Several of our clients have asked why not. Manufacturers and retailers often offer cash back deals or rebates as further enticements to purchase anything from computers to automobiles. In recent years, such cash back deals are growing in popularity in the real estate market. Unfortunately, when applied to real estate, these cash back deals are illegal.

Illegal???!!!

Yes, illegal.

Many homeowners, home buyers, real estate professionals, and even attorneys who should know better will tell you that getting cash back when you purchase real estate is legal and perfectly acceptable. People do it all the time. It’s a great deal for everyone involved. The buyer simply pays a little more for the property, and the seller agrees to kick back the surplus cash to the buyer. The buyer gets some cash to pay off outstanding credit card debt, cover home repairs and renovations, or whatever. The seller unloads the house at close to or better than the asking price. The real estate agent gets a bigger commission. The mortgage broker earns a commission on the loan. And the lender scores a larger loan and stands to earn more interest over the life of the loan.

The problem is that a cash back deal misleads the lender into approving a loan for which the collateral (the house) is insufficient to secure the loan. If the homeowners default on the loan and the lender forecloses, the lender is less likely to be able to sell the home for enough money to cover the balance owed on the loan.

These cash back deals also inflate house prices, property taxes (which are based on property values), and insurance, making homes less affordable. Over time, they increase foreclosure rates resulting in deflated property values. As homeowners leave, neighborhoods

If you are selling your home, refuse to go along with any deal in which the buyer is receiving cash back at closing. If you’re having trouble selling your home, you may need to hire a professional stager to make your home look more inviting, hire a top-producing agent to market your property more effectively, or drop your asking price. Going along with a cash-back arrangement is no way to attract a buyer.

If you are buying a home and stand to receive cash back in any way, shape, or form, put a stop to the transaction immediately. Many sellers will try to cover their tracks by offering cash back in other forms, such as lease back payments (for investment properties), paying you for an option to buy the property back (when they have no intention of ever buying the property back), cash for repairs and renovations, or even free furniture or a car or a vacation package.

Here are some of the warning signs that a cash back deal is in progress:

If you notice any of these warning signs, put a stop to the transaction, refuse to get involved, and contact the lender to report your suspicions. If the lender won’t listen to you, call Freddie Mac’s mortgage fraud hot line at 1-800-4FRAUD8 (1-800-437-2838) or contact your state attorney general (you can find a list of state attorneys general at <ahref="www.consumerfraudreporting.org/stateattorneygenerallist.php">www.consumerfraudreporting.org/stateattorneygenerallist.php</a>). 

 

Learn more about this from Ralph Roberts.

Ralph R. Roberts, GRI, CRS is a real estate and mortgage fraud forensics expert and author of Protect Yourself from Real Estate and Mortgage Fraud: Preserving the American Dream of Home ownership (Kaplan Publishing).

 

Having a hard time selling and tempted to try the cash back approach? Don’t do it!

 

Instead discover other more creative approaches we have to selling your home quicker.

 

Looking for the “Best Deal In Town” and tempted by creative cash back deals that sound fishy? Don’t bite!

 

There is an abundance of homes for sale in today’s market at rock bottom prices. There is no need to resort to something illegal to accomplish your goals. For a great search experience visit out partner website www.bestmichiganhouses.com.

 

Getting the highest price for the sale of your home is usually a seller’s primary objective. But even if you sell the house at a high price, it still has to appraise or it will never make it to closing.

Our experience in home sales in the Detroit, Michigan suburbs is that sellers, with the help of their agents, usually price a property too high. This results in a lower appraisal and an unsold house after weeks or even months of being off the market.

This blog provides the first in a series of house pricing clinics that you can use to objectively set the correct asking price for your home that will net you the most dollars after all is said and done at the closing table.

Low appraisals are becoming more common in our correcting market, and it’s adding to the frustration levels of sellers, agents and even the appraisers. However, there are steps that sellers and agents can take to possibly improve the appraisal. In the cases where they cannot, they can at least minimize the disruption a low appraisal can cause.

The first step in avoiding a low appraisal is setting the price right the first time and getting a sale at a price that will appraise at current market conditions. Click here for advice on how to set the price right. 

