posted by birddog23
Okay - house comes back appraised for $320k.
Agree on sale price of $310k (between seller and buyer, handshake agreement). But go through with the actual sale price of $320k.
After the whole process, original seller gifts buyer $10k.
This is illegal?
You don't "gift" cash in a home sale. There are cases where seller provides cash back, usually to cover closing costs ($5-$6k for the buyer in most areas for $300k house).
I think normally you would already have a contract in place before the appraisal, and after 2008 it's unlikely to be appraised at a value above the net of cash price.
Like I said before, if you don't really intend for this to be a gift then you need to explore "rent to own" options. This might also allow you to keep your existing [presumably better rate] mortgage in place while you rent it out. That potentially is an issue for you getting a mortgage on a new home. And it comes with a host of liabilities. And a "rent to own" contract could be a violation of your mortgage agreement, even if unlikely you'd have to talk to a real estate attorney.
So let's say you rent at $3k per month. Again, I don't know the finer points but then after two years you give credit for 90% of the rent as a downpayment/equity (i.e. you charged a 10% interest rate). Then they pay the agreed purchase price (in 2 years) of $320k. Hopefully it appraises for that - then they have $65k in equity which is just enough for 20% downpayment.
Don't feel like crunching the numbers to see how that shakes out for buyer and seller. I think the 10% + $20k would mostly cover your real estate taxes and interest over the 2 years. Buyer is paying like $1k extra per month to put $2k in rent toward a downpayment (so "saves" them $24k over 2 years building equity instead of paying rent).
