Do you remember being a kid, and you weren’t sure why but somehow you knew you were doing something wrong, even though no one had ever told you specifically not to do what you were doing? Fast forward and you’re an adult, and you’re buying a your first home and everything is great, except for the price. Until the salesperson, says: “Hey we’ve got a solution. If you pay our price we’ll give you a cash rebate on closing."
This offer is usually made by developers or sellers who have multiple units for sale. It works well for them because they will generally point out those sale prices to less astute buyers as a justification for their price.
Most often they will want to work that deal out on an addendum (side agreement) and not on the purchase contract. In one such case when one of my team brought one such scenario to my attention, I simply said to him that as long as it's ok with his client's lawyer and finiancial institution then I’m ok with it. As I suspected, the seller's agent didn’t want this side agreement shared with the bank.
If that’s not enough to raise red flags then I don’t know what is?
There are legitimate rebates and allowances, but not one of them goes through the back door with a wink wink, if you know what I mean. So here’s a quick checklist to make sure things are on the up and up so you don’t end up spending 10 – 15 behind bars:
- Work with a REALTOR who represents your interests
- Trust your instincts -if something doesn’t feel right check into it
- Share all the documentation with your lender and lawyer
- Look into the previous sales thoroughly
