Our origin was unique to the Real Estate Profession.  We maintain our high standards and our 65+ hour work weeks no matter what the cost.  But one thing is for certain, these standards that we have in place, have not hurt our business.

Manufacturers and retailers often offer cash back deals or rebates as further enticements to purchase anything from computers to automobiles. In recent years, such cash back deals are growing in popularity in the real estate market. Unfortunately, when applied to real estate, these cash back deals are illegal.

Illegal???!!!

Yes, illegal.

Many homeowners, home buyers, real estate professionals, and even attorneys who should know better will tell you that getting cash back when you purchase real estate is legal and perfectly acceptable. People do it all the time. It’s a great deal for everyone involved. The buyer simply pays a little more for the property, and the seller agrees to kick back the surplus cash to the buyer. The buyer gets some cash to pay off outstanding credit card debt, cover home repairs and renovations, or whatever. The seller unloads the house at close to or better than the asking price. The real estate agent gets a bigger commission. The mortgage broker earns a commission on the loan. And the lender scores a larger loan and stands to earn more interest over the life of the loan.

The problem is that a cash back deal misleads the lender into approving a loan for which the collateral (the house) is insufficient to secure the loan. If the homeowners default on the loan and the lender forecloses, the lender is less likely to be able to sell the home for enough money to cover the balance owed on the loan.

These cash back deals also inflate house prices, property taxes (which are based on property values), and insurance, making homes less affordable. Over time, they increase foreclosure rates resulting in deflated property values. As homeowners leave, neighborhoods erode.

If you are buying a home and stand to receive cash back in any way, shape, or form, put a stop to the transaction immediately. Many sellers will try to cover their tracks by offering cash back in other forms, such as lease back payments (for investment properties), paying you for an option to buy the property back (when they have no intention of ever buying the property back), cash for repairs and renovations, or even free furniture or a car or a vacation package.

Here are some of the warning signs that a cash back deal is in progress: 

Ralph R. Roberts, GRI, CRS is a real estate and mortgage fraud forensics expert and author of Protect Yourself from Real Estate and Mortgage Fraud: Preserving the American Dream of Homeownership (Kaplan Publishing).

Remember that if you have a feeling that something is not right, be sure to go with your gut, until proven that you were not correct.  Your heart usually has it right.  The mind is where the question arises.  Also, be sure that you are getting dealt with straight.  Find out someone’s history, track record, find out what they are about. 

Make sure you are working with people that have ethics and a foundation that has been built on doing the right things.  How do you figure that out? - Never, ever, interview someone over the phone, make sure you can look at them in the face and watch them talk.  Not just hear them - Watch them.  You’ll know it.  If they don’t show their true colors at first - give it some time.  Everyone that does not have your interests at their heart - will be revealed. "hopefully more sooner than later!"  - CONNOR with HONOR