This post is dedicated to a local Realtor engaged in the very dangerous practice of structuring short sale buy-back/lease backs.
For those not familiar, a short sale buy back is where the Seller/Borrower (who is in foreclosure) enters into a Purchase Agreement with a relative, friend or whomever to buy the [distressed] property at a short sale discount. Unbeknownst to the lender, the buyer's intention is to buy the house at the short sale discount, allow the seller to remain in the house and then enter into an agreement with the seller (who is now a tenant) to buy back the house at a significant savings (but more than the short sale purchase price of course).
The investor/buyer (1) gets a great deal on the house via the short sale, and (2) will make more money when the seller-turn-tenant-turn-buyer exercises the option to buy-back the property. Both the investor and the homeowner have gotten what they wanted - it's the lender that loses thousands of dollars in this scheme.
And, yes, it is a scheme. I believe the correct word is fraud.
Buy backs have gotten a bad reputation due to the dishonesty of investors who literally bilked homeowners out of their home and equity. Homeowners that feel "cheated" many months, sometimes years after being "saved from foreclosure" appear regularly on the 6 o'clock news. Most Realtors and investors that I know won't even do a buy-back anymore.
Add a short sale to the mix and you have a recipe for disaster.
In the State of Florida, a Realtor can be held accountable for his or her actions for up to five years. That gives a homeowner plenty of time to feel "cheated".
George, there are plenty of honest ways to earn commission - please don't add to the foreclosure, mortgage & housing crisis by dishonest dealing.