"Donate" Your Way Into A House
My first time homebuyers found exactly what they wanted in a new development built by a high-volume builder. We ironed out all the usual nitty gritty in their contract: price, closing costs, fridge or blinds, etc. It was all straightforward and routine until the Builder's Rep asked:
"Would they like to donate to (Insert name of large national non-profit)?"
I stared at my phone. Then into outer space and then back at my phone. Donate?
I asked for clarification. Surely "donate" was a euphemism or a misspelling.
"Would they like to donate to (non-profit)? It will make their offer stronger."
Surely, surely my buyer's offer was not contingent upon them donating money to a charity they had no prior involvement with and knew little about. How was this relevant to a sales contract?
"It's not contingent! But it will make their offer stronger. We care a lot about this organization."
Was this the new landscape of Home Buying Hunger Games? Having to donate to a builder's personal cause in order to get 3 bedrooms, 2 baths and a fenced-in yard for the dog they got at the shelter? My buyer's reaction echoed my disbelief with a firm, "Give 'em a dollar!"
Ultimately, we didn't donate to anyone else's cause and still got the house. The exact advice I'd offer anyone else, for a few damn good reasons.
First, the builder suggested wrapping the donation into their mortgage since there was nowhere on the Closing Disclosure for "charity." That means my buyer's would have been paying interest on a donation every month for as long as thirty years.
Second, the amount of the "donation" would never appraise. Let's say they gave $5,000 to seal the deal and we added it onto the value of the home. Then the appraisal comes back $5,000 short. Now, their only option is to come out of pocket $5,000 for a charity they were never involved in, just to get a home.
We can give the builder the benefit of the doubt here. Maybe this organization is near and dear to their heart and they're doing everything they can to raise money for it. That fine but implying that a buyer may not get a house without contributing seems antithetical to giving.
Small businesses to Big Box chains have all embraced the "round up" at the register approach to "charity." How many times have you been asked at the grocery store for a dollar? Been prompted at self-checkout? It can feel uncomfortable to say "no" but there are better ways to give. Often these corporations pool all of your giving over the course of a year, put it under their name and write it off their taxes. The bragging rights about their charitable efforts can be seen on their marketing.
Donate because you feel compelled in your heart to do so and know that the roof over your head should never be contingent upon supporting someone else's charity.