Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 02-15-2008, 09:34 PM   #21
Thinks s/he gets paid by the post
free4now's Avatar
 
Join Date: Dec 2005
Posts: 1,225
I'd steer clear because the implication of "charity" is that you won't disclose. It would probably be illegal for you to fail to disclose that cash back.

One of my neighbors got a great offer on their home, surprisingly higher than asking. The only wrinkle was that the new "owners" wanted to move in before closing (technically renting it during that period). Turned out that the people moving in were druggies who just wanted to squat until they got evicted. This was a clever way to avoid rental background checks.

On the other hand, the devious part of me wants to encourage you to accept the deal and then after closing say "Nah, I changed my mind about making that charity donation".
__________________

__________________
free4now is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 02-15-2008, 09:49 PM   #22
Thinks s/he gets paid by the post
 
Join Date: Jul 2005
Posts: 3,862
Arizona is ready to start prosecuting buyers/sellers for schemes that sound similar to this. Be sure to do your research and maybe consult a lawyer before accepting that offer.

Dan
__________________

__________________
Animorph is offline   Reply With Quote
Old 02-15-2008, 09:53 PM   #23
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Quote:
Originally Posted by Animorph View Post
Arizona is ready to start prosecuting buyers/sellers for schemes that sound similar to this. Be sure to do your research and maybe consult a lawyer before accepting that offer.

Dan
Why would anyone buy or sell real estate without the services of an attorney? :confused:
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 02-15-2008, 10:06 PM   #24
Thinks s/he gets paid by the post
 
Join Date: Aug 2004
Location: Laurel, MD
Posts: 2,946
There seems to be well established organizations that do precisely what you described. It should be faily easy to determine if your offer is legit....I would approach cautiously rather than dismiss (unless you expect a better offer). Nehamiah is the name of the organization that I have heard several times. Here's another link.

Nehemiah Corporation - Home Page
__________________
jazz4cash is offline   Reply With Quote
Old 02-15-2008, 11:09 PM   #25
Thinks s/he gets paid by the post
free4now's Avatar
 
Join Date: Dec 2005
Posts: 1,225
Interesting j4c. Yet another factor that caused the real estate bubble comes to light. I'm just amazed that the IRS let them get this big... they claim to have disbursed 1 billion dollars, and yet they haven't been shut down like other similar programs:

IRS Status of Charitable Organizations - HUD

According to this blog, even Nehemiah will be shut down on March 31, 2008:

Real Estate Blog - HUD / Down Payment Assistance programs -- DPA & Nehemiah -- Alive for a while....
__________________
free4now is offline   Reply With Quote
Old 02-15-2008, 11:21 PM   #26
Thinks s/he gets paid by the post
 
Join Date: Aug 2004
Location: Laurel, MD
Posts: 2,946
I glossed over all the stuff I found, but I've been hearing about Nehamiah for a loooong time. Probably a bit unfair to hang much of the bubble on them, but like anything else probably has been abused. There is a 'program fee' that I would bet some quasi-charitable groups abused. According to one blog I saw the courts slapped down the action by HUD permanently, so I think DPA (Down Payment Assistance) programs are still going strong. I think the HUD Sec'y may be certafiable.......he's gotten himself into all sorts of scraps. Supposedly these programs are for folks with good credit and adequate ratios, but still highly leveraged and property must appraise over asking price in OP's case.
__________________
jazz4cash is offline   Reply With Quote
Old 02-16-2008, 08:32 AM   #27
Recycles dryer sheets
Eyerishgold's Avatar
 
Join Date: Aug 2007
Posts: 222
Thanks for all the replies. I heard back from my attorney and she says this is legit. The organization we would be making the dontation to is Downpayment Assistance Made Even Easier!. It looks like we're paying the buyers 3% downpayment and we're covering the closing costs as well, which we're fine with. This preferred program is taking a pretty heft fee but, like I said, we're fine with the amount we'll walk away with. The only thing I didn't factor in was paying commission on on the 230k sales price instead of the 216k we're actually getting. Thank you for pointing that out.

According to our attorney and our real estate agent, everything will be disclosed properly and we aren't doing anything illegal.
__________________
Eyerishgold is offline   Reply With Quote
Old 02-16-2008, 10:01 AM   #28
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Dumb question off the top of my head...what happens if you make the donation and then the deal fails to close due to insufficient funds from the buyer? Do you get your donation back? Or does the 'donation' happen during the closing process after the escrow is funded?

We did something similar to this, minus the donations, with my wifes old house. Offer was for 10k over ask with 10k getting put back into the deal as part down payment and part closing costs. The couple that bought the house put a $500 deposit on it with the offer and when I asked that they increase the deposit to $2000 earnest money, they said that $500 was all they had and they had to scrimp to come up with THAT.

