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  • Property-a-holics

    'Cheeky Trick' or being unethical..

    Hello Tribes!
    I have an estate agent friend who is also an active investor, and although he puts deposits in buying and then remortgaging, he was saying that he puts a lower figure on the mortgage application to bring the purchase price down.
    For example, property worth 100k, you agree with the seller 70k, fill in the application form £60,000 surveyor will come out and value the property on value or pp which ever is lower hence the 60k.
    He will go back to the seller and say surveyor thinks the property is only worth 60k etc.
    Buy at £60k and remortagage to 100k.
    Although he says this is a 'cheeky trick' he learnt in the trade, apart from being unethical, are there any other repercussions ie can it be done?
    I do not know if this is BS or the truth to be honest, as those 'creeps' will say anything!
    This is NOT me doing this before I get shot down, by the way, I simply want to get peoples opnions about this ie legalities.
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    No it's not cheeky.

     

    It is downright dishonest - Is this client somebody for whom he is acting on behalf when selling a house? If so he is in breach of contract and his fiduciary duty. He should be sued for the client's loss.

     

    If he is doing it on a house he is buying, he is potentially committing fraud - supplying false information on a mortgage application. Okay, the mortgagee won't lose out - but it is fraudulent misrepesentation and the seller loses out.

     

    Each and every vendor could sue him for the shortfall. If they were my client's I'd advise them to do that.

     

    Glenn Ackroyd

    Maximising Returns and Managing Exits For Portfolio Landlords

    E. Glenn.Ackroyd@NationalPropertyGroup.co.uk T. @NPGlettings

     

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    Agree with Glenn 100%!
    Plus the valuer would almost certainly ask the home owner the agreed sale price. If there was an estate agent involved the valuer would ask them for the sold price as well.
    I think it would be hard to pull off tbh.
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    I agree with both on this.

     

    Vanessa- Not to sure what you mean by 'if there was an estate agent involved the valuer would ask them for the sold price as well' can you please clarify?

     

    Asking the owner would be an issue, or he 'was not present' or told not too say anything: in any case the seller never gets a copy of the val, and he just shows it him afterwards.

    I agree it would be very hard to pull off esp if the seller was savvy/had local knowledge or even if knew his property would get dv to 70k [he knows its worth 100k] should not be dv to 60k.

    Greg -Not too sure if it is not for his own client, although the agents do overvalue and undervalue to gain instructions for the agency.

     

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    Hi Fernando, it's certainly unethical and dishonest and under the estate agents 1979 (the law), he must reveal any personal interest he has (in a property transaction) "promptly and in writing" if he...

     

    pasted directly from https://www.oft.gov.uk/about-the-oft/lega...g-interest

    • have an existing personal interest. You must declare this before you begin negotiations
    • plan to acquire an interest in your client's property
    • are selling your property to the client.

    You must not ask for or receive a deposit for the sale of a property in which you have a personal interest.

     

    < end >

     

    Remember if you sleep with dogs chances are you'll get fleas!

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    Just a quick observation FD, you say hes a friend and end your post calling him a creep?? certainly if hes conning honest and maybe desperate people hes a creep in my books but I wouldnt be at the same time listing him as a friend.

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    Personally I agree with Pat that the whole process appears to be in breach of the provisions of The Estate Agency Act 1979. Therefore, whether through interpretation people consider it to be a 'cheeky trick', sharp practice, creative or whatever - Its against the law, period

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    Hi Anthony-He is a friend but it does not mean I agree with what he does. BTW if you saw the NMD HItler video you would know what I mean by 'creep'.

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    Pretty mercenary slant on things.

     

    Don't you think you are mis-leading the rics surveyor into reducing their valuation.

     

    In turn the only reason the seller is willing to drop the price further is upon seeing a qualified person's valuation of their property.

     

    Not my cup of tea i'm afraid.  It's just unnecessary manipulation. 

     

    Although I am not vastly experienced there appear to be so many great opportunities to make money in property without having to resort to these tactics. 

     

    Each to their own of course but why not look to add value to a situation by using your knowledge and experience as a property professional.

     

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    --------------------------------------------
    Alex Tucker
    http://www.builtbyalex.com

    Shaun

     

    You said:

    "I have to say, that I must applore for completely over looking the fact that I also mentioned NMD/Creative Financing, which by completely ignoring it would suggest that you either practice it or have done it for your own personal gains."

     

    Why does this automatically mean the conclusion you have drawn?

     

    Can you also tell us as a relatively new person to the forum a bit about your background? Is Connect Uk your business or are you an agent for them?

     

    Just to clarify what has been said on here many times, NMD is not illegal per se, but there are many ways of doing NMD that are and those inevitably attract the greatest focus.

    BTW, for the record, I've never given a kickback to anyone, never mind an agent, or done a NMD deal of any shape or form..

     

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