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I need someone who knows Real Estate

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geno

geno

Lifer
I was informed recently that having a buyer's agent gift their commission back to the buyers might get them in a bit of trouble in terms of securing the loan / mortgage. More specifically, this will be an FHA loan. If there is an arrangement between relatives, one being the agent and the other the buyer, is it shady / illegal to do this? Supposedly, this is a new measure FHA is implementing, but it seems a little sudden. Does anyone have any idea about this, if it's common and legitimate? Is there any reason a lender would try to prevent this? Let me know if any more info is needed, I'm just trying to gather some info here...
 
I don't see how the lender can prevent it unless it's going against the loan. If it's going towards the down payment they can reject it as the full 3% needs to come from the buyer.
 
Doesn't the seller usually pay the agent fees? If so, how would what the agent does with his/her fee after the sale has gone through have anything to do with the buyer's loan as the sale takes place?
 
it's illegal for someone that doesnt have a license to receive money from a real estate transaction. and yes, I am a licensed real estate agent in MA.
 
Originally posted by: richardycc
it's illegal for someone that doesnt have a license to receive money from a real estate transaction. and yes, I am a licensed real estate agent in MA.
Click to expand...

Not here in Texas. I got $3K from my realtor and $1K from the seller's realtor when I bought my house 5 years ago. I don't believe they've changed the law.
 
Tax evasion.

<------ In industry.

It is illegal for compensation regarding a real estate transaction to take place outside of the HUD 1.

There are standard referals that are outside, but gifting back any sort of money is illegal.



Does it happen all the time? Yes.

Will you get away with it? Most likely.
 
Contact your local HUD HOC and also your local board of realtors.

Richardycc I'm work in real estate in NY and I'd like to know how real estate transactions take place without a broker in MA. How do non brokered transactions or real property take place? That doesn't add up.
 
Originally posted by: SampSon
Contact your local HUD HOC and also your local board of realtors.

Richardycc I'm work in real estate in NY and I'd like to know how real estate transactions take place without a broker in MA. How do non brokered transactions or real property take place? That doesn't add up.
Click to expand...

Non "brokered" transactions take place all of the time. Walk into a BofA for a loan, and that is retail.
 
Originally posted by: richardycc
it's illegal for someone that doesnt have a license to receive money from a real estate transaction. and yes, I am a licensed real estate agent in MA.
Click to expand...

Then what is the purpose of gifting? Or is it not as standard as I would have been lead to believe?

Ocguy, is there any way to pay taxes on it and make it legit? I won't do anything if it's going to get us or anyone else in trouble, but there had been a prior verbal agreement and now I'm being told something else.

Thanks Sampson, I'll look into that just in case.

Thanks everyone!
 
Educated guess:

It's called an unfair inducement. It's proscription has nothing to do with tax evasion. It's a measure put in place supposedly to protect consumers. All it really does is protect realtors from competition with other realtors who cut commissions to get more deals.

However gifting the money back without the giftee declaring it would constitute tax evasion.

You should contact these people.
 
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