Today I read in the New York Post’s real estate section about Atelier, a building in Midtown that will let buyers put their down payment for their condo on a American Express credit card.
But they let him put his $90,000-plus down payment on his American Express card, which gave him all the bonus points he needed to fund his shopping spree. “That was quite shocking,” says Feliton. “When I was getting ready to write out the check, I was just joking around and said, ‘Can I put this on my card?’ They said yes. It worked out to a $1,000 gift certificate at Saks.”
How stupid is that?! Putting down payments for a condo or house is not smart. It is risky for both the seller of the building and the home buyer. The home buyer can mess up their credit if they cannot pay off the balance right way.
For the seller, there is the cash flow delay inherent with credit cards. A certified check is really “money in the bank”. Funds are immediate with a certified check. The seller could also be hit with credit card chargeback. Any credit card charge can be disputed. Plus, what if there is identity fraud by the potential “buyer”? The seller would have little or no recourse.
Bottom line, incentives are great but both parties (seller and buyer) have to look at the financial risk of using a credit card for a critical thing like buying your home.