Is your house worth 260-310? Would you pay 2% stamp?

martinsurrey

silk wrote: »

I think you've assumed I mean offer more than the house value, which I never suggested at all. The bank will loan the max / market value of the house, and like any buyer I'd try to start by offering less anyway (but not too much less since I want them to pay some stamp as well).

I think you’re confused on how banks value for mortgages, the bank offers a mortgage based on the lower of market price (per valuation) and net selling price.

So if you buy a house for £200k (net selling price) but it’s worth £250k, you can only get a mortgage based on £200k.

If you buy a house for £300k but its only worth £275k you can only get a mortgage for £275k

In fact when you get a valuation done by a bank, the value on it will never exceed the offer price.

kmmr

silk wrote: »

We can afford it, we can demonstrate this, and we have a MIP.

The fact is we don't want to "spend" 9k on "nothing" when we could instead spend it on a kitchen refurb or landscaping.

As a buyer I'd sooner offer closer to the market value of the house, e.g. 295 for a 299 - and ask for 2% stamp from the seller, vs offering 290 or less and paying full stamp myself.

To be honest house prices around here are going for almost 100% of the asking value anyway - which is why martinsurreys post confused me.. there's no false/inflated pricing going on here, it wouldn't surprise me if we had to offer the full asking value to get the house we wanted.

Hence posing the question.

I was just giving you the logic - not saying I agree with it!

On the other hand, why should the vendor spend £9k on 'nothing' on your behalf? Especially if other people will pay it. It does work if they would otherwise only get £250, but I think at £300 you are too far from the stamp duty line to really expect them to pay.

Maybe at 260-270 the argument becomes better for the vendor.

p.s. Stamp duty is an illogical tax IMHO. It should be 4% on the amount ABOVE £250, not the total amount. Like income tax. It creates a frustrating arbitrary line in sale prices

silk_2

martinsurrey wrote: »

I think you’re confused on how banks value for mortgages, the bank offers a mortgage based on the lower of market price (per valuation) and net selling price.

So if you buy a house for £200k (net selling price) but it’s worth £250k, you can only get a mortgage based on £200k.

If you buy a house for £300k but its only worth £275k you can only get a mortgage for £275k

In fact when you get a valuation done by a bank, the value on it will never exceed the offer price.

The last two properties that we made offers on sold for 98% or more of the asking price.

Like I said, the reason your examples confuse me is that houses in this area typically sell for, and are valued at, their actual asking price.

For example a 250k house sold for 248. Kind of kicking myself for not just offering the 250 but it has gone now. Also a 279 house just rejected a 272 offer (not from us).

And my question on the seller paying 2% is also based on the assumption that I'd be loaning the actual value of the house, or under. I am not trying to get an artificially higher mortgage or anything dodgy like that.

notanewuser

silk wrote: »

We can afford it, we can demonstrate this, and we have a MIP.

The fact is we don't want to "spend" 9k on "nothing" when we could instead spend it on a kitchen refurb or landscaping.

As a buyer I'd sooner offer closer to the market value of the house, e.g. 295 for a 299 - and ask for 2% stamp from the seller, vs offering 290 or less and paying full stamp myself.

To be honest house prices around here are going for almost 100% of the asking value anyway - which is why martinsurreys post confused me.. there's no false/inflated pricing going on here, it wouldn't surprise me if we had to offer the full asking value to get the house we wanted.

Hence posing the question.

You'll be spending wayyyyyyy more than £9k as you would effectively have added it to your mortgage!

kmmr

silk wrote: »

Where'd the 291 come from? The house is valued at 300 and on sale for 300, indeed houses on that street go for more.

As Martinsurrey says - the bank will only 'value' the property at a maximum of what you have offered. So if you have offered £300k-£9k, then the maximum bank valuation will be £291k.

silk_2

kmmr wrote: »

On the other hand, why should the vendor spend £9k on 'nothing' on your behalf? Especially if other people will pay it. It does work if they would otherwise only get £250, but I think at £300 you are too far from the stamp duty line to really expect them to pay.

Maybe at 260-270 the argument becomes better for the vendor.

p.s. Stamp duty is an illogical tax IMHO. It should be 4% on the amount ABOVE £250, not the total amount. Like income tax. It creates a frustrating arbitrary line in sale prices

That's what I'm saying though.. or rather, asking. If you want 300k you're likely not going to get offers above 290, even if the house is actually valued at 300 (i.e. the lower valuation from the bank is 300) and you are pricing fairly.

So if all you'd had so far were offers sub 290, then one day someone offers between 291-299 with you paying around 5,800 stamp - wouldn't you jump at that? Wouldn't it make both buyer and seller happy?

phoebe1989seb

A few years back we knew someone that was selling their house at about £20k over the £250k SDLT threshold. They had a £250k offer from a person that had already indicated to the EA that this was well within their budget and the EA suggested that they increase their offer but on the proviso that the vendor paid the additional SDLT to *share the cost* - the vendor didn't have a mortgage btw, but the buyer was getting one I think.

The buyer objected to this, supposedly on the grounds that he didn't agree with SDLT (:mad:) and didn't want anyone - not even the vendor - having to pay the additional tax!!!

In the end the house sale went through at £250k and the buyer gave the vendor £10k in cash as he allegedly genuinely believed the house was worth more than £250k - even though it had been valued at £250k by a surveyor. Neither the EA nor the solicitors involved were aware of this transaction :eek:

martinsurrey

phoebe1989seb wrote: »

A few years back we knew someone that was selling their house at about £20k over the £250k SDLT threshold. They had a £250k offer from a person that had already indicated to the EA that this was well within their budget and the EA suggested that they increase their offer but on the proviso that the vendor paid the additional SDLT to *share the cost* - the vendor didn't have a mortgage btw, but the buyer was getting one I think.

The buyer objected to this, supposedly on the grounds that he didn't agree with SDLT (:mad:) and didn't want anyone - not even the vendor - having to pay the additional tax!!!

In the end the house sale went through at £250k and the buyer gave the vendor £10k in cash as he allegedly genuinely believed the house was worth more than £250k - neither the EA nor the solicitors involved were aware of this transaction :eek:

I'll boil this down to a few lines

Linked transactions, stamp duty evasion, proceeds of crime, money laundering.

silk_2

kmmr wrote: »

As Martinsurrey says - the bank will only 'value' the property at a maximum of what you have offered. So if you have offered £300k-£9k, then the maximum bank valuation will be £291k.

I'm not though, I'm offering 300k. I'd be offering 300k regardless of who pays the SDLT, and that's where you're losing me.

I'm not trying to find any loopholes, just a deal that benefits both parties whilst making sure SDLT is fully paid. Buyer happy because they have less upfront costs, seller happy because he got a quick deal close to asking price, government happy cos it got it's claws into a sack of free cash.

If there are genuine legal implications then I will stop looking into this, and save up an extra buffer just to be extra comfortable with the fees.

martinsurrey

silk wrote: »

I'm not though, I'm offering 300k. I'd be offering 300k regardless of who pays the SDLT, and that's where you're losing me.

I'm not trying to find any loopholes, just a deal that benefits both parties whilst making sure SDLT is fully paid. Buyer happy because they have less upfront costs, seller happy because he got a quick deal close to asking price, government happy cos it got it's claws into a sack of free cash.

If there are genuine legal implications then I will stop looking into this, and save up an extra buffer just to be extra comfortable with the fees.

The party that isn’t happy in the above is the mortgage company, as if everyone else is getting their cash, where is it coming from... that’s right, the mortgage company, and they wont allow it.

it’s not illegal, just won’t go through the underwriting process.