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Excuse me for saying this, but if the buyer has only a 3.5% downpayment, they shouldn't be "buying" the property! They're essentially upside-down from day one!
Excuse me for saying this, but if the buyer has only a 3.5% downpayment, they shouldn’t be “buying†the property! They’re essentially upside-down from day one!
Well said.
If they only have 3.5%, keep saving.
It makes no sense, other than the latest scam to prop up values, although a very dangerous precedent for the buyers. I'm looking at right coast properties; VA, MD, DC. I knew that seller subsidies existed, but never gave it much attention. Recently I researched how it flowed through the settlement process. The link below is to a property that recently sold, it was used as an example to clearly show how the value of the property's selling price was overstated, and that is the price that is recorded as the official sales price.
http://www.redfin.com/MD/Bel-Air/529-Cressy-Rd-21014/home/14494301
In this example the sales price was $219,900, the seller subsidy was $8140. The assessor office recorded sale price was $228,040.
Actual sales price of the property was overstated by 3.7%! Subsidies are hard to track down, and from what I can gather from how Case Shiller calculates value changes, these subsidies are not accounted for. It is estimated that in the VA, DC areas these subsidies on the low side are 3%, which in turn makes the reported geographic results, overstated by 3%!
If you Google reasoning behind the subsidies, it is clearly to advance comp numbers for appraisers!