They're in foreclosure now, and thats not good news for the bank because that house's value has probably dropped a good 40% since we sold it to them.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Old 02-16-2008, 10:15 AM   #29
Thinks s/he gets paid by the post
 
Join Date: Aug 2004
Location: Laurel, MD
Posts: 2,946
Glad to hear you have checked this out and seem very comfortable with the process. I was wondering if the 'donation' is tax deductible? Can't think of any reason why it would not be.
__________________
jazz4cash is offline   Reply With Quote
Old 02-16-2008, 10:19 AM   #30
Thinks s/he gets paid by the post
tryan's Avatar
 
Join Date: Mar 2005
Posts: 2,449
Quote:

The only thing I didn't factor in was paying commission on on the 230k sales price instead of the 216k we're actually getting. Thank you for pointing that out.
The tax stamps (paid to the town/city) will also be on the larger sale $$. Most states have this paid by the seller (VT has the BUYER pay them).

Makes you wonder about the many of the recorded sale values ... when loads of the sale proceeds are going everywhere EXCEPT to the seller.
__________________
FIRE'd since 2005
tryan is offline   Reply With Quote
Old 02-16-2008, 10:29 AM   #31
Recycles dryer sheets
Eyerishgold's Avatar
 
Join Date: Aug 2007
Posts: 222
Quote:
Originally Posted by cute fuzzy bunny View Post
Dumb question off the top of my head...what happens if you make the donation and then the deal fails to close due to insufficient funds from the buyer? Do you get your donation back? Or does the 'donation' happen during the closing process after the escrow is funded?
It's my understanding that the funds come from a pool of funds from previous donations and is wired prior to closing. Then, at closing, our donation replaces the funds that came out of the 'pool'.

Quote:
Originally Posted by jazz4cash View Post
Glad to hear you have checked this out and seem very comfortable with the process. I was wondering if the 'donation' is tax deductible? Can't think of any reason why it would not be.
I was wondering the same thing but on their website they state that the donation isn't tax deductible. I'll probably look into this a bit more to find out why it isn't.
__________________
Eyerishgold is offline   Reply With Quote
Old 02-16-2008, 10:44 AM   #32
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Thats easy. One of the criteria for a donation to be characterized as charitable and deductible is that you do not expect to receive compensation for making the donation.

Since you're getting a return as part of a financial transaction you're participating in, it wont qualify.

Its also not really a "donation" per se. But it does sound better that way.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Old 02-16-2008, 12:08 PM   #33
Thinks s/he gets paid by the post
free4now's Avatar
 
Join Date: Dec 2005
Posts: 1,225
Why would HUD allow these shenanigans when funneled through a sham charity, but wouldn't allow the seller to just directly rebate money to the buyer in a transparent way?

And in this context what does "charity" mean anyway. It seems this "charity" doesn't offer tax advantages, contributes to the delinquency of our society, and only benefits particular individuals.
__________________
free4now is offline   Reply With Quote
Old 02-16-2008, 12:33 PM   #34
Thinks s/he gets paid by the post
ladelfina's Avatar
 
Join Date: Oct 2005
Posts: 2,713
Quote:
This preferred program is taking a pretty hefty fee
This sounds like a more 'genteel' version of the mortage scams running around Italy; just saw a service on it last night where they sent hidden cameras around with a young couple visting mortgage brokers. Him: undocumented "income" of ~ 1300 monthly; her: temp. contract for 1000 monthly. Broker #1: "no problem; we'll just set up a fake company that will give you a pay stub history and a 'business' phone number in case the bank calls.." for the modest sum of 2000. Brokers #2 & 3 offered, for 2500 in one case and 3% of the loan in the other, to falsify the girl's paystubs to make it look like she had qualifying income.

Quote:
It's my understanding that the funds come from a pool of funds from previous donations and is wired prior to closing. Then, at closing, our donation replaces the funds that came out of the 'pool'.
Does this not say to you, "pyramid scheme"?


Sounds like a recipe to screw the lending bank -the buyers will have no equity in the house- but it's not clear what your risk is. KM brings up good points about what the inflated sales price might mean to you and your brother. If it doesn't qualify for the CG exemption (you haven't lived in it 2 out of the last 5 years) it will increase your CG taxes. What's your basis established at your father's passing? Do you sense that there is interest in your market or do you think this is the best offer you're likely to get in the timeframe? I'd probably pay for a RE atty. in the home state to look at it, in any case.
__________________
ladelfina is offline   Reply With Quote
Old 02-16-2008, 01:24 PM   #35
Recycles dryer sheets
Eyerishgold's Avatar
 
Join Date: Aug 2007
Posts: 222
Quote:
Originally Posted by ladelfina View Post
Sounds like a recipe to screw the lending bank -the buyers will have no equity in the house- but it's not clear what your risk is. KM brings up good points about what the inflated sales price might mean to you and your brother. If it doesn't qualify for the CG exemption (you haven't lived in it 2 out of the last 5 years) it will increase your CG taxes. What's your basis established at your father's passing? Do you sense that there is interest in your market or do you think this is the best offer you're likely to get in the timeframe? I'd probably pay for a RE atty. in the home state to look at it, in any case.
The house isn't in great shape and the other offers we've gotten have been EXTREMELY low compared to this one. Before putting the house on the market we decided that we'd take anything above 215k, which is why we're fine with what we'll end up.

