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Buyers (investors) offering incentives to the seller to accept their offer?

Posted by Joni Barsuglia on December 21, 2012 at 2:22am in Short Sale Discussions
I have a short sale listing in a sought after neighborhood, I am receiving offers from investors that are offering money to the seller to accept their offer. Is there a way to do this ethically and legally? I would like to get this for my seller, but I don't to do anything shady! I need an answer fast! I think I have priced it well and the offers are coming in pretty much at full price or slightly higher. Joni B.

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Replies

  • Wayne Brooks December 22, 2012 at 11:05am
    Joni, you're right it won't be fraud if it's on the HUD. It just won't survive if it's on the HUD. Either your seller is prepared for this, or he'll become uncooperative when it gets chopped.
  • Wayne Brooks December 21, 2012 at 8:25am

    Yep, investors calling it "cash for keys" is just another name for fraud/violation of ALT.  Raise the price, and if the seller insists on the "cash for keys" under the table, slap him.

    • Joni Barsuglia > Wayne Brooks December 21, 2012 at 2:59pm
      I really don't think it's fraud or a violation of the ALT if you show it on the HUD and they approve it. But I think I had better check with C.A.R. Legal
  • Joni Barsuglia December 21, 2012 at 6:46am
    The problem is, if you could call it one, is that all the offers are coming in w/o any insp. cont very clean, good deposit $$ and cash. They are calling it cash for keys? I guess what I really want to know is that if we include it on the HUD and the bank approves it, I'm thinking we are fine. I'm not interested in doing anything outside of escrow.

    Any thoughts on that.
    • Smitty > Joni Barsuglia December 21, 2012 at 8:18am

      Cash for keys usually refers to a foreclosing lender offering a homeowner $$ to get out so the foreclosing lender doesn't have to bring the homeowner to court to evict them after the foreclosure.  I've never heard it termed like that in a short sale.

      I agree with Justin.  if you put money on the HUD for the seller, their lender will take it.

    • Justin Berry > Joni Barsuglia December 21, 2012 at 6:55am

      Any additional money brought by the buyer would be gobbled up by the lender(s).  They may allow an incentive, but those are allowed irregardless of additional money brought by the buyer.  

      You could exclude certain personal property (appliances, etc) from the real estate inclusions and sell those separately via a bill of sale, because it is not part of the real estate transaction, it wouldn't need to show on a HUD-1. It should be a reasonable amount, not $10000 for a microwave,etc.....

      (Just my opinion, check with an attorney as I am not one.) 

  • Justin Berry December 21, 2012 at 5:57am

    I agree - that could get messy. 

    Tell the investors that the way to win over your seller's heart is to present the highest, cleanest offer possible.  Increased earnest money deposit, removal of contingencies/inspections - that's what I want for Christmas! :-)

  • Smitty December 21, 2012 at 5:49am

    I don't think you should accept an investor's money to accept an offer. This would violate many arms length transaction forms.

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