Vendor Gifted Deposit - benefits to vendor?

sazzamaz

My house has been on the market for around a year. We accepted an offer of £195,000 a couple of months ago, but the buyer pulled out.

The house is now on the market for £197,500. It's a two bedroom terrace, ie a first time buyers' property.

My estate agent is trying to get me to sign up for "Vendor Gifted Deposit", whereby I sell my house for the asking price, but then give the buyer £10,000 as a cash gift so they can use this money as a deposit.

Apart from an incentive to help sell my house, what are the benefits to me?

What does the estate agent get out of it? (other than the sale of the house?)

Any advice/insights gratefully received!

ginvzt

We were told that we can't even pay stamp duty for the buyer!!!! If you give money to the buyer, we were told, they would have to pay tax on it. Maybe EA is trying to get the higher sale price = higher comission for him, but actually the buyer gets the house for £10k less? £10K at 1.5% in comission it is £150...

sazzamaz

Thanks for your reply Ginvzt, I'll have a look into the tax issue, hadn't considered that...

EA is on a fixed fee so they are just desperate to get a sale no matter what the final selling price!

Richard_Webster

My estate agent is trying to get me to sign up for "Vendor Gifted Deposit", whereby I sell my house for the asking price, but then give the buyer £10,000 as a cash gift so they can use this money as a deposit.

These "cash gifts" are incentives that have to be reported by the buyer's solcitors to their mortgage lender who might then decide to downvalue the property accordingly and offer a lower mortgage. (Not reporting could lead the solcitors to a charge of being a party to a mortgage fraud.) So as this process could take a few weeks, you might well be wasting time only to find your buyer was assuming he could get a "90%" mortgage and not have to pay the 10% and was disappointed when lender downvalued the property and only offered 90% of the reduced figure...buyer then backs out...

Better not to try to be clever but simply reduce the asking price or do what some agents in my area are doing, which is coming up with a significantly lower figure than previous asking prices but saying "offers in excess of..." to encourage a number of people to compete for an apparently cheap proeprty and see how far they will "bid" against each other.

terryw

Richard_Webster wrote: »

These "cash gifts" are incentives that have to be reported by the buyer's solcitors to their mortgage lender who might then decide to downvalue the property accordingly and offer a lower mortgage. (Not reporting could lead the solcitors to a charge of being a party to a mortgage fraud.) So as this process could take a few weeks, you might well be wasting time only to find your buyer was assuming he could get a "90%" mortgage and not have to pay the 10% and was disappointed when lender downvalued the property and only offered 90% of the reduced figure...buyer then backs out...

Better not to try to be clever but simply reduce the asking price or do what some agents in my area are doing, which is coming up with a significantly lower figure than previous asking prices but saying "offers in excess of..." to encourage a number of people to compete for an apparently cheap proeprty and see how far they will "bid" against each other.

Absolutely true. But in the past I have known of people getting around this by the vendor giving a draft to the purchaser's solicitor (without saying who the draft is from) or by the purchaser and vendor each informing their respective solicitors that £x has been paid direct. I am not recommending this though.

terryw

Swift1_3

I'd be more tempted to advertise at £189K so it sounds cheaper and maybe offer to pay stamp duty as an incentive rather than deposit.