Agent gifting commission to buyer?

[2bindenver]

The lender must also agree to be RESPA compliant.

[MikeJaquish]

Originally Posted by emotiioo

The commission only accounts for part of the buyers down payment which is over 200k. The buyer has a prequel letter that gives her a lot of room above our asking price. We are tempted to ask if she would be willing to offer without including this "gift" as part of her funds. I mean the agent can write her a check after closing and she can use it to pay down the mortgage to where she wants to be.

Everyone is overthinking this.
Almost anyone with 20% down can take 6% of the contract price in credits from the seller, or from either agent.

$20,000 credit?
No problem, from your details offered. She is putting down $200,000?
If the offer is competitive, or best among the offers you have in hand, you are overthinking it.

Write a check after closing? THAT is an issue. Loan fraud.
And, at that point the agent has a taxable event. Pre-Tax money, on the CD is the way to do it.

[Diana Holbrook]

Originally Posted by MikeJaquish

Everyone is overthinking this.
Almost anyone with 20% down can take 6% of the contract price in credits from the seller, or from either agent.

$20,000 credit?
No problem, from your details offered. She is putting down $200,000?
If the offer is competitive, or best among the offers you have in hand, you are overthinking it.

Write a check after closing? THAT is an issue. Loan fraud.
And, at that point the agent has a taxable event. Pre-Tax money, on the CD is the way to do it.

OK this is a possibly a better understanding of the tax law than I have.

If I were the agent, I'd want to be clear on this. I'm not sure it matters to the seller as long as the loan won't be hung up about it. I would verify that. I'm not sure it's loan fraud if the lender knows.... but it's definitely loan fraud if the lender doesn't know.

[jackmichigan]

The buyer may have simply described it incorrectly. If this is to be a credit against the purchase price, there probably won't be any issues. Since they're putting down a hefty deposit, it sounds unlikely that it would affect the loan. Even if so, there's probably a way to structure this so that the lender isn't concerned (MikePRU's suggestion would certainly work). I've gifted a few commissions to buyers, but they were all cash deals so there were no complications involved.