Michigan, cash at closing - Posted by J.T.

Real Estate Investing Real Estate Law
1

Posted by J.T. on October 15, 2005 at 13:10:11:

Possibly, though all of the houses are currently rented. Plus, when listed as “improvements” wouldn’t the Lender look negatively towards improvements needed? I’m up for all options. If lenders allow $8,000-$10,000 to be held in escrow for “improvements”, then I’m all for it. I’m sure the properties could use improvements. Also, wouldn’t the appraiser need to discount the value if there are improvements needed?

Thanks again,
J.T.

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Michigan, cash at closing - Posted by J.T.

Posted by J.T. on October 14, 2005 at 10:22:20:

Situation:
I am thinking about selling 4 current rental properties. I am going to pay a finder’s fee of $2,000 to someone who is going to refer a buyer of these properties. I will also pay buyers’ closing costs PLUS this buyer will receive $5,000 to $8,000 cash at closing for each property purchased. How would this be acknoweleged on the HUD statement at closing in order for Lender not to be discouraged? Will Lenders allow this? Is it necessary to tell the Lender?

Thanks

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Re: Michigan, cash at closing - Posted by AWWestMich

Posted by AWWestMich on October 15, 2005 at 11:19:58:

Can it be stipulated in the P&S as Seller finance for improvements on the purchased units. The key being its to be used for ‘improvements’ on the property. I’ve seen where this is written out as ‘vouchers’ used in the purchase of materials after the sale. The seller/mortgagee controls how and what the money is spent on.
IMHO

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Re: Michigan, cash at closing - Posted by River City

Posted by River City on October 15, 2005 at 18:39:26:

Generally, when a property is appraised to include the cost of the improvements, the purchaser has to submit a formal request to cover the cost of the improvements. In addition, the lender usually holds the funds in an escrow account and releases the money per inspections on the improvements. Typically, this would be a rehabilitation loan. The appraiser will appraise the property with a value of “as is” and a value after the improvements have been made. This way, the lender knows if the improvements will sufficiently increase the value of the home.