Gift of Equity (general)

by Craig Villa , Ovean County New Jersey, Tuesday, August 11, 2009, 01:38

How can a seller base a gift of equity on an asking price. Shouldn't it be based on appraised value? I'm working on a deal where the seller tried to sell on the open market and the listing expired at $260,000. He then sells it to a relative at $260,000 with a $60,000 gift of equity, effectively selling it for $200,000. Since the contract price is $260,000, will the mortgagge company be looking for an appraised value of $260,000 and what will the tax assessor be putting the sale down as, $260,000 or $200,000 (and noting it as a family sale). I'm getting a little tired of the shell games and being like the real estate police. Who came up with the rule that a home "has to appraiser" in order for the mortgage to go through. Shouldn't the lending decision be based on value and equity? I had a deal where the buyer was putting down 60% and the value came in like $3,000 below the sale price and the mortgage guy called me to say I was killing the deal. Both me and the buyer were like, what the heck is wrong with these people?