Question: Can I buy a home for 250,000.00 with a lender and purchase it on a side agreement for 200,000 and have the seller give me the 50,000 difference after closing for repairs?
Answer: NO THAT IS FRAUD
Anyside agreement without lenders or third parties acknowlwedgement is FRAUD.
What Can I Do Then?
Option 1. You can purchase the property for 250,000 and have Title hold 50,000 for repairs in an escrow fund which is typicaly 1.5 times the amount. ( Your lender would have to agree and appraisal would need to come in at 250,000 to close, Most lenders do not like Escrow hold backs and require it to be done before closing.
Option 2. Seller can get items done before closing and have venders paid at the time of recording, if they are willing to wait to get paid. ( On a side note if repairs are large this puts seller on the hook for bills to be paid even if sale does not go through, I urge caution on this if repairs are extensive as seller may not have cash to pay the venders if it does not close.)
Option 3. If the repair amount is small seller and buyer can do a Amendment to Change purchase price for the amount needed and buyer can complete repairs after closing. As long as it appraises and lender is fine with repairs that are left onto buyer.
Option 4. The Seller can offer to cover the buyers closing costs, pre paids and reserves. The lender only allows the sellers to pay up to a certain amount of those costs depending on the loan program you are on. Check with your lender on the exact amount to see if it matches up.
Option 5. The Buyer may purchase the property as is where is as long as lender and or Appraisor does not require repairs.
Option 6. If repairs are extensive Seller may need to take home off the market until the repairs are fixed and can be placed back on the market.
Any Side Deal with out the knowledge of the lenders, appraisors, title companies and REALTORS is illegal.
If any of these parties tell you to not tell a third party about a side deal you are doing they are committing FRAUD as well.
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