£1000 buyers incentive available

JimmyTheWig

Hi,

We've seen some properties online that say "£1000 buyers incentive available (subject to terms and conditions)". Speaking to the agent I'm told that this means that if we use their solicitor and their mortgage broker then the vendors will give us £1000 cash back on completion.

Now, this £1000 has got to come from somewhere. Sounds too much just to use their people, doesn't it? The commission on a mortgage and solicitor referal can't be as much as £1000, can it?
So where does the money really come from?

Does it mean that the solicitor will be particularly overpriced?

The problem that we have is that we will need to secure a buyer on our house before we can put in an offer on a new house. May well take a week before we get our offer accepted. Until that point we don't know what agent we will be buying through, and so don't know what solicitor we will be using to get the £1000 incentive.
But by that time we ought to have our solicitor instructed on the sale.

Not quite sure what my question is here. Anyone any thoughts?

Part of the issue is that we are moving to another part of the country and don't know any solicitors in that area. So part of me thinks that the one recomended by the agent can't be that bad a starting point, can it?

In terms of the mortgage, we will probably be porting our existing product to avoid ERCs. The estate agents has confirmed that their guy can work with our mortgage company and doing a port through him would qualify for the incentive (if we use their solicitors).
I understand that an estate agent mortgage salesman isn't usually the best route to go down, but it sounds like he won't do any worse than I'd do myself.


Thanks,

Jim

G_M

Yes the solicitor will be expensive.
Yes, so will the mortgage advisor, who will point you at a mortgage that pays him commission.
Yes, neither of these will be 100% 'on your side'.

The £1000 will have to be declared to your mortgage lender insmuch as theprice you are really paying is £1K less than on the contract. If LTV is an issue that might make a difference.

Personally I would not only not take this offer up, I'd avoid the agent in future too. Trying to fiddle (yes - what else is this?) aspects of a multi-thousand pound deal..... well, what is the current reputation of bankers these days?

The alternative is to simply tell the seller to reduce the agreed purchase price by £1000 and progress a straight-forward purchase.

JimmyTheWig

G_M wrote: »

Yes the solicitor will be expensive.
Yes, so will the mortgage advisor, who will point you at a mortgage that pays him commission.
Yes, neither of these will be 100% 'on your side'.

Are you saying the mortgage guy will charge a fee as well as get his commission? My point here is that if we are porting our existing mortgage it doesn't matter much to me whether some idiot at the estate agents gets a kick-back from the mortgage company or not. I wouldn't trust a word he said, but if he wants to fill out the forms for me _and_ give me £1000 then that's ok by me.

I agree the solicitor will be expensive, but £1000 more expensive than others?
In what way do you think the solicitor might not be on our side? That would be the most worrying bit to me.

The £1000 will have to be declared to your mortgage lender insmuch as theprice you are really paying is £1K less than on the contract. If LTV is an issue that might make a difference.

I did wonder if this was a trick for some people to improve their LTV. It's not a problem for us as we'll be in the region of 40%-60% LTV.

The alternative is to simply tell the seller to reduce the agreed purchase price by £1000 and progress a straight-forward purchase.

Well, yes. But surely they wouldn't be funding this £1000 themselves, would they? Unless I've missed the point and it forms part of the initial offer discussions. I.e. they're saying they will take £1000 off the asking price (whoop-de-doo) but in reality wouldn't take £1000 off their bottom price. In which case the whole thing is pointless.
I am imagining that the vendors get a £1000 kick-back from the estate agents for doing this. The vendors don't have anything to gain from us using the agents people, do they?

kingstreet

One of our builder introducers does the same thing.

They do it to improve the speed of the purchase process as they think it will go smoother/quicker using firms familiar with the development, the paperwork and the scheme involved, if any.

They fund it out of their profit margin. We get our usual procuration fee and charge no fee to the client.

The solicitor fee is also competitive. The builder gains more from quick turnaround and uses its own solicitor to represent it, of course.

The expense is part of the marketing budget and costed into the price of the property, but it doesn't have to be artificially inflated.

It's not in the Midlands with a developer beginning with "C" is it, Jimmy?

JimmyTheWig

No it's not, on either count!
It's not a new build, anyway.

Though, thinking about it, it may be that the ones that are offering it are all on the same reasonably new estate. And we've decided we don't want that estate, now, anyway!
Which means it may be irrelevant.

So that just leaves the question of how to choose a solicitor.
I think it's a case of using the ones the estate agent suggest or picking one out of a google hat.

sparkstertom

I have to say I was confused by this too. The EA that is marketing the house we REALLY like is part of this group and is offering this 'incentive'.. think we'll give it a miss to be honest...

Don't get me wrong, £1k could pay solicitors fees.. but I don't like not knowing where it's coming from!!

fairytinkerbell

when i was buying my house i went with the estate agents recommended solicitors, i knew they would be more expensive but i was viewing the house in a group and knew the other viewers was interested so wanted to make myself more favourable to the seller and best friends with the estate agent as they may favour me more as they will be getting their commisson. they wasn't the fastest but paying that bit extra got me my home so was worth every penny or pound

saversfriend

JimmyTheWig wrote: »

No it's not, on either count!
It's not a new build, anyway.

Though, thinking about it, it may be that the ones that are offering it are all on the same reasonably new estate. And we've decided we don't want that estate, now, anyway!
Which means it may be irrelevant.

So that just leaves the question of how to choose a solicitor.
I think it's a case of using the ones the estate agent suggest or picking one out of a google hat.

I live in Swanage and chose the solicitor "recommended" to my by my Mortgage company when I purchased my flat. The solicitors were based north of Birmingham and I never saw them - we dealt with things by email / post / phone.
My advice would be not to do this - because they were a cheaper solicitors, they took on too much work and caused numerous delays and were poor at their job, Much better to choose a solicitor local to you who a) has a local reputation to maintain and b) is somewhere you can pop in to see how everything's progressing.

Also, if the solicitor's are slow, don't forget to chase them up. My friend had problems with his which were sorted when he started phoning them every hour on the hour and the buyers of his house called them every half past the hour.

JimmyTheWig

theragingbullock wrote: »

Much better to choose a solicitor local to you

Local to you, or local to where you are moving to?

betmunch

I know this offer, its the Connells/Sequence group os agents that do it.

I know where the £1000 comes from as well - The vendor.

Its an absolute scam and should be stopped by trading standards as it is conditional selling.

Ignore the offer, if you have to buy through them then say you just want to agree a price and not get involved in any "promotions" You will save a grand simply by using fairly priced solicitors and not having to pay their mortgage broker fees.

Total scam!

JimmyTheWig

betmunch wrote: »

I know this offer, its the Connells/Sequence group os agents that do it.

Correct.

I know where the £1000 comes from as well - The vendor.

So are you saying that you agree an offer based on whether you are using this "discount" or not? I.e. it's a bit like an inflated trade-in price for an old car? In which case it is meaningless.

Or are you saying that you negotiate to what may be the sellers bottom price, and then say you want £1000 off for using this deal - in which case the vendors are £1000 down on their bottom price?