Seller Pays The Deposit! Ea,s New Campaign

[crash 2005]

Seller pays the deposit!

THE Sequence estate agency chain have launched a national campaign designed to help first-time buyers — by getting the seller to pay the deposit.

After recent evidence suggested it could take first-time buyers over four and a half years to save for a five per cent deposit, Sequence’s London divisional managing director Vito Rausa said: “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. This will then generate activity around their property and get the sale they wanted. Within just four hours of launching in our Thornton Heath branch, we had a seller signed up and more are joining the campaign.” The seller in question, Karin Campbell, was delighted with the initiative. “It needed an estate agent to offer something different to the usual price reduction,” she said. “This keeps everyone happy and most importantly it gets people moving.”

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

[OnlyMe]

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

<{POST_SNAPBACK}>

Perfect scenario for instant negative equity - if the sellers can't sell at the price they are offering THERE IS NO MARKET FOR THE HOUSE AT THAT PRICE.

Hello negative amortization loans too.

[El_Pirata]

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

<{POST_SNAPBACK}>

I've seen this little scheme in a mail out by our clearly desperate local EAs.

Sounds very fishy to me and I wonder if the legality is dubious.

If they have to return 5% of the price in cash to the buyer, then surely they've just in effect taken 5pc off the price and the real achievable value of the property is actually 5% lower than the transaction on paper.

It's like me selling you a button for £100 but giving you £99 first, and then you claim you have a button worth £100.

So the buyer will, in the real world, have a 100% mortgage rather than 95%. Does this not mean that the buyer has taken on more risk than they agreed with their lender?

[OnlyMe]

El_Pirata,

Yep, exactly that; maybe the lender doesn't care as long as not too many find out about the real status of their collateral.

I see huge litigation in the years to come.

[Elizabeth]

It's like me selling you a button for £100 but giving you £99 first, and then you claim you have a button worth £100.

<{POST_SNAPBACK}>

A button is only worth what your prepared to pay for it

[BuyingBear]

I've seen this little scheme in a mail out by our clearly desperate local EAs.

Sounds very fishy to me and I wonder if the legality is dubious.

If they have to return 5% of the price in cash to the buyer, then surely they've just in effect taken 5pc off the price and the real achievable value of the property is actually 5% lower than the transaction on paper.

It's like me selling you a button for £100 but giving you £99 first, and then you claim you have a button worth £100.

So the buyer will, in the real world, have a 100% mortgage rather than 95%. Does this not mean that the buyer has taken on more risk than they agreed with their lender?

<{POST_SNAPBACK}>

Well, they've got one seller signed up so that's the entire market saved! When it gets to this stage it's apparent what powerless little bods agents are, given the bubble of the century are their egos prepeared for the ensuing market conditions?

Indeed, this is pointless, much like the incentives on new builds it helps keep the illusion that prices are stable, why not just drop the house by 5% since it's clearly over-valued anyway? If the EA is less than honest they will just load the 5% on the price, as they do anyway for normal sales.

It seems they have a mental block, houses aren't selling but prices aren't the problem, so they're essentially bribing people with a 5% discount because prices aren't a problem. Seems they don't appreciate that this is real money, real debt that has to be repaid, it's just numbers on paper for them.

Basically they're scraping the barrel for buyers, all the mugs with any sort of deposit have disappered, the same is happening in the US in the form of neg amortization, expect the same to happen over here, however the banks are probably scared of future mis-selling claims.

[Elizabeth]

I don't see how this is new. It has been going on in the new build sector for at least a year.

[ʎqɐqɹǝʞɐɥs]

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

<{POST_SNAPBACK}>

Why cant the sellers wait 4 and a half years for the FTB to build up a suitable deposit? Oops or is that timescale not a trough?

[Guest Bart of Darkness]

I'm intending to put down a 33% deposit.

I'd gladly let the seller pay that!

[eurows]

I know someone that has negotiated a seller pays 10% deposit. This was knocked off the price of an already reduced house.

In full it equates to a 20% discount. He's quite chuffed.

I wonder if that is a good deal and how do you tell. I would be waiting for a 20% reduction in house prices which I would probably have to waite a year or two. He got it today.

[Mushroom]

Keeps the "list price" of the house up?

Just as car manufacturers offer "contributions" to a deposit or special deals.

The list price doesn't change.

Citroens, for instance are never sold at list price.

So what does the sale price get recorded as?

With or without the seller contribution?

[Marina]

And who pays the stamp duty on the 'discount'?

[apom]

this is the negative EA effect.

Durring a boom the more your house sells for the more they get.. so they push the price up.. they are at this point the Sellers best friend.

But thats when its a sellers maket..

Now its a buyers market..

So the estate agent switches sides..

they are the buyers best friend.. Far fewer houses are being sold and they don't get paid with no sale.

They want to shift property and they don't want the most expensive properties in the area on their books..

They want the cheapest..

They are now going to become our best friends

[BuyingBear]

this is the negative EA effect.

Durring a boom the more your house sells for the more they get.. so they push the price up.. they are at this point the Sellers best friend.

But thats when its a sellers maket..

Now its a buyers market..

So the estate agent switches sides..

they are the buyers best friend.. Far fewer houses are being sold and they don't get paid with no sale.

They want to shift property and they don't want the most expensive properties in the area on their books..

They want the cheapest..

They are now going to become our best friends

<{POST_SNAPBACK}>

Not really, that 5% will be counted as the sale price so their commission will be based on it, better than just knocking 5% off.

[apom]

Not really, that 5% will be counted as the sale price so their commission will be based on it, better than just knocking 5% off.

<{POST_SNAPBACK}>

They want sales.

They want to sell more then the other guys and in a buyers market that means they will be pushing prices down..

Granted they will try and cover this with smoke and mirrors..

but it can be seent hat they are already advising people to drop prices.

Not so they sell quickly..

but so the EA gets the money from a sale that could have gone to an EA up the street.

They want to have the cheapest properties.

If another property is the same in another EA they will want theirs to be cheaper..

this is as was last time.. the point where the EA's will push prices down

[BuyingBear]

They want sales.

They want to sell more then the other guys and in a buyers market that means they will be pushing prices down..

Granted they will try and cover this with smoke and mirrors..

<{POST_SNAPBACK}>

Indeed, it's all about volume and cutting prices whilst saving face, obviously £5k for example doesn't make much difference to their commission but panders to the vendors ego that this is considered a deposit not a price cut.

I've spoken to an EA recently (aren't I brave) and they were very much in denial, I cannot work out whether is some kind of mental block or whether they actually believe their own BS. Anyway, they've been sacking staff and they can only afford a single B&W page in the local rag, and there is a 'merger' (closure) on the boards, they know this they know I know this, but they BS on regardless, they even pushed "potential value" of a house up by £20k despite a dog of a summer and all the above difficulties, I left them to it.