Author Topic: Buying seller's new home as well - A new norm?  (Read 633 times)

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Offline NotAnEarlyBird

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Buying seller's new home as well - A new norm?
« on: June 17, 2021, 08:03:11 AM »
Will this be a new norm in this crazy market?
"Competing against 50 other offers on the home, the buyer offered more than $100,000 above the asking price — all cash, according to Thomas Brown, agent with and founder of The Agency Texas, who represented the buyer who was moving to Austin from the San Francisco area. But that offer was matched by other buyers. So to seal the deal, Brown’s buyer offered something extra: to buy the seller’s next house."

https://www.mercurynews.com/2021/06/16/the-housing-market-is-so-hot-buyers-are-paying-1-million-over-asking-price/amp/

Offline USCTrojanCPA

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Re: Buying seller's new home as well - A new norm?
« Reply #1 on: June 17, 2021, 09:13:32 PM »
Will this be a new norm in this crazy market?
"Competing against 50 other offers on the home, the buyer offered more than $100,000 above the asking price — all cash, according to Thomas Brown, agent with and founder of The Agency Texas, who represented the buyer who was moving to Austin from the San Francisco area. But that offer was matched by other buyers. So to seal the deal, Brown’s buyer offered something extra: to buy the seller’s next house."

https://www.mercurynews.com/2021/06/16/the-housing-market-is-so-hot-buyers-are-paying-1-million-over-asking-price/amp/

Very smart given how high property taxes are in Texas.
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Offline akula1488

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Re: Buying seller's new home as well - A new norm?
« Reply #2 on: June 19, 2021, 01:23:19 PM »
Wait so the buyer bought two houses, one for themselves and one for the seller to live in as a tenant? What's in it for the seller? The buyer won because they got investment property as well.

Offline Cares

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Re: Buying seller's new home as well - A new norm?
« Reply #3 on: June 19, 2021, 02:10:51 PM »
Wait so the buyer bought two houses, one for themselves and one for the seller to live in as a tenant? What's in it for the seller? The buyer won because they got investment property as well.

No they bought the second home for the seller to own not to keep as an investment property.

Basically the simple math works out that if they paid $1M for their home their property tax base would be $1M. Whereas if they paid $1M via 2 homes and "sold" or "deeded" the 2nd property to the sellers then their tax base would only be $500k even though the true "purchase price" was $1M.

Offline daedalus

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Re: Buying seller's new home as well - A new norm?
« Reply #4 on: June 19, 2021, 02:34:09 PM »
Way to mess up the comps.

Offline akula1488

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Re: Buying seller's new home as well - A new norm?
« Reply #5 on: June 19, 2021, 02:46:42 PM »
Wait so the buyer bought two houses, one for themselves and one for the seller to live in as a tenant? What's in it for the seller? The buyer won because they got investment property as well.

No they bought the second home for the seller to own not to keep as an investment property.

Basically the simple math works out that if they paid $1M for their home their property tax base would be $1M. Whereas if they paid $1M via 2 homes and "sold" or "deeded" the 2nd property to the sellers then their tax base would only be $500k even though the true "purchase price" was $1M.

So the buyer is OK  to pay 1M for the house worth $500k but don't want tax base at 1M...The seller wins how? Save some buying cost? But this is tax avoidance fraud, isn't it?

Offline Cares

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Re: Buying seller's new home as well - A new norm?
« Reply #6 on: June 19, 2021, 02:59:31 PM »
How does the seller win? They get a free property. Their capital gains on the home sale is severely lower.

Offline akula1488

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Re: Buying seller's new home as well - A new norm?
« Reply #7 on: June 19, 2021, 03:01:14 PM »
How does the seller win? They get a free property. Their capital gains on the home sale is severely lower.

Too much risk to be part of tax fraud...

Offline Irvinehomeseeker

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Re: Buying seller's new home as well - A new norm?
« Reply #8 on: June 19, 2021, 04:12:06 PM »
seems so much like a Tax Fraud!  but may there is a loop hole to get around it. This appears like asking a private party used car seller to state a much lower price in the DMV transaction so that the buyer gets to pay low sales tax to dmv

 

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