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Buying seller's new home as well - A new norm?

NotAnEarlyBird

New member
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...s-are-paying-1-million-over-asking-price/amp/
 

usctrojancpa

Well-known member
NotAnEarlyBird said:
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...s-are-paying-1-million-over-asking-price/amp/

Very smart given how high property taxes are in Texas.
 

akula1488

Active member
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.
 

Cares

Well-known member
akula1488 said:
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.
 

akula1488

Active member
Cares said:
akula1488 said:
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?
 

Cares

Well-known member
How does the seller win? They get a free property. Their capital gains on the home sale is severely lower.
 

Irvinehomeseeker

Active member
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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