Jump to content
House Price Crash Forum
Sign in to follow this  
Dicky

Seller Pays The Deposit!

Recommended Posts

http://www.estateagencynews.co.uk/news/cur...news-0805c.html

To help get the market moving again, we’ve been talking to our sellers whose properties have been on the market for a while and are ideal for first-time buyers. We’ve asked them to agree to pay a five per cent deposit to the buyer and in return this massive promotion will be highlighted in our branches, in the newspapers and in mail-outs.

Call me cynical but isn't this exactly the same as reducing the price of the property by 5% to get a sale, still it will look good on the Halifax figures as it would only indicate the sale price and not be recored as a fall.

:lol::lol::lol::lol::lol:

Edited by Dicky

Share this post


Link to post
Share on other sites

Oh Dear..... A sign of the times (theres a song in there somewhere)

I have seen these sort of initiatives being offered by private sellers (presumably on the advice of an EA) e.g £2000 towards decorating or a new kitchen or 'stamp duty paid'. This was going on at least six months ago long before developers were offering free cars on completion!!!!

The bubble burst last summer... :lol:

Share this post


Link to post
Share on other sites

I have seen this a lot in Huddersfield. Seller paying stamp duty and a couple paying the 5% deposit.

It just seems a way for the seller to move whilst the buyer pays over the odds just to get a place.

Its another EA scam.

Share this post


Link to post
Share on other sites

It's priceless - and yet another example of the mass stupidity of people. Sellers will be paying EA commission on that deposit they have just given and, if it is a stamp duty purchase, the buyer will pay stamp duty on money he has just been 'given'.

It just shows, very clearly, that dropping the price 5% would not be any use at all.

Share this post


Link to post
Share on other sites
This leaves the banks financing more than they know,

and may leave the buyer open to charges of fraud

I was talking to a mortgage adviser about vendor paid deposits a while ago. He said that while many lenders took a dim view of this, the Halifax was well known for turning a blind eye to it, and he often sugested it as a way for first time buyers to in effect get a 100% mortgage, but pay the lower rates normally only available for 95% LTV or less.

Edited by Neil D Possitt

Share this post


Link to post
Share on other sites

I keep seeing red 'flashes' on EA adverts in the local paper offering gems like "stamp duty paid", "deposit paid", "part exchange availiable" :D The other classic that makes me laugh is "Open Day This Weekend" emblazoned across an advert for a pokey 2 up 2 down! How desperate must people be to take on someone elses cr@ppy un-sellable property as a part-ex on their own larger cr@ppy un-sellable property.

Still, gives me something to laugh at!

Share this post


Link to post
Share on other sites
I was talking to a mortgage adviser about vendor paid deposits a while ago. He said that while many lenders took a dim view of this, the Halifax was well known for turning a blind eye to it, and he often sugested it as a way for first time buyers to in effect get a 100% mortgage, but pay the lower rates normally only available for 95% LTV or less.

Not surprised, handy way of getting around the deposit but providing effectively zero down loans with absolutely no track record of the borrower being able to manage their finances and save money. Same can be said of the type of credit scoring for CC's, just becuae somebody can rotate their borrowing and borrow more money and keep their minimum payments going is no guarantee that the money can ever be paid back or that indeed at some point that not even the interest can be paid.

A recipe for a lot of damage to mortgage and loan books when the chips are down.

Share this post


Link to post
Share on other sites

hi

I would be grateful if anybody could supply their opinion as to why using 'promotions' such as 'deposit paid' or 'stamp duty paid' or 'comes with free plasma tv' are considered more effective than a simple price cut of the same amount.

It's obviously something to do with marketing and influencing buyer psychology and clearly I am an atypical buyer (I visit this site after all) but I really struggle to understand why any buyer would prefer the above rather than a straight forward price cut.

My only theory is that annoucing a price cut could actually have the opposite to the desired effect with potential buyers regarding it as an indication that prices are set to fall even further.

Thanks in advance

Share this post


Link to post
Share on other sites
hi

I would be grateful if anybody could supply their opinion as to why using 'promotions' such as 'deposit paid' or 'stamp duty paid' or 'comes with free plasma tv' are considered more effective than a simple price cut of the same amount.

It's obviously something to do with marketing and influencing buyer psychology and clearly I am an atypical buyer (I visit this site after all) but I really struggle to understand why any buyer would prefer the above rather than a straight forward price cut.

My only theory is that annoucing a price cut could actually have the opposite to the desired effect with potential buyers regarding it as an indication that prices are set to fall even further.

Thanks in advance

There is also another side-effect - it makes it look as if lenders are requiring deposits, lending responsibly and may also affect the credit rating of any packaged loans that are sold onto the market. It is quite possible that buyers of Mortgage backed securities really don't have a clue as to what level of risk they are buying and he true creditworthiness of the poeple they have lent money to.

Edited by OnlyMe

Share this post


Link to post
Share on other sites

Well - my understanding of "stamp duty paid" and "deposit paid" is that this means people who can borrow money as a mortgage but don't have the actual 'cash' to move can buy. I don't think you can use your mortatge to provide you with cash prior to the purchase, which means that you need hard cash in saved to pay your stamp duty & deposit. By offerig to pay this for you sellers are encouraging those not reallly in a very solvent situation, to buy their house.

That's my understanding but I may be wildly wrong.

I think anyone duped into buying a property because they get a 'free' plasma TV needs locking up indefinately as borderline insane!

Edited by Pink Flamingo

Share this post


Link to post
Share on other sites

Ah I hadn't thought of that.

So.. it may be that the seller believes the property is not overpriced, but that potential buyers simply may not have the capital to provide the deposit and stamp duty.

That sort of makes sense in a slightly twisted way... :blink:

Would a lender be happy with this..?

Share this post


Link to post
Share on other sites

I do not think the authorities will be concerned about the fraud aspect. If the Halifax are promoting this they must have checked it through with their legal advisers. Also, if the tax man is getting his 100% of the stamp duty do you think "he will be bothered".

All of the above posts accurately reflect the hype and nonsense that EA's will use to flog a property. Open days are meaningless. Phone up and say I want to view the property the next day because it is more convenient. Is the estate agent going to turn round and say no? Of course not. As regards the free plasma TV's. My advice is go to Richer Sounds. You can buy one there for less than a grand. It's an excellent shop by the way. No, I do not have any connection with them.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.