La Jolla Real Estate, Del Mar Homes, Carmel Valley, University City and Downtown San Diego real estate,
homes and condos for sale in California - Ruth Mills & the Mills Team, REALTOR.






Sign Up For Email Updates
(includes all areas in San Diego County)





 Average Sale Price can be masked by current trend to offer incentives to buy
As the market continues its downturn, demands for cash back
at closing are occurring with greater frequency.

When sellers give buyers cash back within a transaction it creates possible legal liabilities for both the broker and the seller. It is recommended that real estate agents avoid getting caught in the middle of such a tenuous situation.
Jose Palma a representative of Prudential California Realty advises his agents to be wary of overly creative incentives that go too much into the "gray" area of ethics. There is always a black and a gray area. He advises agents to avoid the gray areas.

Here is an example of how the amount of a cash back incentive is determined: a property is reappraised at a higher value. The difference between the appraised value and the actual asking price is given to the buyer without the lender's knowledge of this part of the deal.

Economists fear that incentives of this nature could be altering the reports of average selling prices. This could be potentially damaging to banks, which could be harder hit if the owner has to default on their home loan and the property appraises for less than its original value. This incorrect information could also have a negative effect on the decisions that potential buyers need to make prior to making a home purchase.

Back to our Real Estate Blog