A well written personal property contract that specifically indicates that the underlying real property contract will not be affected in the absence of the personal property contract; plus a "craigslist" "ebay" used price value comparison, similar to one that you might produce in court for, say, valuing items in a divorce, goes a long way towards providing a foundation and basis for legitimacy to help your contract pass the sniff test. A contract written this way, should it come to the attention of the bank "should" not be a problem, as a short sale lender has no lien nor rights of collection against a seller's personal property, and a seller has no obligation to "throw in " personal items to sweeten a short sale transaction to the bank's benefit.
Finally, while offering to purchase some truly desirable items from a seller, at fair market value, in a short sale could very well be a good incentive to sweeten a deal, and "all other things being equal" cause a seller to like your offer better best. I would say that's a legitimate "throw in bonus", especially if those items were going to be sold at a garage sale anyway. If the buyer, after inspection of the items chose to rescind the offer of purchase, without affecting the underlying real property contract, then, if the items were truly priced at fair market value, the seller isn't really harmedâ€¦he/she just has to sell them to someone else. There is a loss of convenience, but not of value.
But a seller "requiring" this, either directly or by insinuation is just plain creepy, and could possibly demonstrate an intent to defraud the lender, especially if it can be established that an offer was selected that was not the most beneficial to the bank, or that competitive offers were hampered by this activity. Bad newsâ€¦ don't do it. Did you know that 25% of all lawyers are currently unemployed? Let's not give the banks a good reason to engage their services, right?
The likeliness, however, that this fraud would be exposed is fairly low, and if it occurs, at most you and the seller are looking at financial penalties that are likely to be relatively minor.
I would suggest you can structure the deal in a different manner such that at least you can avoid being party to the fraud. Consult an attorney on how you might structure the deal as there are many scenarios.
An approach that will protect the buyer in most states is to utilize a little known (or under utilized) contract option where by the buyer pays a commission to their agent. Conventionally, the seller pays all commissions, but in most (if not all) states, the standard real estate contract forms do allow for a buyer to pay a commission. This contract is disclosed to all parties in the transactions including any lien holder(s).
If the buyer's agent wishes to take their funds (from their commission on the sale or otherwise) and pay the seller, then that is their decision and obligation to report while the buyer has lived up to any obligation they have for disclosure and arm's length relationships with the seller in a short sale. If the same broker/agent is representing both parties, the same approach applies.
In any case, consult an attorney. Almost any deal can be done if structured correctly.
The seller will not sign the offer letter and purchase and sale without the signing a separate agreement for the appliances. The appliances are nice but a few years old so the $5500 they are asking is about double the going rate for the same model and year appliances (fridge, stove, washer and dryer).
And the thing that really raised a red flag is that this is a separate agreement, outside of the purchase and sale that the sellerâ€™s bank is not supposed to know about. It's the secrecy that is making me looking into this further.
From what I've read online side deals can be allowed in a short sale situations but there is supposed to be full disclosure with the sellers bank.
Thanks again for all the responses!
BUILDINGS, STRUCTURES, IMPROVEMENTS, FIXTURES
Included in the sale as a part of said premises are the buildings, structures, and improvements now thereon, and the fixtures used in connection therewith including, if any, all wall-to-wall carpeting, drapery rods, automatic garage door openers, venetian blinds, window shades, screens, screen doors, storm windows and doors, awnings, shutters, furnaces, heaters, heating equipment, stoves, ranges, oil and gas burners and fixtures appurtenant thereto, hot water heaters, plumbing and bathroom fixtures, garbage disposers, electric and other lighting fixtures, mantels, outside television antennas, fences, gates, trees, shrubs, plants, dishwashers, refrigerators, washer and dryers, all window treatments and all lighting fixtures. But excluding the following:
Hope this helps.
The short answer - the seller can not gain any proceeds from the sale of the property.
You also need to bring you mortgage lender in the loop on this.
The terms of the short sale have to be acceptable to the seller, the seller's bank, you and your bank. It's all negotiable to a point. People can make all sorts of offers but no one is obligated to accept them.
$5500 may or may not be a good price for appliances but check the contract to see if some of them are excluded or included in the sale, as Louis had suggested.
I guess my questions would be (1) can you refuse the side deal? If not, then it's not really a side deal, the price of the home is really increased by $5500 but the current owner wants that money instead of it going to the bank. (2) is the home still a value to you if you were to pay the extra $5500?
If you want a skilled negotiator, I have an attorney who has a LOT of experience in short sales. I would be happy to refer you regardless of your choice of lender.
Thomas J. Stevens, Loan Officer, Flagstar Bank
Financing in 50 states
Speak to your lawyer ASAP.
The only major appliances that could be made on a side deal would be washer/dryers, and the fridge (if it is not built in) All other appliances should be included in the sales price. That said your offer could also include the washer/dryer and the fridge as well in your purchase price.