Buying homes directly from banks - paying bank officers 4% cash (foreclosed, agent)
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I have an acquaintance who just told me that he can help me to buy foreclosed home for 20% under market price but I have to pay "kick back" to the bank officer 4% cash to get the deal. He showed me the list but unfortunately it doesn't have homes in the areas I wanted. Although the homes seem to be about 15% under market price I didn't like any of them. Another problem is that it will take about 5 months to complete any deal. Since I already found my dream home, I didn't pursue it further. Is this legit and happens a lot? Is the bank officer cheating his own bank? Paying the bank officer cash under the table doesn't feel right to me.
I have an acquaintance who just told me that he can help me to buy foreclosed home for 20% under market price but I have to pay "kick back" to the bank officer 4% cash to get the deal. He showed me the list but unfortunately it doesn't have homes in the areas I wanted. Although the homes seem to be about 15% under market price I didn't like any of them. Another problem is that it will take about 5 months to complete any deal. Since I already found my dream home, I didn't pursue it further. Is this legit and happens a lot? Is the bank officer cheating his own bank? Paying the bank officer cash under the table doesn't feel right to me.
My gut wants me to jump up and say of course it's not legal! But, given our over regulated industry, it seem incomprehensible that anyone would try for a kickback of this kind. I'm guessing it's paid as part of the transaction, or, the bank officer was a Realtor they hired to handle their real estate needs.
My guess is that your friend is not explaining the situation properly and that the fee is either going to the bank or a real estate agent the bank has hired.
^^I had the same thought but I would just caution that most people should not buy a REO property ("bank-owned") without involving a real estate attorney and I would never rely on the lender to use their own closer (if possible) and definitely not without having my own attorney watching out for my interests.
15-20% would not be enough to motivate me, especially considering the places likely need substantial work so you would chew up 20% quick on remodeling and the stress of dealing with greedy contractors running up a tab before the job is even done. Trying to get a front end quote in writing is like pulling teeth and if the slightest surprise comes up you can bet they will try to cover any over runs in the change order.
If you already know good contractors that won't fleece you then I might go for it but I suspect that's like saying I know a place where you can go see real life unicorns lol.
If it was 40% under then there is some room to just hire a general gut the place and still get a 20% savings.
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Quote:
Originally Posted by jimmybirdie
I think the bank officer and his own realtor get 4% cash without the bank's knowledge.
Then, yes. That would be illegal, and you don't want to be involved.
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