Can a seller give a gift card for furniture at closing?

Asked by Mschocolatelady67, 23185 Tue Jul 28, 2009

I am purchasing a new construction home and the builder is giving $50,000 to permanently buy down the interest rate. I may have approx $5000 extra money after applying as much money as we can towards the interest rate. What can we do with the left over money from the seller. all closing costs are paid by NACA. Can the seller give a gift card for furniture? We already have a an executed agreement but just realized we may not be able to use all the cash. Or will I have to give the extra back to the builder. Suggestions are welcome.

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Lorie Gould, Agent, Duluth, GA
Tue Jul 28, 2009
Well said Grace! There are many people who are living in communities that will take years to recover... and I do mean years.
0 votes
Grace Morioka, Agent, San Jose, CA
Tue Jul 28, 2009
Hello Lorie and I am so sorry to hear of your developer problems.

Ms. Chocolate, if the community in which your future home is located is in financial trouble or in jeopardy of becoming one of the many bankrupt communities in Georgia, my suggestion is to run away from the home purchase. While a developer's bankruptcy may not personally affect you or your home, it will affect the value of your property, the value of the community, and, ultimately, can cripple you in your ability to resell your home at a later date.

If you are not already working with a real estate agent (as we, Realtors, do NOT interfere in any contractual relationships between client and agent), you might consider calling Lorie to get the financial "read" on the health and ability of your developer to complete the project without bankrupting the community. If the developer is healthy (and there are quite a few who are healthy through diversification of investments or product, nationalized housing locations and good management--Toll Brothers comes to mind as one of those highly diversified builders), then having funds applied to prepay assessments should not jeopardize your funds. However, if the developer is teetering on the abyss of financial ruin, it might be wise to rethink your purchase of a home in that community.

Talk with a local professional or your Realtor to determine the health of the developer of the home community.

Good luck!!

Sincerely,
Grace Morioka, SRES, ePro
Area Pro Realty
San Jose, CA
0 votes
Lorie Gould, Agent, Duluth, GA
Tue Jul 28, 2009
Let me tag onto the great ideas that Grace has provided.

I am local here in the metro Atlanta area. The market here is different than the market in California. Homeowner association dues have been great to request in years past; however, current market conditions have created conditions where you would not want to prepay dues. You mentioned you are purchasing new construction. How complete is the community? Is the HOA stable financially?

I can give you endless names of communities around the Metro Atlanta area that have bankrupt associations etc. There are communities that have countless vacant lots with a builders that are struggling to keep alive. We have lost so many great builders and I believe that we will see more builder lost fourth quarter as bank call the loans to remove the loans from their books so they can write off the bad debts. This happened last year and I have no doubts it will happen again. I already know of two builders that have been given notice. Your lender should be able to help you not leave money on the table... ask him or her to give you all your options so you can choose the best for you.
Web Reference:  http://www.HomesByLorie.com
0 votes
Grace Morioka, Agent, San Jose, CA
Tue Jul 28, 2009
Hello Ms Chocolate and thanks for your question.

Provided, as Lorie pointed out below, your lender will allow it, here are some common things that developers will do for their new home clients:

1. Credit the buyer with funds for upgrades to the home (for example, better appliances, counters, interior surfaces, carpeting, paint, cabintetry.

2. Credit the buyer by prepaying homeowners association assessments with the funds--this is particularly nice as it ensures that you will not be paying for this expense for as much as two years.

3. Credit the buyer for some closing costs

Normally, the seller will not provide you with a "gift" at close of funds to purchase furniture or personal items. Try asking for some upgrades or credits applied to other areas more commonly provided to other buyers of new home products.

Good luck!!

Sincerely,
Grace Morioka, SRES, ePro
Area Pro Realty
0 votes
Lorie Gould, Agent, Duluth, GA
Tue Jul 28, 2009
This is really a question for your lender. All seller concessions have to be allowed by the lender and that would constitute a seller concession. Maximum seller concessions on some loans is 6% while others only allow 3%. So the answer to your question is you can do whatever the lender allows you to do. And there should be an avenue for the monies to be used to your benefit since it appears the lender was allowing the $50,000 concession to begin with.

Best of luck and congratulations on your new home!
Web Reference:  http://www.homesbylorie.com
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