5% Deposit Paid

EmDools

We bought our house in 2005 and paid 67k and it is now worth 95k.

We are putting it on the market soon and have seen a few estate agents.
One of them mentioned as a selling incentive for buyers we should say "5% Deposit Paid" I was just wondering how it works. I understand that no real money gets moved around. Can someone please explain it?!?

Thanks

POSSETTE

the sale of house goes through the same as normal...ONLY the way to get the 5% paid is to have your new mortgage with a certain supplier..you are restricted to them only..so prob not the best deal either...we had it with a house we were buying but went for carpets and appliances instead..look at bit more into it as there provider might not be too bad...

EmDools

Sorry probably not made myself clear...typical.

As a selling incentive our estate agent mentioned that when we sell our house we should say that there will be 5% deposit paid.

So if our house for example was on the market for 100k the buyers would pay 95k.

Just wondering how that works.

chappers

you agree a price with the buyers and then essentially reduce it by 5% they tell their mortgage company they are buying a house for say £100k but that they only need a mortgage for £95k. Therefore they get to buy a house without a deposit when they can't get a 100% mortgage.
It all falls down though if the mortgage company come along and value it at £95k or lowere as then they are back into 100%+ mortgage terrritory

m00m00

which estate agent is it ?

I've noticed Bairstow eves doing it on many existing properties in one area I'm looking at

EmDools

I am in the Manchester Area and it was Scotts who recommended it.

Richard_Webster

Also of course your buyer's solicitors will effectively have an obligation to tell their client's lender that the 5% isn't actually being paid, at which point the lender could (and in the present market probably will) withdraw its offer and substitute one based on a price of £95K!

Badger_Lady

They were talking about this on the news yesterday - apparently it's being widely encouraged by estate agents across Britain.

It's basically a bit of a trick on the mortgage lender, but it's attractive to buyers who need a deposit-boost in order to get a mortgage (any mortgage!) in the current marketplace.

Doesn't necessarily help the sale itself (as mentioned above, the lender could get wise to it), but it will certainly help to attract viewings / offers. Once you've got this far, you've a much better chance of proceeding to sale than your neighbours who are still sitting on the market.