Vendor Pays SD Strategy?

[Cards]

Hi guys,

Just wondered if anyone is adopting this strategy?
The strategy was used by someone in an API mag I was reading a few months ago and it's been playing on my mind!

Also discussed here:
http://somersoft.com/forums/showthread.php?t=78841


It looks like a very creative strategy, but will it work today?

 

[D.T.]

Buy houses
???
Profit

Why does there need to be more to it?

 

[Aaron_C]

You will get valuation problems.

 

[Scott No Mates]

If the vendors are offering incentives, what does that tell you about what they're selling?

 

[Peter_Tersteeg]

The lender will deduct the stamp duty from the value of the property. The net result will be that the contract price for the property is higher so more stamp duty is due, which you'll end up paying anyway.

This creative strategy only causes trouble and doesn't get you ahead in most circumstances.

 

[Corey Batt]

Valuation problems as they will addback the stamp duty amount, which in turn should make you liable for more stamp duty as the purchase price has increased.

If you do this in LMI territory it can be even worse, as the LVR's will be rejigged and substantially more LMI liable.

The same goes for 'developer rebates' or any other cash/asset incentive.

 

[Aaron_C]

The obsession with putting in as little hurt money as possible is a strange one.

 

[Paul@PFI]

Ever thought why its a rare / never used strategy ??

It would also be assessable to the vendor...No win for them. None at all.

Its no different to throwing in a car / boat....There will be tax consequences and valuation issues + stamp duty on the increased sum etc. For someone so keen to max the loan and minimise outlay its a self defeating mechanism. Its not different to the strategy to avoid CGT...Overpay for the property.