Home Sale Question - Posted by Kevin

Posted by Michael Steele on March 15, 2006 at 15:06:59:


On Paper – your asking price is truely what ever you make it out to be. If you bump your price from 100k to 110k that is up to your discresion. Per lender requirements the buyer has to give 10% of the sales price. All proceeds are given to the seller at point of sale. After that what the seller does with his/her money (keep or give portion back to the buyer) is up to their discresion (as long as any agreements are not put on paper – thats where fraud is brought in)

These types of deals are called “creative financing” but keep in mind it is up to your discression as the seller as to if you choose to take this route.

Also keep in mind the extra 10% increse creates more of a capitol gain that in actuality you are not truely recieving. Again – up to your discression.

This seems to be a deal you should look at from all angles before you proceed and try your best to make the wisest decision.

Mike Steele

Home Sale Question - Posted by Kevin

Posted by Kevin on March 15, 2006 at 14:47:27:

In order to get out of a financial mess I agreed to sell my personal residence, of over 2 years, to a friend. (mistake #1)
They have had trouble finding financing and are proposing the following to me:

That I sell the home to them at 10% over my asking price.(Which would be supported by an appraisal) It was explained to me that this extra 10% would be ‘secretly’ given back to the buyer as they are required by the lender to put down 10% for the loan. In searching your archives I’ve read everything from fraud to creative financing.

Question #1 - Can someone, using my example, explain whether or not this is fraudulant?
Question #2 - I will be making no money off this deal. Will I actually be losing money, in taxes, by selling for an extra 10% which goes right back into the buyers pocket?

Thank You

Re: Home Sale Question - Posted by Sylvia

Posted by Sylvia on March 17, 2006 at 21:52:18:

It sounds like bank fraud to me. Best advice, ask an attorney regarding legal questions before you get in knee deep.

Re: Home Sale Question - Posted by mcole

Posted by mcole on March 15, 2006 at 20:53:06:

No matter what people call it, or how they try to disguise it, what you?re describing is lending fraud – pure and simple.