understanding correct?
fin