Repossessed Home Tour and Inventive Selling Tactics

This is video is out of the Bay Area and while a different, if not morbid idea, Portland isn’t ready for it. Hopefully the Portland real estate market won’t. The company focuses on showing repo homes in two 18 passenger buses. I found this clip on youtube. It’s not the greatest quality but it gets the point across.

In the same vain, a local seller is offering this:

*ATTN: Buyer’s Agent-SELL THIS HOUSE GET A CAR & THE 2.7% BAC! Property owner to gift a 1992 MERCEDES BENZ CE300 to the BA at time of closing, who represents a buyer who purchases this property for full price & closes the transaction by 02/29/2008*


A quick search of Kelly Blue Book says that trade-in value is somewhere between $3600-$4650 depending on quality and assuming base features and 60k miles. The IRS isn’t going to look at it as a gift no matter what you tell them it was- it’s income. Note, just the text was sent to me. I have no idea what listing it is and don’t really care to.

3 Comments on “Repossessed Home Tour and Inventive Selling Tactics

  1. On IRS regulations; gifts and such

    At one time I kept abreast of these issues, but times change, and I shifted over to other areas. I am not a CPA or an enrolled agent. I have studied the Tax Code, and I have compared what the IRS publications suggest against the code–it’s amazing how much better off a person is when they have a real professional rather than rely on IRS publications for their only source of information. From this it should be clear that I am not giving expert advice, but I do suggest hiring a real tax professional going forward (strategy). This has risk, as the tax code changes in time.

    With all of that out of the way, a gift under $11,000 (total calendar year) probably would not be a problem, but it must be a real gift–not some earned income labeled as a gift. In this car case a person must actually perform some work to obtain the car (i.e. earn the car). In other words, I would see no gift problem if the owner just gave the vehicle to someone, but the owner requires service to obtain the vehicle, thus according to the Tax Code it is income.

    With that out of the way, we must also remember that our system of taxation is based in large part on voluntary compliance. I once rooted out extra boot on a 1031 exchange–the purchase price was artificially increased to hide the so-called “boot.” The cash flow back to the purchaser was not obvious. The owner thought he could just “doctor the purchase price” to avoid taxation. As I questioned, is it ok if you don’t get caught? I cannot answer this very personal question for you. I left him with two options: 1. Pay as you are legally required, in my opinion; 2. Hope the IRS never questions the transaction (there is a very high likelihood of this).

    This does point out something that should be mentioned, and I have suggested it in the past. Sophisticated people know how to work the tax system. Rental property has far greater tax advantages, if you know how to work it, and even better tax advantages if you are willing to take what I call “full advantage of the tax code.” (Read into that whatever you want, but I call it good business) BTW, a crafty person knows how to draft the transaction so that claims of tax avoidance can be made rather than tax evasion.

    I had a friend who just sold a rental home tax free. How did he do this? He moved back into it for two years. Then he sold it as his primary residence. I think we have discussed this in this forum before. In any event, he didn’t pay taxes on the depreciation recapture. This is 100% within the bounds of the tax code, but it is using the provisions to minimize taxation. Yes, it requires two years of living in a former home, but it may be worth it to avoid taxation.

    Bottom line: The car is clearly earned income, but I bet it would never be reported to the IRS by either the former or new owner.

  2. Dual Agency: Is that car “gift” from the seller a conflict of interest for a BA?

  3. Actually the buyer tour idea is nothing new. It has been used with great success in various parts of the country. (Although it is not used extensively because it does require a great deal of organization to pull off.)

    The bottom line is the agent is supplying his buyers with something they are wanting, otherwise the bus would be empty.

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