Cash back at closing is a scheme where buyers offer considerably more than the asking price and arrange to have that overage (often in the $50k-$100k range) kicked back to them by the seller. Notice the operative word: Scheme
You might be thinking, 'sounds good to me; everyone wins'. Seller gets their house sold and the buyer gets their dream home with a lump of cash to go along with it. Win-Win, right? Wrong. This is fraud and it is illegal.
Why? This type of scheme:
- Inflates housing values, making housing less affordable;
- Artificially raises property taxes;
- Hurts honest real estate practitioners because they lose business to dishonest agents/brokers who offer cash back deals;
- Stimulates foreclosure and destroys neighborhoods that begin to buckle when homeowners default on the inflated loans.
Cash back at closing schemes are done under the table, because no lender would approve a deal like this. If you think you might inadvertantly be involved in a cash back at closing scheme by the suggestion of any professional providing you assistance please call me, your attorney or another mortgage/real estate person to help you.
Tina Faust, GRI
RE/MAX Champions
425-374-2728
http://www.tinafaust.com
Tina@TinaFaust.com
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