Will I lose £6k?

WibblyGirly

One thing I'm unclear of...

£6k goes to the auctions house/EA whoever...

Then you pay £75k for the property, does that include another deposit?? Or is then 100% mortgage? Because if the deposit doesn't pay towards the house then would the banks lend on that?

mikeopvc

WibblyGirly wrote: »

One thing I'm unclear of...

£6k goes to the auctions house/EA whoever...

Then you pay £75k for the property, does that include another deposit?? Or is then 100% mortgage? Because if the deposit doesn't pay towards the house then would the banks lend on that?

£75k is the purchase price, I will pay 25% deposit £18,750 and will require a BTL mortgage of £56,250

I will only need to pay 3% stamp duty on £75k

marksoton

mikeopvc wrote: »

OK but mostly people are just saying it's a scam! Walk away! Wouldn't touch it with a barge pole etc. but I'm asking for reasons.

Just to be clear, I don't agree for one second that a third party should make £6k on a £80k property, that part is a scam. The auction co and estate agent are getting £3k each if not more if a sale falls through which I think is disgraceful.

Other than that why is it a scam? Does it being a scam mean there is no possibility of a sale whatsoever?

I'm no legal expert either so hopefully someone will see this thread who is and they can offer some advice.

Also I have told the guy from the auction co that the email is a good start but I will need them to put it into the reservation agreement they want me to sign.
Furthermore I am going to tell them that I need it to say the if the completion falls through through no fault of my own then I will get my £6k back.

Just to add that I am aware the £6k is coming out of the vendors pocket as my purchase price will be £75k so I do feel sad for her but that's between herself and the agents / auction co

:wall::wall:

This is exhausting. It's a scam.End. What bloody reasoning do you need?!

If you wish to be part of it crack on. Let us know how you get on.

mikeopvc

marksoton wrote: »

:wall::wall:

This is exhausting. It's a scam.End. What bloody reasoning do you need?!

If you wish to be part of it crack on. Let us know how you get on.

Are you saying nobody has ever purchased a property using this method then?

marksoton

mikeopvc wrote: »

Are you saying nobody has ever purchased a property using this method then?

Just carry on. Let us know how it goes.

bitsandpieces

What happens if the survey finds the property is worth £65k/has horrific subsidence and is uninsurable/something else bad. Is that the £6k gone?

Your solicitor wasn't the one recommended by the estate agent? I'd also wonder if HMRC will come after stamp duty on the £6k - they might count it as part of the purchase price.

mikeopvc wrote: »

Just to be clear, I don't agree for one second that a third party should make £6k on a £80k property...Just to add that I am aware the £6k is coming out of the vendors pocket as my purchase price will be £75k so I do feel sad for her but that's between herself and the agents / auction co

It sounds like the seller is getting an horrifically bad deal, if there's not another reason for her using this method. I'd worry about whether there is another reason.

franklee

mikeopvc wrote: »

OK but mostly people are just saying it's a scam! Walk away! Wouldn't touch it with a barge pole etc. but I'm asking for reasons.

When you get it valued I'd be amazed if the value comes in at 81K. So you are paying 81K for a property "worth" 75K. Why would you want to do that?

OTOH if the property is really worth 81K then why is the vendor prepared to take a 6K hit?

If the property is sound why bother with an auction.

I am so confused as to why you think it's OK to burn 6K.

I suspect there is something wrong with the property that will come up on valuation/survey and then you will be left in a legal battle with the auction property as to if your get out wording applies or not. They then say well it's obvious a property of that age has giant woodworm (or whatever comes up) and so pulling out is your choice. Basically it's messy.

If it was a normal sale you could go back after survey and renegotiate the price, with the auction you can't.

Why would you want to get into this quagmire when the option to buy the property normally should be available and is available for other similar investments? Does it have gold plated taps, is the plot special? Why?

mikeopvc

franklee wrote: »

When you get it valued I'd be amazed if the value comes in at 81K. So you are paying 81K for a property "worth" 75K. Why would you want to do that?

OTOH if the property is really worth 81K then why is the vendor prepared to take a 6K hit?

If the property is sound why bother with an auction.

I am so confused as to why you think it's OK to burn 6K.

I suspect there is something wrong with the property that will come up on valuation/survey and then you will be left in a legal battle with the auction property as to if your get out wording applies or not. They then say well it's obvious a property of that age has giant woodworm (or whatever comes up) and so pulling out is your choice. Basically it's messy.

If it was a normal sale you could go back after survey and renegotiate the price, with the auction you can't.

Why would you want to get into this quagmire when the option to buy the property normally should be available and is available for other similar investments? Does it have gold plated taps, is the plot special? Why?

It was first valued at £90k, next door but one is up for sale for £114,950, another a few doors down is up for £107,500, another for £119,950 (extra bed) another for £121,950 (extra bed) another for £134,950 (extra bed, conservatory and garage)

It's well worth £75k all day long

Mr.Generous

What makes me laugh is that everyone else gets paid whatever happens. the mortgage guy says go ahead ... guess what? he only gets paid if you go ahead. The EA says its ok they will be flexible. Guess what? They only get paid on a sale. The solicitor says it should be no problem ... need I go on?

I read one of these modern method of auction packs once, my understanding was that as a buyer I was agreeing to pay vendors extortionate selling fee's and that I was paying up front none refundable fee to proceed. I don't care who advises me to go ahead in these circumstances, I wouldn't.

Have you had a bill of sale showing clearly actual numbers regarding the sale?

Agreed price £ xxx
Agreed fees £xxx
Up front deposet £xxx
Balance deposit £xxx
Mortgage payment on completion £xxx

By the way I sell rare nuts and bolts that will be worth a lot of money some time next year. My friend runs a delivery company and will drop them off for you if you go ahead. His wife runs a packaging firm and will ensure they are well packaged.

All three of us can assure you its a great deal. Can you provide me with your bank details and we can get the ball rolling?

mikeopvc

Mr.Generous wrote: »

What makes me laugh is that everyone else gets paid whatever happens. the mortgage guy says go ahead ... guess what? he only gets paid if you go ahead. The EA says its ok they will be flexible. Guess what? They only get paid on a sale. The solicitor says it should be no problem ... need I go on?

I read one of these modern method of auction packs once, my understanding was that as a buyer I was agreeing to pay vendors extortionate selling fee's and that I was paying up front none refundable fee to proceed. I don't care who advises me to go ahead in these circumstances, I wouldn't.

Have you had a bill of sale showing clearly actual numbers regarding the sale?

Agreed price £ xxx
Agreed fees £xxx
Up front deposet £xxx
Balance deposit £xxx
Mortgage payment on completion £xxx

By the way I sell rare nuts and bolts that will be worth a lot of money some time next year. My friend runs a delivery company and will drop them off for you if you go ahead. His wife runs a packaging firm and will ensure they are well packaged.

All three of us can assure you its a great deal. Can you provide me with your bank details and we can get the ball rolling?

Why do you need my bank details? Are you making a deposit?