Lagarde's Drift Posted March 8, 2011 Share Posted March 8, 2011 Well, either the surveyor is valuing the property at its correct value and the vendor, buyer +/- mortgage company are deluding themselves as to the buyer's aspirations, or the surveyor is overvaluing the property. With the spotlight on them I am surprised that there are any about that would be willing to partake in this game knowingly. Quote Link to comment Share on other sites More sharing options...
chrismar Posted March 8, 2011 Share Posted March 8, 2011 I heard something similar on a BBC Radio 4 broadcast from Manchester shortly after the credit crunch. Property developers of flats there were giving buyers 'cashback' and recording a higher sold figure in order to sustain prices. This was considered fraudulent at the time, could well be a criminal offence, and no-one knew how widespread the practice was. I wondered if anyone else had heard this programme. The potential benefits to property developers are obvious, maybe less so to private sellers. I can't imagine a lender being that easily taken in - surely they don't want to lend more than a property is worth. Or maybe they do. The taxpayer will pick up the tab if it all goes wrong again. This time last year we were considering a new build on a development by Barretts. They offered us a "deposit payment builders incentive" on the purchase, (where by we would have paid say 250K and they would have coughed up 25K (leaving us then to find the stamp duty)...... so that the sale was recorded at a higher price at Land Reg. Needless to say - we having investigated property itself more fully - did not go through with it - primarily because we felt the size of the rooms in the place were so small and as there was not enough space to get much more than a bed in the main bedroom. . . . and not enough room for most of our living room furniture - not that we have much but we felt this was taking "minimal" a tad too far. Quote Link to comment Share on other sites More sharing options...
wolfe tone Posted March 8, 2011 Share Posted March 8, 2011 Well, either the surveyor is valuing the property at its correct value and the vendor, buyer +/- mortgage company are deluding themselves as to the buyer's aspirations, or the surveyor is overvaluing the property. With the spotlight on them I am surprised that there are any about that would be willing to partake in this game knowingly. I too have just sold my house and gave the buyer £10k as a gifted deposit, Santanders surveyor asked me three times during the valuation whether it was a gifted sale or not , the implication being the valuation would have been different had it been a normal sale. Quote Link to comment Share on other sites More sharing options...
RichB Posted March 8, 2011 Share Posted March 8, 2011 interesting. Quote Link to comment Share on other sites More sharing options...
FedupTeddiBear Posted March 8, 2011 Share Posted March 8, 2011 Is there anyway of finding out what the real price of a property was allowing for vendor deposits?? The reason I say this is that we just sold our house in West Yorkshire for £215,000 but gave the purchasers a £30,000 vendor gifted deposit (all above board - mortgage company knew all about it). That means that really the house sold for £185,000 but all the reports will show it selling at £215,000. Is there anyway of finding out where else this is happening so we can see what a house is really selling for? What was the asking price you advertised for the house? Was it £215K, higher or lower? If this practice is widespread then the average actual % of asking price achieved reported (I think it shows at about 92% at the moment?) must be affected. Quote Link to comment Share on other sites More sharing options...
ingermany Posted March 8, 2011 Share Posted March 8, 2011 I know that Persimmon have been doing this for ages. They advertise a "we pay your deposit, we pay your stamp duty and we arrange your mortgage" service. This includes a BTL arrangement as well if you want. You can ask the developer for a no money up front property and then rent it out as an "investment". They also say that you only have to pay 85% of the property's valuation (they pay the rest). Again, they're just over-valuing the property and subsidising the sale. I suspect the practice is commonplace. 100% mortgages never went away. These deals are being sold to military personnel.....but I expect they're not exclusive to that group. I agree that it's the lender who is being scammed (or perhaps colluding). Interesting that another property company running a BTL operation- "Blue Forces" has gone bust recently. They specialised in selling property to forces personnel and then managing it for them. Effectively a BTL agency. Arranging zero deposit finance and managing the property for the landlords. blue forces I think a lot of military personnel were sucked into BTL at the height of the boom-with the active encouragement of the MoD. Blue Forces Bust And now come the redundancies. Quote Link to comment Share on other sites More sharing options...
Topher Bear Posted March 8, 2011 Share Posted March 8, 2011 I think we've found the reason why prices are not falling faster. With so few sales, this sort of action will be a greater proportion of sales and with normal ftb scuppered to get the required deposit, often might be the only way a sale goes through. Not quite to same scale but local agent advertises that it does a £1000 buyers incentive scheme. Does anyone have a chart of the japanese boom and bust overlayed with ours? Since it looks like governments want to go the japanese route of years and years of anemic growth if any. It might show us where house prices are heading next. Quote Link to comment Share on other sites More sharing options...
TeddyBear Posted March 9, 2011 Share Posted March 9, 2011 Was told by an EA that, when a place sells around 255 - 280k mark at the moment the vendors are very often paying the stamp duty as otherwise buyers won't go over 250k. So similar to a gifted deposit in a way. He said it's all totally legal. Quote Link to comment Share on other sites More sharing options...
easy2012 Posted March 9, 2011 Share Posted March 9, 2011 I heard something similar on a BBC Radio 4 broadcast from Manchester shortly after the credit crunch. Property developers of flats there were giving buyers 'cashback' and recording a higher sold figure in order to sustain prices. This was considered fraudulent at the time, could well be a criminal offence, and no-one knew how widespread the practice was. I wondered if anyone else had heard this programme. The potential benefits to property developers are obvious, maybe less so to private sellers. I can't imagine a lender being that easily taken in - surely they don't want to lend more than a property is worth. Or maybe they do. The taxpayer will pick up the tab if it all goes wrong again. I imagine these sort of mortgages will come at rates of 5% or so and the lenders are happy to profit that... Effectively, this is a subprime mortgage and we are in it again. Tick tock tick tock for the next crisis and bail out... Quote Link to comment Share on other sites More sharing options...
