Dodgy Sounding - vendor wants 10%

eddddy

Hi Giuberry

As a compromise, you could ask your solicitor about setting up a "pre-contract deposit agreement".

The normal structure is: both buyer and seller would each pay a 1.5% deposit to their solicitors, and if either party withdraws without good reason, the other party gets both deposits.

(Failure to get a mortgage offer because of a poor survey report would normally be classed as an acceptable reason to withdraw, without losing the deposit.)

In general, these agreements are intended to:
- Deter the seller/buyer from simply changing their minds for no good reason.
- Deter the seller from accepting an offer from someone else (i.e. gazumping)

But... you end up paying extra legal fees to get them set up, and they are not really watertight anyway. You could end up in a massive argument about whether the reason for withdrawing is good or bad.

moneyistooshorttomention

Whew. Now I've not used that phrase "Got the nerve of the devil" for some time now. That vendors attitude has just reminded me of it.

There is NO way I would hand over 10% non-refundable money to anyone anywhere anytime.

I would stick to my "You get 10% deposit at Exchange of Contracts time normal procedure mate and that's that" even if it is London (with its blimmin' International housing market these days:mad:).

If he stole that money off you, ie took it and then refused to sell the house to you after all, you'd have no comeback. You couldn't get the police onto him, you couldn't get a payout from an insurance company. He'd have just nicked it and gone. For all you know, he's pulling that one on other people as well. Ten lots of people each having 10% stolen off them and he's sold the place/got the money and could carry on staying there. Have cake and eat it time..

AnnieO1234

I'll say one thing, it's a nice way for the vendor to say accept 5 different offers at say £20k each non refund. He doesn't have to sell at all but makes hundred grand from unsuspecting and naive buyers...

princeofpounds

Don't go near this.

There's a good chance the property is unmortageable for some reason - hence cash buyer wanted.

And it will cost you 10% just to find out what is so seriously wrong with the property......

Exactly this. It would be insane stupidity.

As for the 'pre contract deposit' idea, I think triple max power emphasis needs to be put on this sentence.

You could end up in a massive argument about whether the reason for withdrawing is good or bad.

That will be an EXPENSIVE argument, not just massive.

Audrey_Wright

It does sound dodge, but there again he might be looking for a little insurance that he's not wasting his time with you.

I might be willing to agree to a deal like that with certain compromises, like you pay it off after a positive survey and there would be no raises to the price from it's current standings.

That said, it's still risky and you still come out empty handed, but better consult with your solicitor on whether the deal is beneficial or not.

dominoman

Ignore the above. Lots of people commenting here that just don't understand how it is in London.

Pay the deposit and move quickly to get the house. If you don't someone else will.

Make sure your deposit is with your solicitor and not theirs. That way it is in your control.

Good luck.

ejc81

Hi Giulia,

It doesn't sound 'dodgy' at all to anyone that understands the property market.

You are effectively a risk to the vendor. If he accepts your offer & takes the property off the market, he could be sitting around for 8 weeks whilst your mortgage deal falls apart, you change your mind, etc,etc. In that time he could have happily sold his property to someone else and moved on, but instead he chose to trust you, why?

As has already been said by the sensible folk above, you have a few options.

Personally, if I loved the place:

1) I would be ensuring I had the best conveyancer available, by that I mean not just your local solicitor, you need someone that just deals in property sales if you want this to move at any speed.

2) The mortgage deal needs to be solid and they need to be able to move when you want them to.

3) When you agree to pay the deposit it's conditional on:

A) It is most definitely subject to survey

It will be lodged with your solicitor

C) The property will be immediately removed from the market

D) You include terms such as subject to completion within XX days

There are good companies around that offer insurance against being 'gazumped' survey costs if the vendor withdraws etc. It all depends on who you use.

Do a little bit of research, make sure you're happy with the conveyancer, and it really shouldn't be a major concern.

By the time you've got paperwork organised for the deposit, the surveys should be back & you should be ready to go

ging84

Essentially what is being asked is for you to exchange contracts blindly, without searches, survey, or a mortgage offer in place, completely on the vendors terms, without the aid of a solicitor
for an agent to even entertain the idea is worrying, perhaps you should name and shame the agent

There is a reasonable chance of it being a scam, agent knowing it or not.
I'd report this to someone, if the agent is a chain, definitely make a complaint to their head office, if it's some fly by night agents, possibly call trading standards or even the police.

Even if it is not a scam, what if the property is unmortgageable or for whatever reason you can't get a mortgage anymore you've lost your deposit, or at the very least you've got a massive struggle of a legal battle to get any of it back, this is why contracts are exchanged and deposits are paid only after due diligence has been done.

Right now you don't even know if the vendor owns the property, or has the right to sell the property, and you can bet your !!! the agent can't confirm this for you. Even if not a scam and the vendor is simply an idiot, it could easily end up with your money sat in the vendors account for months, maybe years, maybe even end up lost if he was declared bankrupt.

As for the 2 comments above about going for it, it's an absolute nonsense that you could leave the deposit with your own solicitor, that would make no difference to the vendor at all.

But they do have the makings of a fairly perfect scam
Foney vendor + foney agent + foney solicitor, with a fee deal too good to refuse. The solicitor will be able to talk the vendor into him keeping the deposit with the buyer signing an agreement, the buyer he's thinks safe, but he's already been scammed as soon as he pays the deposit, they could then continue to string him along asking for extra fees, they could even try it with an unmortgageable property, and a fairly genuine looking contract where the solicitor would pay out the deposit to the vendor should the sale fall through, buyer might not even know he'd been scammed, would just seem like a property deal gone bad.

This is why if something sounds slightly fishy, you should always run , not walk away