QUESTION: What is the proper,legal way for a seller and an agent to offer a buyer incentive on the purchase of property?
ANSWER: We cannot advise you as to whether the seller is permitted to make this offer to potential buyers. The seller may want to check with his/her own attorney as to the legality of this and what the ramifications might be. If the seller goes through with offering an incentive,you need to make your mention of this in the MLS and any other advertising as specific as possible so as not to mislead the public. In addition,it must be clear that the incentive is being offered by the SELLER and NOT by the agent AND that it is contingent upon lender approval.
For your information,please be advised that many lenders do not like this practice. They typically will not approve the seller providing cash to the buyer at closing. However,they may allow the seller to pay a certain percentage of closing costs. At any rate,you will need to make sure that the lender approves any such incentive offered by the seller.
As we have reminded everyone before,as an agent you cannot give the person cash or anything which can be converted into cash. You are also not permitted to pay closing costs by TREC. TREC has determined that agents cannot pay closing costs for a party to the transaction under the Gifts and Prizes rule and statute.
[SOURCE:TAR's Legal &Ethics Hot Line Attorneys]