I haven't lived in the house for about 4 years. My brothers, on the other hand, are living there currently and have been since my dad passed away. The appraised value after his passing was 240k. So, I'm not entirely sure of the tax implications of that. We are using an attorney, in fact, the attorney we're using for this is the same person we used to open up his Estate.
__________________
Eyerishgold is offline   Reply With Quote
Old 02-16-2008, 04:51 PM   #36
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Sounds like you'll be enjoying a nice capital loss for your 2008 taxes.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Old 02-16-2008, 10:35 PM   #37
Thinks s/he gets paid by the post
 
Join Date: Apr 2007
Posts: 1,304
Quote:
Originally Posted by cute fuzzy bunny View Post
Sounds like you'll be enjoying a nice capital loss for your 2008 taxes.
I don't think that you can take a capital loss on a house that was NOT a business property (i.e. rental unit).
__________________
Life is GREAT!
megacorp-firee is offline   Reply With Quote
Old 02-17-2008, 12:15 AM   #38
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,616
[QUOTE=free4now;616412]One of my neighbors got a great offer on their home, surprisingly higher than asking. The only wrinkle was that the new "owners" wanted to move in before closing (technically renting it during that period). Turned out that the people moving in were druggies who just wanted to squat until they got evicted. This was a clever way to avoid rental background checks.
Oooh, good to know about that trick-- thanks!

Quote:
Originally Posted by brewer12345 View Post
Why would anyone buy or sell real estate without the services of an attorney? :confused:
Because they cost money and, unless paid more, have no incentive to move the deal along. I haven't used an attorney to close on a house since 1985 (South Carolina), and he screwed it up. Of course since then we've done our real estate buying/selling in Hawaii & California, which didn't require lawyers.
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Old 02-17-2008, 12:35 AM   #39
Thinks s/he gets paid by the post
 
Join Date: Apr 2007
Posts: 1,304
[quote=Nords;616931]
Quote:
Originally Posted by free4now View Post
One of my neighbors got a great offer on their home, surprisingly higher than asking. The only wrinkle was that the new "owners" wanted to move in before closing (technically renting it during that period). Turned out that the people moving in were druggies who just wanted to squat until they got evicted. This was a clever way to avoid rental background checks.
Oooh, good to know about that trick-- thanks!


Because they cost money and, unless paid more, have no incentive to move the deal along. I haven't used an attorney to close on a house since 1985 (South Carolina), and he screwed it up. Of course since then we've done our real estate buying/selling in Hawaii & California, which didn't require lawyers.
When I was in CT, it was not necessary nor customary to use an attorney for closing a house (or so I was told). But I hired one anyways. They protect YOUR interest. RE is one of those things where 'you don't know what you don't know' can get you in trouble and you usually have a HUGE amount of money at stake. That is the reason for getting a GOOD RE lawyer. I have used one for each and every of my houses bought/sold. I do make good use of them though... Now that I have the experierce, I have not had to go to the last 2 closings I had. I told the lawyer to bring the check to my house. He had to be there anyways and I learned that I don't (POA to him to sign all docs).

I have heard of a transaction where there was no lawyer for the seller. The buyer got the seller to sign the docs (after putting down 1/3). Took the docs, had them recorded and declined to pay the seller the rest. Morale to the story is, if you don't know what you're doing, you have to have someone helping you who does.
__________________
Life is GREAT!
megacorp-firee is offline   Reply With Quote
Old 02-17-2008, 09:18 AM   #40
Thinks s/he gets paid by the post
tryan's Avatar
 
Join Date: Mar 2005
Posts: 2,449
Quote:

Quote:
Originally Posted by brewer12345
Why would anyone buy or sell real estate without the services of an attorney? :confused:

Because they cost money and, unless paid more, have no incentive to move the deal along. I haven't used an attorney to close on a house since 1985 (South Carolina), and he screwed it up. Of course since then we've done our real estate buying/selling in Hawaii & California, which didn't require lawyers.
As a seller closing without an attorney is a no brainer PROVIDED the buyer is financing the home ... the bank will insist on a clean closing (they have more to loose than anyone else); no need for TWO attorneys. In MA the seller pays for the deed ($100-200) ... just ask the banks attorney to do the work and charge your side of the HUD settlement.

Closed several cash deals as a buyer where an attorney was retained only for my title search ($100-150). Well worth the fee as foreclosed properties can have sloppy paper trails.

But having 2 attorneys at a closing ... charging +$600 each is a waste of $$ IMHO.

Quote:

I have heard of a transaction where there was no lawyer for the seller. The buyer got the seller to sign the docs (after putting down 1/3).
Sounds like an urban legend .. the buyers attorney would be disbarred.
__________________

__________________
FIRE'd since 2005
tryan is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
The Pain of Selling Your House marty Life after FIRE 11 10-21-2006 10:35 AM
House selling question Mwsinron FIRE and Money 2 07-29-2006 03:24 PM
Selling my first House Canadian FIRE Young Dreamers 35 06-01-2006 07:40 AM
Selling my house. Could use some advice MJ FIRE and Money 46 12-26-2005 05:04 PM
Selling a house Brat FIRE and Money 61 09-27-2005 05:49 PM

 

 
All times are GMT -6. The time now is 01:15 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.