Can I do this?

Absolutelyalan

Our house has been on the market for a year. There's nothing wrong with it, it's just the state of the market and the fact that it's in a higher price bracket, so fewer potential buyers.

As a way of attracting buyers, I came up with this cunning plan....

Say the house is on the market for £550,000.
Stamp Duty (robbers) on that is £ 22,000.

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The buyer therefore pays £572,000

So they have to find £22,000 hard cash.

But if we agreed on an 'official' sale
price of £572,000
Stamp Duty £ 22,880

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The buyer pays £594,880

BUT on completion I make a bank transfer of £22,880 to the buyer. He ends up paying £572,000 which he can include in his mortgage, while he walks away with £22,880 cash which would otherwise have gone to the Treasury. He can use that to pay off some or all of the extra mortgage, put in a new kitchen, have a great holiday, etc. The point is, he has a choice of what to do with that £22k.

We win by getting almost our asking price (572,000 - 22,880 = 549,120) which would be fine by us. We would pay slightly higher agents' fees but the difference is very small.

The Treasury wins by getting £800 more than they would have.

Of course, it depends on the buyer having a mortgage in place that would cover the higher purchase price, but the question is... is this legal? Have I missed something blindingly obvious?

I would appreciate any advice.

Simon11

If your house hasn't sold in a year, I'd take a guess its too expensive!

Stop wasting time thinking of plans like this and just lower the price

grimsalve

Isn't that just a cashback scheme?

DannyboyMidlands

Are you having a laugh? You are seriously considering fraud as an alternative to pricing your house realistically?

There may be nothing wrong with the house but if you've been on the market for a year, there is certainly something wrong with your asking price. In any market a property priced correctly should sell within about 3 months. If it doesn't then it's over-priced for current market conditions.

Considering nobody else thinks your place is worth the £550k that you do, what makes you think that the mortgage valuer is going to think it's worth £572k?!

Seanymph

It's doubtful the mortgage valuation would come in high enough to cover the scheme.

What you could probably do more successfully is reduce your property to £498k and charge them for 'fixtures and fittings'.

Therefore you pay less estate agency fees - they pay less stamp duty. And your house is at a much more marketable price.

madmish00

Flaws to the plan:

1. You want a buyer to pay £22k above your asking price (despite having not been able to sell at the asking price)
2. You want a valuer to value the property at 22k more than the asking price (despite having been on the market for so long)
3. Your buyer would likely need a bigger mortgage to pay you £572k
4. If a buyer paid you asking of £550k plus stamp duty it would still only cost them the same price. They would have smaller mortgage and smaller repayments (I know you say they can pay down the 22k you give them back but most mortgages won't allow such large overpayments without penalty)

I really don't see the incentive to the buyer.

grimsalve

DannyboyMidlands wrote: »

Are you having a laugh? You are seriously considering fraud as an alternative to pricing your house realistically?

I don't think it's technically fraud, I've seen EAs try this sort of thing before - advertise a house for sale at £X but with maybe 5% cashback (seems a bit pointless though, might as well just market it at £X-5%!)

The £22k "incentive" would need to be agreed by solicitors anyway and it tends to be the solicitors that sort out the stamp duty, etc.

Alternatively, you take the house off the market, carry out £22ks-worth of improvements, and then put it back on the market at the higher price?

Gwhiz

Price it at (or accept offers at) £500K would be a much more sensible approach.

ViolaLass

<silly post, ignore>

grimsalve

madmish00 wrote: »

I really don't see the incentive to the buyer.

I guess it might work on FTB properties when 100% mortgages were plentiful eg. FTB buys the house without a deposit and gets a 100% mortgage to cover the cost of the property. Then gets the "cashback" from the seller and uses this to buy furniture, etc.

An FTB is probably not the sort of buyer you're hoping to attract on a £572k house though

GAH

Everyone has to pay stamp duty, even if it is a Stealth Tax, and any buyer purchasing a property in that higher price band will expect to pay that higher stamp duty.

Obviously I don't know your property or area, but even in a slower market, everything sells at the right price, and if you have been on a year, it sounds like you are asking too much.

A lot has changed in a year. And if you haven't reduced the price since you started marketing, it almost certainly likely to be less.

Theres no way around the stamp duty, its fraud.