Posted by JPiper on January 16, 2001 at 22:57:44:
First point: why would you be “inflating” the purchase price of the house to the appraised value??? Don’t know about you, but when I sell my price is already pushing the envelop…it certainly isn’t BELOW appraised value where I need to inflate it! My worry is whether the house is going to appraise at my price…always!
Second point: I don’t ever forgive seconds. Never done it even once. I work hard on collecting them…every dime.
But your idea is an old technique…what it boils down to is lender fraud. It’s done…but I wouldn’t advise it. There’s too many loan programs out there now that make it pretty easy to get your buyer in if he has even a few redeeming factors. If the guy has some credit problems, and has 0 cash…just go on to the next guy. If he has OK credit, he can already do 100% financing. If he has some credit issues, so maybe he needs 5% down…you can probably pay his closing costs for him. If your price was high to begin with, you’ll have the cash.