Advice on house purchase final price negotiations

winklegirl

We have just finished negotiating with vendor on final price of house based on the survey and quotes for work we obtained. We have agreed a £4,000 reduction. We thought that this was in the final price of the house, but the EA and our solicitor are talking about it in terms of leaving the purchase price the same with the vendor giving us an "allowance" as a contribution for the building works.

Our solicitor has said doing it this way saves them drawing up a new contract, and seems happy with doing it this way, but we want to make sure we understand this fully and are not opening ourselves up to any other costs - for example re tax - e.g. will this 4,000 be classed as taxable income for us? Wondered if anyone here could reassure us on this matter, or point out any other implications of doing things this way?

Ta, Jo

seraphina

I'm sure someone more knowledgable than me will be along in a minute, but it sounds a bit smoke and mirrors to me. If they're happy for £4k off the price, then surely that's £4k off the selling price? If it wasn't off the final sales price, I'd want more off to be honest, as a bird in the hand is worth two in the bush and all that.

My first question is why won't they just reduce the sale price? What's in it for them? It would surely benefit you far more to have the final sale price reduced - your mortgage would be for less, saving you a packet over the typical lifetime of a mortgage. I'd rather pay a few hundred quid for a new contract than thousands of extra pounds in interest.

winklegirl

seraphina wrote: »

I'm sure someone more knowledgable than me will be along in a minute, but it sounds a bit smoke and mirrors to me. If they're happy for £4k off the price, then surely that's £4k off the selling price? If it wasn't off the final sales price, I'd want more off to be honest, as a bird in the hand is worth two in the bush and all that.

My first question is why won't they just reduce the sale price? What's in it for them? It would surely benefit you far more to have the final sale price reduced - your mortgage would be for less, saving you a packet over the typical lifetime of a mortgage. I'd rather pay a few hundred quid for a new contract than thousands of extra pounds in interest.

I understand all your points, and these are exactly our queries too (and we have honestly tried to get more off, but has taken a while to get vendor to drop this far).

However, it's not going to change what we are being lent as part of the mortgage, as we aren't taking out a 100% mortgage. It could reduce the amount of the deposit we are putting down, but as long as we have the cash (either from vendor or from chunk of deposit we wouldn't be using) to do the work, then I don't think (?) this is going to matter re mortgage. In fact if we do drop house then there could be an implication of higher lending charge, so maybe better for us in that respect to keep the sale price at higher value. But happy to be corrected if we are getting this wrong.

Smi1er

Insist that the selling price is reduced by £4K, that way you are covered and after all it is you who is buying

cattie

Surely paying £4000 more than you need to is going to cost you extra in stamp duty, unless of course the property is under the stamp duty bracket?

selectcase

Just another point but if you pay the asking price and the vendor then gives you 4k back could that not been seen as fraud/money laundering??

stretching it but you never know??

I am selling my place and a surveyor is coming tomorrow - any serious defects i will knock of the final selling price - not be giving cash back for sure!!

PasturesNew

winklegirl wrote: »

Our solicitor has said doing it this way saves them drawing up a new contract,

Does he not have a word processor ....? He's making it sound like the olden days, with a manual typewriter and 6 carbon paper copies!

chappers

PasturesNew wrote: »

Does he not have a word processor ....? He's making it sound like the olden days, with a manual typewriter and 6 carbon paper copies!

Don't be too sure my brother-in laws' solicitors practice just got IT'd up before Christmas they still had two typists.