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Why do developers offer to give 5% deposit paid?

Our mortgage provider says they use the money handed over by the purchaser when valuing the property, not that amount plus the notional 5% given by the developer. Is there a tax reason for developers including this gift?

Asked on Oct 13 2010, General in Norwich | Report content

Answers (4)

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  • The main reason is they are trying to make it easier for you to buy their property that's all, but banks will value it at 95% purchase price because in real terms that is what you are paying and that is what it's worth.

    Answered on Oct 14 2010, Report content
  • The main reason is to move stock on as an assett sitting on thier books does nothing for the developers cash flow ... generally if they are offering discount of 5% would make counter offer... they are ready to haggle.

    Answered on Oct 15 2010, Report content
  • It is basically a scam in my view, to get around the problem of buyers with no deposit, and lenders who do not offer 100% mortgages. The lender's valuer is effectively being asked to over-value the property so that you can get a mortgage with no deposit. As new-build properties tend to decrease in value immediately after purchase anyway, you will most likely find yourself in a property worth substantially less than the agreed sale price for some time to come if you take one of these deals.

    Answered on Oct 16 2010, Report content
  • Mainly as rightly stated, to increase the potential for sale through the offer of an 'incentive'. Can be a bit of smoke and mirrors at times though.

    Answered on Oct 19 2010, Report content

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