SarahBell Posted March 9, 2011 Share Posted March 9, 2011 He said it's all totally legal. And if an EA told you a property was spacious and light would you believe them or want to see if for yourself? Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted March 9, 2011 Share Posted March 9, 2011 Is there anyway of finding out what the real price of a property was allowing for vendor deposits?? The reason I say this is that we just sold our house in West Yorkshire for £215,000 but gave the purchasers a £30,000 vendor gifted deposit (all above board - mortgage company knew all about it). That means that really the house sold for £185,000 but all the reports will show it selling at £215,000. Is there anyway of finding out where else this is happening so we can see what a house is really selling for? How big was the purchasers mortgage? I see above you "just" sold your house,, then in post 10 "we were desperate to sell having relocated to another part of the country for work (and to rent) 18 months ago" Quote Link to comment Share on other sites More sharing options...
Guest Posted March 9, 2011 Share Posted March 9, 2011 Sorry, but as far as I am aware there is no central register of mortgage fraud, especially when the lender was aware of the lie. +1 lol Quote Link to comment Share on other sites More sharing options...
Thewayforward Posted March 9, 2011 Author Share Posted March 9, 2011 How big was the purchasers mortgage? I see above you "just" sold your house,, then in post 10 "we were desperate to sell having relocated to another part of the country for work (and to rent) 18 months ago" In answer to the various questions... We had to relocate for jobs 18 months ago, and it's taken that long to sell the house. We have been renting here for 18 months whilst still paying the mortgage on the house we sold for 18 months. The house was losing value faster than the capital repayments we were making on the mortgage. In terms of price, £215k was a 30% drop on the 2007 values being given to similar properties in our road, so the actual price of £185k was considerably lower than 2007 values and certainly a bigger drop than all the house price indexes suggest. Indeed the only properties selling in the area are those with similar drops in prices (one other property was put on at £375k in 2007 and has just sold with an advertised price of £250k). When we eventually sold it was being marketed at £215k which was a market beating price - we always had the price on lower than similar local properties to try to secure a sale. Because of this we actually pulled local prices down when other sellers had to drop theirs to compete with ours. We would have kept dropping until it sold which would have continued to pull down the local market. Quote Link to comment Share on other sites More sharing options...
rantnrave Posted March 9, 2011 Share Posted March 9, 2011 We would have kept dropping until it sold which would have continued to pull down the local market. And the problem with that is...? Quote Link to comment Share on other sites More sharing options...
Thewayforward Posted March 9, 2011 Author Share Posted March 9, 2011 And the problem with that is...? No problem with that... more than happy for prices to keep dropping now we're renting and not selling!! Quote Link to comment Share on other sites More sharing options...
PaulParanoia Posted March 9, 2011 Share Posted March 9, 2011 Oops, I committed mortgage fraud! Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted March 9, 2011 Share Posted March 9, 2011 In answer to the various questions... We had to relocate for jobs 18 months ago, and it's taken that long to sell the house. We have been renting here for 18 months whilst still paying the mortgage on the house we sold for 18 months. The house was losing value faster than the capital repayments we were making on the mortgage. In terms of price, £215k was a 30% drop on the 2007 values being given to similar properties in our road, so the actual price of £185k was considerably lower than 2007 values and certainly a bigger drop than all the house price indexes suggest. Indeed the only properties selling in the area are those with similar drops in prices (one other property was put on at £375k in 2007 and has just sold with an advertised price of £250k). When we eventually sold it was being marketed at £215k which was a market beating price - we always had the price on lower than similar local properties to try to secure a sale. Because of this we actually pulled local prices down when other sellers had to drop theirs to compete with ours. We would have kept dropping until it sold which would have continued to pull down the local market. sooo...how much was the purchasers mortgage? Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted March 9, 2011 Share Posted March 9, 2011 Oops, I committed mortgage fraud! yeah, read that...funny how salary multiples didnt come into the equation just becuase the fraudulent LTV was available., the couple could magically borrow 10K more. Quote Link to comment Share on other sites More sharing options...
Thewayforward Posted March 9, 2011 Author Share Posted March 9, 2011 sooo...how much was the purchasers mortgage? Don't know - I know they put a deposit down in additional to our "gifted deposit" - I would assume that it must have been at least 10% so that the mortgage company didn't make more fuss over the gifted deposit, but I don't know for sure. As buyers I guess they'd done their research as to mortgage companies who accept gifted deposits and then viewed houses on the basis of improving their LTV through a gifted deposit. Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted March 9, 2011 Share Posted March 9, 2011 Don't know - I know they put a deposit down in additional to our "gifted deposit" - I would assume that it must have been at least 10% so that the mortgage company didn't make more fuss over the gifted deposit, but I don't know for sure. As buyers I guess they'd done their research as to mortgage companies who accept gifted deposits and then viewed houses on the basis of improving their LTV through a gifted deposit. so really, you dont know how the deal proceeded according to the buyers paperwork. Quote Link to comment Share on other sites More sharing options...
Thewayforward Posted March 9, 2011 Author Share Posted March 9, 2011 so really, you dont know how the deal proceeded according to the buyers paperwork. I'm not sure anyone ever sees what mortgage their buyer is getting? We got a 10% deposit on exchange from them so the funds were there then. Certainly if I bought a house I wouldn't expect to have to tell the people I was buying from what my deposit was (other than the standard 10% on exchange) or my salary multiples... Maybe I am misguided on this, it's been a few years since I bought a house. Quote Link to comment Share on other sites More sharing options...
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