seller wants $3000 cash to close .. isnt this illegal?
okay we are now 2 weeks from closing but the problems continue.
Seller is expecting to receive $3000 moving money even though they did not qualify for the HAFA program. They were emailed about this months ago by the negotiator (i was copied on it). They are stating they will not close without it.
isnt it illegal for me (the buyer) or the broker to agree to give them cash to close the deal?
what say you???
Replies to This Discussion
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Permalink Reply by Yvonne C. Cousar on
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just my 2 cents worth.... rule of thumb... NEVER do anything "under the table"... even if there is nothing in the transaction documents that say you cannot pay the seller the $3,000, you should disclose to the lender that seller is requesting some money at closing.... let the lender give you the go-ahead "in writing." That way you are in the clear, and there is nothing in the transaction that can come back later and bite you... remember "failure to disclose" is the stuff that lawsuits are made of.
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Permalink Reply by arod on
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thank you yvonne... i agree completely. but i wonder if bank would allow it?
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Permalink Reply by Satar Naghshineh on
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No, chances are they won't. The banks are settling a debt that is secured by real property. Any monies that are to be received by the seller, they would want to contribute to the loss. As far back as I could remember, line 603 on the HUD had to be zero!
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Permalink Reply by Alexandra Germon on
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The bank won't allow it on the HUD, however what seller and buyer agree to privately (like the sale of personal property) after the close of escrow have nothing to do with the HUD.
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I totally agree.
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Permalink Reply by Rodney Mason on
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All monies recevied or paid must clearly be disclosed on the HUD-1 that has been approved by all parties. There are disclosures to be signed at closing stating that there are no outside agreements. Signing that then having one could very easily be considered to be fraud. Doing anything else may put a real estate license in jeopardy. Fraud is taken very seriously is this industry.
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I have been doing short sales for a while now and I mostly represent sellers in my transactions. This is my take on the situation. Look at the sellers from the following perspective: they are losing their home, their biggest investment. For the majority of people, it's a very emotional time. They invested a lot of money in their home and now they are left with nothing. Some banks pay 3K, some banks pay 13K and some banks like Chase pay 20K. Nationstar doesn't pay anything for relocation or seller incentive. There is something wrong with the situation here. At least put yourself in the seller's shoes and imagine leaving everything. I don't see anything wrong with purchasing appliances from them or spa or any other personal belongings after the close of escrow for cash. It's not illegal to buy something from sellers. Its not illegal to pay something for their moving truck. You can negotiate with them, and that would be my recommendation.
Are you getting a good deal on the house? Most of the short sales are below market value. Yes, you stuck with the repairs. I would suggest for you to ask the listing agent to submit your inspection report to the bank and ask for credit. It worked in some cases on my short sales, however Nationstar is not that easy to negotiate with. My guess they would say no. If I was you and I really wanted the house, I would buy something for cash from sellers after the close of escrow. They might not even have money to move! That's a real problem.
On another note - staying after the close of escrow is a huge no-no in my book. At least have rental agreement signed with them for how many days they are staying. If you have time, I would not close escrow until sellers move out. You can be stuck with them forever in the house. If short sale approval letter expires and you don't have time and they can't move out that quick - have them sign a rental agreement even if you are not charging them rent. Agreement has to clearly state when they are moving out. It's always a risk when you allow sellers to stay in the house after the close of escrow,especially on a short sale. They are used to not paying mortgage and probably have nowhere to go, so making sure that they have a place to move would be my priority. I would double check all the facts, where they are moving, when, call all the numbers, it's in your best interest.
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Awesome advice. However, I would go further and not let them stay. Anytime you enter into a rental agreement, you are opening up yourself for more problems. Have an exit strategy for the sellers lined up before you close. The worst case scenario is that you have a rental agreement in place and the sellers negate on their promise to move out. You then evict the sellers and when the are about to get kicked out, they file for bankruptcy and stall the eviction some more. Once the stay is lifted and they are forced out, you walk into a property that has been totally gutted and damaged. At this point you are out thousands of dollars and even though you can sue them in court, the seller's are "judgement proof".
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I agree, Satar, best if they move. Every time I allowed seller to stay after close of escrow, my heart skipped a bit every day until they moved out. You never know especially in a short sale situation. If they file for BK just the way you said, their attorney can keep them in the property for years without any rent payments. It's could be a mess. The only time I would allow it - if the bank is foreclosing and not giving any extension on short sale approval letter and if I know for sure that sellers have place to move to, paid for the truck, deposit on a new place and I verified it all.Even after all that, it's still touch and go.
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Exactly. You are totally correct.
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Permalink Reply by Richard OBrian on
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Alexandra, I disagree a bit, without any real info on the seller circumstances on how long they did not make their mortgage payment (we have seller with over 2 years delinquent) they have already gotten there moving money and are just looking for more. I would stay clear of any back-door deal…
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Richard, I've done many short sales where sellers didn't pay their mortgage for over 2 years. It doesn't matter. I haven't met ONE person who saved their money..... most people don't have a penny when they move, they spend everything even if they don't make their mortgage payments. I know and they know that they should save the money they are not paying for mortgage, but they spend it. It's human nature I guess.
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