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Old 06-25-2011, 08:17 AM
 
Location: Bar Harbor, ME
1,922 posts, read 4,067,254 times
Reputation: 1297

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I have a house that will appraise for a lot more than I'm selling it, so it will pass the bank appraisers. However, since the banks are not willing to lend for people who don't have 20% down, is there any LEGAL WAY to give a buyer the other 10% that they need?

Lowering the cost doesn't really help the buyer who doesn't have the required 20% because you have to lower the property way way down to get to their magic number.

For example(used big easy to figure numbers to make my point): suppose we have a house that we could sell for $200,000 and the appraisers would probably accept that number if the buyer had 20% down. But the buyer only has $20K not $40K, so s/he won't even look at any houses of that number, even though they could easily afford the payments. The seller wold be happy to sell the house at $180K and give the buyer the additional $20K that they need for the bank.

Is there any way to make that happen legally?

Z
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Old 06-25-2011, 09:37 AM
 
Location: MID ATLANTIC
8,309 posts, read 21,174,929 times
Reputation: 9672
Only if you are related and you are giving a gift of equity. But under no circumstances may you put cash in the buyer's pocket. There is a distinction.
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Old 06-25-2011, 09:46 AM
 
Location: Philadelphia
244 posts, read 694,997 times
Reputation: 168
I do not know of any bank that is requiring 20% down unless their credit is shaky or maybe if it is an investment property.
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Old 06-25-2011, 09:52 AM
 
11,115 posts, read 17,632,636 times
Reputation: 10118
Quote:
Originally Posted by Zarathu View Post
I have a house that will appraise for a lot more than I'm selling it, so it will pass the bank appraisers. However, since the banks are not willing to lend for people who don't have 20% down, is there any LEGAL WAY to give a buyer the other 10% that they need?

Lowering the cost doesn't really help the buyer who doesn't have the required 20% because you have to lower the property way way down to get to their magic number.

For example(used big easy to figure numbers to make my point): suppose we have a house that we could sell for $200,000 and the appraisers would probably accept that number if the buyer had 20% down. But the buyer only has $20K not $40K, so s/he won't even look at any houses of that number, even though they could easily afford the payments. The seller wold be happy to sell the house at $180K and give the buyer the additional $20K that they need for the bank.

Is there any way to make that happen legally?

Z

You might be able to hold a 2nd mortgage; but the bank will always be in the first position if the buyer defaults. Consult a lawyer on that arrangement.
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Old 06-25-2011, 10:40 AM
 
Location: Tempe, Arizona
4,511 posts, read 12,835,526 times
Reputation: 2199
Quote:
Originally Posted by byoak View Post
I do not know of any bank that is requiring 20% down unless their credit is shaky or maybe if it is an investment property.
This ^. There are many lenders that do not require 20% down, unless the buyer has a credit issue, or there is some issue with the property that restricts the type of loans available. Suggest you talk to some Realtors and llenders about your situation and requirements for buyers.
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Old 06-25-2011, 11:23 AM
 
Location: Bar Harbor, ME
1,922 posts, read 4,067,254 times
Reputation: 1297
Quote:
Originally Posted by SmartMoney View Post
Only if you are related and you are giving a gift of equity. But under no circumstances may you put cash in the buyer's pocket. There is a distinction.
Yeah... that's what I always read everywhere. But I thought there was an outside chance that one of you hotshots had a solution. I'm betting that if you are rich and powerful there are loopholes. But I'm not either rich or powerful.

For example.... I could employ the buyer as a contractor to clean my garage for $20000. ;-) But I'm sure that this is also illegal. Everything is illegal unless you are rich and powerful.
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Old 06-25-2011, 11:58 AM
 
Location: Tempe, Arizona
4,511 posts, read 12,835,526 times
Reputation: 2199
Quote:
Originally Posted by Zarathu View Post
Yeah... that's what I always read everywhere. But I thought there was an outside chance that one of you hotshots had a solution. I'm betting that if you are rich and powerful there are loopholes. But I'm not either rich or powerful.

For example.... I could employ the buyer as a contractor to clean my garage for $20000. ;-) But I'm sure that this is also illegal. Everything is illegal unless you are rich and powerful.
Why do you think there is a 20% down requirement in your situation? There are loans available with 0% (USDA, VA), 3.5% FHA, 5-10% conventional, etc.
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Old 06-25-2011, 12:40 PM
 
4,404 posts, read 8,522,830 times
Reputation: 5658
You and your wife can each give each buyer up to $13,000, but only if you aren't expecting anything in return.
Gift Tax: Don
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Old 06-25-2011, 01:01 PM
 
Location: Cary, NC
39,210 posts, read 67,972,380 times
Reputation: 40107
Quote:
Originally Posted by Zarathu View Post
I have a house that will appraise for a lot more than I'm selling it, so it will pass the bank appraisers. However, since the banks are not willing to lend for people who don't have 20% down, is there any LEGAL WAY to give a buyer the other 10% that they need?

Lowering the cost doesn't really help the buyer who doesn't have the required 20% because you have to lower the property way way down to get to their magic number.

For example(used big easy to figure numbers to make my point): suppose we have a house that we could sell for $200,000 and the appraisers would probably accept that number if the buyer had 20% down. But the buyer only has $20K not $40K, so s/he won't even look at any houses of that number, even though they could easily afford the payments. The seller wold be happy to sell the house at $180K and give the buyer the additional $20K that they need for the bank.

Is there any way to make that happen legally?

Z
You or your agent need to sit with a good mortgage banker/broker or two and get a list of low/no downpayment options for buyers.
VA
FHA
Community loans
Doctor loans
No closing costs loans
Etc.

My guy has 97% funding up to $417000, with Seller contributing down payment and closing costs possible.

And the property marketing should mention applicable potential programs.
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Old 06-25-2011, 01:53 PM
 
4,567 posts, read 9,701,129 times
Reputation: 6666
Give me 10% and I will promise to buy your house. ;-)
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