Buyers want me to show tenants round

lister

silvercar wrote:

"""They asked us to raise the asking price officially, even though we'd only get the same amount from them. This was to help them get more money from the mortgage company, so that they would have some ley way for a couple of months while getting tenants in"""

There are legal ways of doing this (developers do it all the time). According to the "buy-to-let bible" you raise the price by say £3,000 and offer a £3,000 cashback on completion. All legal and above board. BTL mortgages are generally restricted to 85% of value, so with a higher value the buyer can borrow more.

I doubt it is legal. It may be common, but if the mortgage company lend you money on the basis of false or incomplete information you have wittingly supplied them, then it is fraud as far as I am aware.

EDIT:

Of course because of the nature of house prices the fraud is hard to prove, but nonetheless, artificially inflating the price of an asset in order to gain financial advantage is simply fraud dressed up pretty. If company directors deliberately deceive potential investors about the value of their company during a share issue in order to be able to sell their shares at a higher price it is rightly regarded as fraud, and this is no different.

mspig

My worry would be that you show tenants around the house and none of them want it, would the buyer pull out as he/she can't find tenants.
I would make sure contracts are exchanged first before letting tenants around.

Robert_Sterling

gringo80 wrote:

They asked us to raise the asking price officially, even though we'd only get the same amount from them. This was to help them get more money from the mortgage company, so that they would have some ley way for a couple of months while getting tenants in.

What did they say when you told them that you would not conspire to defaud the lender?

gringo80

Thanks for your replies!

The whole raising the asking price thing was looked into by our solicitors and is all above board apparently. It sounded dodgy to us and caused us alot of stress, worrying that we were being asked to do something illegal.

These guys are a bit cheeky, they waited until we had accepted the offer on the house and then they came round to say that the only way they could afford it was to rasie the asking price, so again we didn't really have a choice as we'd already lost a prevoius buyer and were in a chain.

I think it's called 5% vendor deposit, and allows them to have less of a deposit. Eg. Our house has officially sold for £112,100. We only ever see £106,500 of this. The remainder is retained by the buyers solicitor on completion. This allows them to borrow the full £106,500 from the mortgage company, while making it seem as though they have the remaining £5,600 as a deposit, which they don't really. It is v confusing eh?

Mspig - that is exactly that what we are concerned about. They are putting so much emphasis on getting tenants in asap, badgering us for a completion date when we haven't even had all the searches back, so i'm a bit worried that the slighest hint of a problem and they might pull out.

I've already told the EA that they can bring a prospective tenant round on monday - would it be bad of me to retract this and insist contracts are exchanged first?

I really appreciate all your advice.

gringo80

PS i'm a bit confused about the difference between exchange and completion. Can we exchange contracts even before we've moved out?

trigger_mike

What would bother me is the fact the buyers showing lots of different tenants around looking at your belongings and coming back later to nick them all.

silvercar

You exchange contracts when everything is agreed. This is the "no going back" point.

When you complete you move out.

Ian_W

gringo80 wrote:

PS i'm a bit confused about the difference between exchange and completion. Can we exchange contracts even before we've moved out?

Pressed thanks instead of quote gringo. :doh: Still nice for you to get thanked for asking a question!!

When you exchange contracts the deal is binding but hasn't yet taken place, so you do normally exchange whilst you're still living there. Completion can take place on the same day as exchange but more usually is a few days or weeks later. Your buyer isn't really financially committed until contracts are exchanged, hence the advice about only allowing viewings when they are.

Personally, if you've agreed to this viewing I'd just let it go ahead but make the point you're not happy about further ones until you've exchanged.

If you're in a chain [obviously your buyers aren't] exchange only usually takes place when everyone in the chain can commit to the purchases/sales.

gringo80

Oh thanks guys, that makes sense now!

Actually just had a word with my solicitor about waiting until we have exchanged contracts until we show tenants round, but realised the downside of this would be that although we'd be in a good position, our buyer would be worried they'd be tied to a house that they possibly couldn't let, so might pull out anyway.

Definitely will put a limit on it though and make the point we're not very happy about showing any more round. Hopefully we won't need to.

I'd better get back to work i guess, all this house business takes up so much time and worry!

lynzpower

It seems to me your buyers are brainless.

If they are worried about buying a house that they might not be able to let then they are investing in a nonsensical way . it seems mental to me that they havent/ arnt accounting for voids straight after completion!!

1. even if you did show tenants round, until you have got a date for exchange/ completion none of these tenants wil be moving in?

2, hasnt the so called investor said that they will be doing some work on it, if so why bother showing people round if they are going to refurb

and what about the electric/ gas etc thry have to test and make sure everythings fine otherwise they shouldnt be letting- sounds like some corner cutting to me.

Im so :mad: for you they are really taking the pi$$