A few things have changed since I posted that two years ago; what settled out is that no more than two unrelated occupants can live outside of R3. 

We are buying the house to live in it for no more than 5 years, then sell it or rent it out.

Have no more than three bedrooms.

Apparently offer 2% more than hard money (secured by real property at no more than 65% LTV) and all reasoning goes out the window.  

1% is just a rule of thumb, no more. 

Quote from @Bruce Woodruff: Quote from @Peter Mckernan:Up front (First Contact) Red Flags - 1) Everything should be in writing and very detailed 2) There should be a very specific Scope Of Work3) They should not ask for much upfront $$, certainly no more than 10% - if even that.

You could also place a "time-span" test on this, meaning the no more than three months between violations.

It would dually represent buyers and sellers and charge a total commission of no more than 0.6%.

It would dually represent buyers and sellers and charge a total commission of no more than 0.6%.

He is enticing people into paying more than the minimum, it is no more complicated than that.Pay mortgage payment = 22 years of payments (in his summary)Pay mortgage + HELOC principal + HELOC interest = 9.6 years of payments (in him summary)There is nothing wrong with it, it is behavioral economics.