Bargain Sale Benefits for Donor and Nonprofits
An investor in Virginia decided to make a charitable gift of a rental home he owned in Orange County, CA., a property he had not seen in many years. He had mortgage debt to pay off – more than $160,000 – and likely significant repair cost after years of wear and tear. After some research, he chose Realty Gift Fund to accept the home as a “Bargain Sale” donation (part sale, part gift).
RGF agreed to a $325,000 cash payment to the donor and to accept the balance of the property’s appraised value as a charitable gift. Approximately half the cash payment would retire the mortgage debt, with the other half paid as cash to the donor.
RGF engaged a local real estate broker to assess condition and value while preparing to close the donation, scheduled for shortly after the tenant was able to vacate the home. When the property became vacant, the broker took photos documenting the need for extensive repairs, and proposed two possible list prices, one as fully repaired and the other in as-is condition. Within a few days of signing the listing agreement, RGF received a cash offer that would close in two weeks in its as-is condition.
Due to the efficiency of its process, RGF was able to reduce ownership and closing costs which increased the grant of remaining proceeds to the investor’s Donor Advised Fund at Vanguard Charitable.