Is this legal?????

Question

I am trying to buy a condo from a Real Estate company and they are offering me $50 thousand cash back. Is this legal?
The condo is going for $700,000 and they will give me $50,000 back at the close of escrow
I understand that it is my $50,000 that they are giving me, but this sounds a little fishy.
Should I be concerned, and is this deal on the level?
Thank you for your time,
Geoff

I am trying to buy a condo from a Real Estate company and they are offering me $50 thousand cash back. Is this legal?
The condo is going for $700,000 and they will give me $50,000 back at the close of escrow
I understand that it is my $50,000 that they are giving me, but this sounds a little fishy.
Should I be concerned, and is this deal on the level?
Thank you for your time,
Geoff

Answer 1

Sound fishy to me too. I think they are trying to show an artificially high sales price to use to convince others to pay more for similar units than they would otherwise pay. Even if it is legal, if you borrow the $50,000 in your mortgage, you will probably pay around $100,000 in extra interest over the life of the loan.

Answer 2

Best you check out the Real Estate company thoroughly.
Just because the condo is going for $700,000 doesn't mean that is what the final price will be. It will go for the best offer even if its less.
If they are giving you a $50,000 rebate,I don't think that is illegal,but I've never heard of anything like that.

Answer 3

Impossible to answer this question without reading the entire contract. Anyone spending this kind of beans on a condo should have a real estate attorney look it over first. Could be something as simple as the type of "cash back rebate" often advertised with car sales, but there are surely some contingencies involved, and no one here can know what those are without reading the entire contract.

Answer 4

Yes, it's legal - it's a silly incentive to buy the property, which is probably overvalued anyway. Just tell them you will buy, but only at $650,000.

Remember your property taxes will be based on the purchase price of the house, so you will be paying taxes based on $700,000 when you really only paid $650,000 for it.

Deals like this are sometimes done to assist first time buyers who are struggling to get the deal together; this essentially lets them take an equity line of credit by getting a bigger mortgage than is needed, then giving them the money back. It's somewhat unethical, and ends up costing you more money!

Answer 5

I agree it is legal. This is not wise for you though, someone already mentioned your property taxes. You will be financing that $50K over 30 years. If your interest rate is 6%, after 30 years you will pay back $108K on that $50K, costing you $58K. The real estate company is doing this to artificially raise the value of their property. They offer you 50, the next guy 40, the next 30, and eventually people are willing to pay full price because so many others have apparently already paid $700K for the condo.

If you have to ask total strangers if this deal is OK, run from it; you are out of your league.

Answer 6

keep in mind the sale price for the commission will be on the 700k before the "rebate/discount/depeciated value" kick in, so his commision is higher
but if they are offer 50k cash back then they are asking 50k too high to begin with, so I would opt for even a lower price that 650k ( besides condos are now a losing bet as the flippers have gotten out fo the condo market ), most chas back or 50% offer are fake anyways, save for factory back rebate like automakers use, no one sell realestate realistically at a loss, not even developers who have their margins, what they try to do is avoid getting to close to their margin, keeping up property values and final price at sale is in the developers interest to keep other associate property selling at top dollar, but in the current buyers market the burning question is how much lower will it go? that all depends of the amount of qualified buyers ( now much lower due to the hike in terest rates ), the amount of inventory on the market ( represented in months of availible housing units which at current is ever growing larger ) and the desperation of the sellers ( which for some is panic or keep lower their prices to more realistic pricing ). ultimately many saw the fallacy of buy now ( at any cost ) or be priced out of the market brought on by relators, loan agents, developer etc what all.. and deciced to stay on the sideline and watch the ensuing meltdown occur.

Answer 7

This is legal, but may not be such a good idea. sounds like an incentive to get the condo sold. The only problem is, the condo may only be worth $650,000.00 and you will have financed $50.000.00 more than what it's worth. I would ask the realtor to show you comparablel properties in the neighborhood to justify the $700,000.00 price.

Answer 8

What is the reason for giving you the money back?
Are you using their finance company, or any other service that they offered?
Is it a rebate on the brokers commission?
It sounds extremely fishy.

Answer 9

I don't see why it should be illegal, but it sure seems kind of weird. I'm sure there are other condos on the market.

Answer 10

Ya it is....i've even heard of people giving away all-exspense-paid trips to Hawaii and Italy.....it's a buyer's market and people will do anything to sell their property

happy habitat hunting!