Question about buying or selling a house or property... - PeachParts Mercedes-Benz Forum

KarTek · #1 08-17-2009, 09:00 AM

Just out of curiosity, could I walk up to someone with a suitcase full of cash and use it to buy their house?

Vice versa, could someone give me cash for my house?

What are the legal obligations of a house sale?

All sales I'm familiar with have been through a realtor, paid through a loan. I've never heard of just plunking down cash for a house though, in this market, I can see it happening with the bargain prices you can find in some areas.

Thanks!

kerry · #2 08-17-2009, 09:35 AM

I imagine you could walk up to anyone with a bunch of cash and buy his or her house. Bill of sale on the back of an envelope might suffice?
I bought my house with cash back in 89. It had all the rigamarole of a typical sale with a loan.

TX76513 · #3 08-17-2009, 09:37 AM

You can do it - Just hire an atty to do the paperwork for you, as there are some things you don't want to miss.

Mistress · #4 08-17-2009, 09:42 AM

Medmech where are you??????? Title searches need to be done...

davestlouis · #5 08-17-2009, 10:18 AM

I would also imagine that there would be some sort of federal notification about such a large cash transaction...it you walk into your bank with $100K in 100 dollar bills, surely the bank has to tell somebody about that.

Oracle12345 · #6 08-17-2009, 10:19 AM

yes its possible but most of time real estate agents want bank statements and other forms.

Jim B. · #7 08-17-2009, 10:24 AM

Yeah, it has been done, many times.

Back in the late 1980's and 1990's there was a LOT of panicked Hong Hong dollars looking for a place to be parked.

People there were panicking that when the 100 year lease with Great Britain ended, in 1997, that the Chinese commies would grab all of it, take everything and leave them with nothing.

We have an unusual situation in this country: "We don't care who you are, or where your money came from, if you have it, you can buy ANY real estate you want."

A great deal of it came to San Francisco, and got sunk into real estate, -- we are talking apartment buildings, high rise skyscrapers, and private houses.

Often times, title was taken in the name of "straw men" --- waiters in Chinese Restaurants...

I was in the title business in San Francisco back then. I heard incredible stories, of Chinese people with suitcases full of cash, coming up to the front door of homes in the Richmond and Sunset District, worth $400,000 ( a LOT even then) of old Irish widows, and offering them $700,000 CASH on the spot for the houses.

What could they do?

Of COURSE they sold out.

It changed the character of those SF neighborhoods forever. "Progress" if you want to cal it that.

The asians that bought, wanted to have the property in PORT cities, like LA, Long Beach, Vancouver, SF, Portland, Seattle, and places that faced ASIA.

Yeah it happened. I saw it.

KarTek · #8 08-17-2009, 10:25 AM

Quote:

Originally Posted by davestlouis

I would also imagine that there would be some sort of federal notification about such a large cash transaction...it you walk into your bank with $100K in 100 dollar bills, surely the bank has to tell somebody about that.

Yes, that's something I'm curious about too.

Now, here's another question:

Hypothetically, if I have a friend who's down on his luck and I want to sell him a piece of property at a discount for him to build a house on, am I under any obligation legally to sell that property to him at a "fair" market value or can I sell it at what ever price I choose?

What if that friend is a building contractor and I want to trade him the property for the equivalent value in construction services?

I'm just thinking out loud here.

Jim B. · #9 08-17-2009, 10:37 AM

Quote:

Originally Posted by KarTek

Now, here's another question:

Hypothetically, if I have a friend who's down on his luck and I want to sell him a piece of property at a discount for him to build a house on, am I under any obligation legally to sell that property to him at a "fair" market value or can I sell it at what ever price I choose?

You can give it to him for free, by deed, sell it to him for any price and keep a mortgage on it for him to pay you back, or trade it for something in exchange for the deed.

You can transfer it for a dollar, full market value or anything in between. It is up to you.

Quote:

What if that friend is a building contractor and I want to trade him the property for the equivalent value in construction services?

I'm just thinking out loud here.

THAT is a trap for the unwary. I would never get into ANY deal with a down on his luck building contractor even if he is a REALLY good one.

Most have no money, and ask for "progress payments" to pay them as they go, when they build things. Many times they don't pay their subcontractors, who then have the legal right to record a lien on YOUR house, which you have to pay off when the contractor skips town or runs out of money.

Trade HIM (the contractor) the real estate for "the equivalent value in construction services"?

Oh no, never. Unless you TOTALLY trusted them, and even then, NOT till they performed the equivalent value in services FIRST.

And even THEN, probably a very bad idea. Get a VERY good written contract, with strict timelines for completion, and penalties for every day late.

Contractors are notorious fo working on their OWN schedules, and showing up when they feel like it.

Check their licenses are in good standing, the have all the bonds they need so if a worker gets hurt on the job you aren't stuck with it, get their references for past work, and then CALL them.

If you trust, then VERIFY...

ramonajim · #10 08-17-2009, 10:38 AM

If you sell a property at less than market value, you're supposed to report it on your income taxes - you may be liable for gift taxes on the difference between your sale price and fair market.

Hatterasguy · #11 08-17-2009, 06:44 PM

Yeah thats how I usualy buy building lots, although I walk up to them with my check book.

Just run it through your attorney for the closing, they will take care of the title search, transfer of title, etc, etc.

Write up a contract on some paper, doesn't have to be much, than take it with the deposit to your attorney. The buyer should also have an attorney, so make sure you get that info. Than the lawyers deal with it.

Hatterasguy · #12 08-17-2009, 06:50 PM

Quote:

Originally Posted by KarTek

Yes, that's something I'm curious about too.

Now, here's another question:

Hypothetically, if I have a friend who's down on his luck and I want to sell him a piece of property at a discount for him to build a house on, am I under any obligation legally to sell that property to him at a "fair" market value or can I sell it at what ever price I choose?

What if that friend is a building contractor and I want to trade him the property for the equivalent value in construction services?

I'm just thinking out loud here.

I have never done a trade before, so I can't help you with that.

But as for your first point no, as long as you are not a licensed real estate agent. If you have your license even if you are not practicing be carefull. If you steal some property from someone you can get sued. Thats why I let mine expire. On the flip side with selling, as long as you are the owner you are fine.

But no you are under no obligation to sell or inform the buyer of the fair market value of the property. I make a lot of my money by purchasing stuff far, far below fair market value. For example the last building lot I purchased I got for 30% of FMV. I'm working on one now thats complicated and is currantly worthless, but after some work I'll have about 50% of FMV into it, after I make it valuable. My uncle has been known to literaly steal them for about 5% or less of FMV.

You can sell the property to your friend for $1 and it has been done before.

Medmech · #13 08-17-2009, 06:59 PM

Quote:

Originally Posted by Mistress

Medmech where are you??????? Title searches need to be done...

Not really if someone is paying cash they have the option of doing thier own search or nothing at all. Where the trouble resides is very few title companies will accept cash bills you can also count on all kinds of red flag cash transaction incidents coming up.

and some nice audits to follow, the cash has to be sourced.

davestlouis · #14 08-17-2009, 08:17 PM

That's one nice thing about having cash flow where the biggest thing I can pay cash for is a Snickers bar...no red flags with the IRS for large cash transactions. I was under the impression that anything over $10K has to be reported on some sort of form. I have a life insurance license, and part of what we do as part of our training is look for money laundering. Cash is always a red flag.

t walgamuth · #15 08-17-2009, 08:24 PM

I believe the banks have to report cash deposits of over 10K.