Secondly, in our market where the price is decreasing, you’ll want to get the house sold as quickly as possible. Staging the house is crucial to getting it sold quickly at the right price. We often tell our clients who we represent in the sale of their home "We are in a price war and a beauty contest". Not only does the house have to be priced right, it also has to look great. Our home staging checklist will help in taking you through the things that must be done before putting your house on the market.

If you set the price right and made the house look like a gem, chances are you will get a sale in a reasonable time period. Once that happens it is crucial to get an appraisal fast. We work diligently with the selling agent and bank to get the appraisal fast. Every day the house is off the market is a loss to the seller if the appraisal comes in low. We want to know about appraisal issues right away so we can get the house back on the market if the issue is unresolvable. An added benefit is that often there were other buyers for the house that may still be in the market to buy. We want to resurrect them if possible

 

 

 

 

 

A low appraisal does not have to kill the deal. Remedies include getting a second appraisal, renegotiation of the price, or the buyer can increase the down payment to cover the shortage. Regardless, the marathon process of selling requires stamina. Therefore, when you run the race in the conditions we face, run it once. If you have to start over because of a low appraisal, the sooner off the starting line you find out, the better.

If you are ready to put your house on the market call us and ask for a detailed Marketing Market Analysis (MMA). Most agents will provide a Comparative Market Analysis (CMA) which prices the house based on recent sales. Our MMA prices the house using recent sales and our Marketing systems to help you obtain the best price based on today’s market. Setting that initial price is the first step to getting the best price.

Subscribe to this site and watch for more blogs on pricing your house in today’s challenging market.

Thumbs up for all the positive things about home sales in Detroit, Michigan suburbs that are not getting reported by the media!

It is true that home sales are at an all time low here in Canton, Plymouth, Northville, Livonia and pretty much all of southeastern Michigan.  The media remind us of foreclosures, short sales, and the slowdown in home sales in general almost daily. The mantra is mind numbing, especially if you are a home buyer, seller, or in the real estate sales profession like Noel and I are.

I have always been taught to look on the positive side though and thought I would outline some of the reasons for optimism concerning the present state of affairs in the real estate market. I gathered these statistics concerning home sales in America. Remember these are for the country as a whole but we can expect to see similar results in our market. Also remember our home sale slowdown occurred a year or two prior to the rest of the country. This was due to the slowdown of the Michigan economy that the country did not experience. In fact the slowdown of home sales in the rest of the country is due mainly to the price bubble that occurred due to speculation and easy money as opposed to job losses for example.

The Reasons for Optimism:

 AND — Why an up-turn in late 2008 and early 2009 is likely and by 2010 solid:

AND — Why is now a good time for buyers to buy?

 Proposal A, which passed in 1994, drastically reduced property taxes and capped the yearly increases. This represented a huge savings to Michigan homeowners.

To alleviate the loss in tax revenue the Michigan Transfer Tax Act was amended to increase substantially the tax levied when a homeowner sells their property.

With property values and corresponding SEV declining due to the struggling economy, many home owners and real estate agents took notice of the exemption’s possible applicability under the state transfer tax. However, absent an official interpretation, there was little awareness of its proper application.

As an example of how the exemption works let’s say you bought a house in 2007 for $220,000. You have lived in it as your primary residence and you registered the home with your city as a homestead property. You sold the property in 2008 for $180,000. Unfortunately, a typical situation in today’s market.

The SEV when you bought was $110,000 (half of purchase price) and let’s say your current SEV is $95,000. This scenario would satisfy the first two criteria above.

The true cash value in 2008 is 2 times the SEV or $190,000. Since the sale price is less than the true cash value the third criteria above has been met and you would be eligible for the tax exemption.

The Attorney General’s opinion provides immediate relief to home sellers already faced with the reality of declining value on their single greatest asset. The opinion also provides a uniform reading of the exemption that is necessary to provide consistent application among the various Registers of Deeds across the state as they are already receiving filings for the exemption.

Sellers should be cautioned that a request for the exemption that fails to meet all three criteria could bring a penalty equal to 20% of the tax assessed in addition to the tax due. Additionally, no similar exemption exists in the County Real Estate Transfer Tax Act.

email us at team@bittinger.com for more information. To apply for the exemption you must submit Michigan Department of Treasury form 2796.

Did you sell recently? Is your house up for sale now or are you about to put it on the market. This knowledge will help you save a bundle as our sellers are experiencing. Leave a comment below for more ways to save money in your next real estate transaction.