Vendor Pays Stamp Duty..?

[JamesGG]

Hi all,

Had an interesting offer come in on one of our listings last night. Thought I'd share the idea with you all and see what you think...

As it were, they offered 12k over the "plus" figure the home was advertised at. Roughly what we were hoping to sell it for. But, they included a clause in their offer that stipulated that the vendor had to reimburse the purchaser for the cost of stamp duty. (a shade under 10 large)

These guys are professional wrappers. Even though the net offer (so to speak) is only 2k over the plus figure, and 10 short of what the vendor was hoping for, its still higher than they usually offer compared to the listing price. But that's besides the point, really...

Anyway, the reasons behind it were that they then only need to come up with 10% of the stamp duty, freeing up almost $9,000 - which they can use towards the deposit on the next property. Also, it makes negotiating a resale price much easier, because it appears to the wrappee that the wrappers paid 10k more than they really have...

For the record, this offer wasn't accepted because we had a multiple-offer situation with the other party paying more than the 'net offer'.

So, discuss:

Cheers

James.

 

[duncan_m]

Hi all,

Had an interesting offer come in on one of our listings last night. Thought I'd share the idea with you all and see what you think...

As it were, they offered 12k over the "plus" figure the home was advertised at. Roughly what we were hoping to sell it for. But, they included a clause in their offer that stipulated that the vendor had to reimburse the purchaser for the cost of stamp duty. (a shade under 10 large)

These guys are professional wrappers. Even though the net offer (so to speak) is only 2k over the plus figure, and 10 short of what the vendor was hoping for, its still higher than they usually offer compared to the listing price. But that's besides the point, really...

Anyway, the reasons behind it were that they then only need to come up with 10% of the stamp duty, freeing up almost $9,000 - which they can use towards the deposit on the next property. Also, it makes negotiating a resale price much easier, because it appears to the wrappee that the wrappers paid 10k more than they really have...

For the record, this offer wasn't accepted because we had a multiple-offer situation with the other party paying more than the 'net offer'.

So, discuss:

Cheers

James.

Unless they disclose this clause to the bank it'll be fraudulent (for them).. It's a spin on the well known scam of the brown paper bag being passed back to the buyer at settlement..

Was the clause prominent on the contract or was it in a seperate letter or verbally communicated?

 

[JamesGG]

Duncan,

It was plainly there on the contract, numbered as condition 1.

As far as the banks go... well, it's something they'd need to look out for, I guess. They would get a copy of the contract as part of the loan application anyway, so they'd only have themselves to blame if they didn't pick it up.

The actual condition reads like this:

"The Vendor undertakes to bear the cost of stamping the Transfer of Land. Accordingly, the Vendor shall allow as an adjustment in favour of the Purchaser at settlement the expected stamp duty to be incurred in the Transfer of Land."

Personally, I would've liked it to be a little more specific and show more detail, but that's just me. Apparently, that clause fits the purpose well enough...

Cheers

James.

 

[Lissy]

I've done some offers like this myself, and it's perfectly legal. It's only dodgy if you request the money is paid to you as purchaser (as in the brown paper bag scenario). If it's in the contract as a settlement cost for the vendor, then that's okay. Obviously the property would still need to value at the contract price too, otherwise the bank would say no.
In my offers I also usually specify the amount, so that the vendor can work out the net offer amount easily.

 

[kiwi]

I have also set up offer in this way and they have been accepted. The banks usually only look atthe front page of the contract and then do the vals.... if they work out to be fine... then all is good. Vendors will agree to things some would not imagine. All it takes is to ask! - The hard part is to get the agent (Sometimes) to understand the offer - I usually offer to set upa meeting personally with the vendor and the agent present to get all my points across.
Cheers,
Kiwi