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Old 02-27-2018, 10:08 PM
 
10,280 posts, read 6,533,002 times
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Quote:
Originally Posted by southernnaturelover View Post
They gave me the option to get title insurance at my expense, and Iíll run that over with my closing attorney in the morning. The auction company is legit, Iím not sure if Iím allowed to mention names, but itís Hudson & Wi**iams.

But yes, thatís what theyíre basically wanting me to do, write them a $38k check, and then theyíll cut me one back for $8k.
You said twice that at closing there would be a credit of $8K. A credit is a deduction of the $38K not a refund.
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Old 02-27-2018, 10:32 PM
 
Location: Ohio
18,063 posts, read 13,270,918 times
Reputation: 13878
Quote:
Originally Posted by southernnaturelover View Post
I bid on a foreclosed house through an auction, and seller accepted my ďbidĒ (really an offer). My bid was $30k, and when it came time to sign the documents today it showed that my bid was $38k. When I questioned this they said that the seller needs to show a loss of $38K on a HUD settlement statement, and that I would recieve a credit of $8k at closing.

Iím a bit confused and Iím trying to understand exactly why the seller needs to do this?
There is no legitimate reason I'm aware.

I was under the impression HUD Settlement Statements are no longer used, except for certain situations, like reverse mortgages.

Quote:
Originally Posted by Diana Holbrook View Post
I DON'T think you should just go ahead and pay it because it's the same either way.

What they're asking doesn't sound right at all. In fact, it sounds like the very common email/craigslist/want ads scam where they try to get you to cash a check for more than the agreed price for the 'item' and just send them the balance in cash.

They are getting you to write a check for $38,000 and saying they'll give you $8000 back?

Are you running this sale though a title and escrow company? If you aren't.... STOP. Think. Verify.

On edit.... I see you are in an attorney state? Please make sure attorney has actually checked this out before you send any money.
Sound advice.

Quote:
Originally Posted by southernnaturelover View Post
They gave me the option to get title insurance at my expense, and Iíll run that over with my closing attorney in the morning. The auction company is legit, Iím not sure if Iím allowed to mention names, but itís Hudson & Wi**iams.

But yes, thatís what theyíre basically wanting me to do, write them a $38k check, and then theyíll cut me one back for $8k.
And if they don't cut a check for $8,000?

How do you know they're legitimate? A google search turned up nothing except an investment company in Texas.
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Old 02-27-2018, 11:17 PM
 
Location: Raleigh NC
7,797 posts, read 6,149,667 times
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Presumably, you're paying cold hard cash. Otherwise, this reeks of loan fraud. Even if you're paying cash, this is not something we should be doing as a society.

They put some provision in the contract, which you previously agreed to (signed) and now they're pointing out this 2+% item? Stinks to high heaven...though as Diana said, this is outside my area of experience.
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Old 02-28-2018, 12:30 AM
 
Location: North
810 posts, read 1,274,883 times
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Quote:
Originally Posted by Diana Holbrook View Post
I don't know, you're way out of my area of expertise, but it does NOT sound legitimate to me at all to have them ask you to intentionally overpay, expecting a refund. Please check it out with more than just us. Make sure these people even hold title to the property. There are so many scams out there. Is this something you have ever done before? Have you seen the property?
I agree with Diana. I wouldn't do it. Yes, it's the same to you in regards of paying $30K, but why are they asking you to pay more? Are you going to get in trouble later on for fraud? That deal sounds very fishy.
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Old 02-28-2018, 05:21 AM
 
Location: Floribama
13,542 posts, read 29,505,204 times
Reputation: 11934
Quote:
Originally Posted by LifeIsGood01 View Post
You said twice that at closing there would be a credit of $8K. A credit is a deduction of the $38K not a refund.
It is worded in the contract as a Ďcredití, so they may indeed just deduct $8k off of the $38k at the very end. I will find out today.
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Old 02-28-2018, 12:31 PM
 
994 posts, read 286,149 times
Reputation: 1463
As you can tell from online various reviews...not much favor for Selene.

Looking forward to hearing what your attorney says.

I know in other types of auctions there is a buyer's premium of up to 25%, even 27% in good auction houses...which would be about $8k in your case. However, that's not necessarily real estate and not credited back.

I see you say the seller will use the HUD Settlement statement. Last I heard it is a crime to knowingly make a false statement on that government form. You might search falsifying HUD forms.

The form situation may be the first thing your attorney looks at.

I know a couple of years ago the HUD form, as an industry standard, was still commonly used even in cash settlements just to show cash in, list any other charges to close.

There was a statement at the bottom...something about "I certify...not reimbursing..."
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Old 02-28-2018, 01:29 PM
 
Location: Floribama
13,542 posts, read 29,505,204 times
Reputation: 11934
Quote:
Originally Posted by petsandgardens View Post
As you can tell from online various reviews...not much favor for Selene.

Looking forward to hearing what your attorney says.

I know in other types of auctions there is a buyer's premium of up to 25%, even 27% in good auction houses...which would be about $8k in your case. However, that's not necessarily real estate and not credited back.

I see you say the seller will use the HUD Settlement statement. Last I heard it is a crime to knowingly make a false statement on that government form. You might search falsifying HUD forms.

The form situation may be the first thing your attorney looks at.

I know a couple of years ago the HUD form, as an industry standard, was still commonly used even in cash settlements just to show cash in, list any other charges to close.

There was a statement at the bottom...something about "I certify...not reimbursing..."
My attorney isnít quite sure why they want to do it that way either, but she said banks do lots of things for weird reasons. She did bring up a good point, if I were to sell the house in a few years it would look like I paid more for it, hence less taxes on my profit. I left the contract for her to look over, she was busy with other things while I was there.

There is no buyerís premium, and Selene will have to pay a 5% auction fee ($1900).
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Old 02-28-2018, 01:34 PM
 
994 posts, read 286,149 times
Reputation: 1463
Well, keep us updated.
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Old 02-28-2018, 04:18 PM
 
628 posts, read 447,017 times
Reputation: 1146
In my state whatever the transaction price is (38k) is what the auditor will adjust the value of the home to for real estate tax assessment. So as a buyer you would be paying on an inaccurate valuation and paying higher taxes than you should. It is probably not much money but you should find out how it works in your state. Also owner's title insurance, which you should ABSOLUTELY buy for an auctioned house, is based on the sale price of the house so that will cost you more.

As someone who has closed hundreds of home purchases it makes no sense to me that the sales price would be jacked to show a loss. To show a loss, as in "prove the seller needs to bring cash to closing" you do not jack the sales price, you just add in some seller concession to the buyer on the seller's side.

Buyer brings 30k + buyer fees to closing. Seller pays so many seller's fees that he owes $38k in fees and he brings $8k to closing. The sales price is unaffected. I would never create a paper trail saying that you are paying $38k for this property.
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Old 02-28-2018, 08:40 PM
 
Location: Phoenix, AZ area
2,937 posts, read 2,409,058 times
Reputation: 3372
Quote:
Originally Posted by southernnaturelover View Post
My attorney isnít quite sure why they want to do it that way either, but she said banks do lots of things for weird reasons. She did bring up a good point, if I were to sell the house in a few years it would look like I paid more for it, hence less taxes on my profit. I left the contract for her to look over, she was busy with other things while I was there.

There is no buyerís premium, and Selene will have to pay a 5% auction fee ($1900).
Get a new lawyer that isn't how cost basis works.
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