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Selling PPOR, Buyer wants to declare lower value.

Discussion in 'The Buying & Selling Process' started by dbmil, 18th Nov, 2015.

  1. dbmil

    dbmil Member

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    Hi Everyone,

    We have an offer on our property, however the buyer wants to declare lower figure on the contract and pay the difference in cash. The difference is approximately $150k.

    It is our first time selling, so we're a little hesitant to accept the offer.

    What are the ramifications of such a caveat? Would you accept such an offer?

    Thanks
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    You would be aiding a crime and could be charged yourself.

    Potential revenue fraud as well as money laundering. You should get their details and report them to the AFP and ATO.

    Enforceability - you would run the risk of them not paying and then how do you enforce your illegal contract?
     
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  3. dbmil

    dbmil Member

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    Thanks for the reply.

    They propose to give us the cash at exchange.

    Such a shame though, it's a good offer.
     
  4. Scott No Mates

    Scott No Mates Well-Known Member

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    They're avoiding stamp duty. What's six years behind bars worth to you?
     
  5. wylie

    wylie Moderator Staff Member

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    If the offer is good, and they want the house, they will likely buy it anyway.
     
  6. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    More to it that that, I think. You say it's a good offer, yeah?

    Save $4k in stamps vs make $150k vanish.

    @Terry_w has nailed two probable scenarios.

    As @wylie said, if they actually want the place, they'll buy regardless.

    My bet: they won't.
     
  7. D.T.

    D.T. Adelaide Property Manager Business Member

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    Never ever participate in anything dodgy, its not worth it at all. Tell them to take a long walk off a short plank ;)
     
  8. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Why would the purchasers want to do this? They are money laundering, whether intentional or not. They probably either sell fruit or sell drugs and have a large sum of cash. They buy the house, wait a bit and then sell it for about $150k more than the bought it for - gain all due to capital growth. And put the money in the bank. Does the purchaser have beards?

    Where are you going to put $150k? If you put it in the bank it will be reported on AUSTRAC immediately. ATO and AFP will have a record as will ASIO. If you have a beard you will be suspected of being a terrorist.

    Who are you proposing to collect the $150k cash at settlement? I am sure the conveyancer wouldn't want to walk back to their office with it. It takes a while to count $150k too. Will you take a cash counting machine? Will the 2 other parties at the settlement, the banks, report you to authorities.

    If they don't have the cash at setltement what will you do. If you don't settle they may sue you. They will have a contract with the lower price on it.

    You haven't really thought this through have you?

    There are multiple offences here for both you and them.
     
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  9. EN710

    EN710 Well-Known Member

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    I don't think most people understand the implications, not even to know the right question to ask. If someone offered cash payment to me, money laundering would be the last thing in my mind (and thank goodness I have no beard). I'd think it is weird and ask my solicitor what it means and what's the catch
     
  10. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    You don't know what you don't know!
     
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  11. D.T.

    D.T. Adelaide Property Manager Business Member

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    At least now I know not to grow my beard lest I get accused of offenses :)
     
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  12. melbournian

    melbournian Well-Known Member

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    this sounds dodgy like those ones in melbourne where they inflated the price to get kickbacks but the reversed. You do realize the ATO would be all over this not to mentioned State Revenu office for NSW.
     
  13. Big Will

    Big Will Well-Known Member

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    As others have said I wouldn't touch it.

    If you were make sure they bring the 150,000 in cash before you sign the contract otherwise you will be very unlikely to see the 150,000 as the contract says 150k less. Good part is they will unlikely pull out of the contract as they are 150k in (without any receipts). If they did cooloff or whatever you can be like what 150,000?

    You also need to work out a way to get the money into something else and good luck moving 150,000!
     
  14. melbournian

    melbournian Well-Known Member

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    very true - a nice visit to crown and keep the chips for a while before heading back in to cash them out o_O
     
  15. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    This doesn't work.
     
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  16. melbournian

    melbournian Well-Known Member

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    @Terry_w i know a lot of people who do this (who get paid cash as nightclub promoters), swipe their membership rewards card in crown casino, play for a bit and then take the money out to claim it as winnings. One actually got audited when he purchased a brand new 200K M3 who had a declared income of 40K per year but was able to get out clean.
     
  17. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    The casino is very highly monitored and they are aware people do this sort of thing. All transactions are recorded with ID. I am not sure if there is a limit on how much cash you can take out without ID but anything over $10k would certainly require ID and be records. Extensive video surveillance too.

    Casinos are no longer good places to launder money.
     
  18. melbournian

    melbournian Well-Known Member

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    @Terry_w i have won around 10K+ maybe 8 months ago in crown (after numerous losses) no ID required. I have seen winners of more than 100K walk out no issues.

    in all honestly, the enforcement on these kind of stuff needs to be more focused. Just look at that deal in theage on the dudley house purchase in melbourne. millions taken out and nothing really done. and then the ATO goes after the mechanic didn't lodge his BAS statements correctly.

    Corrupt Malaysia money distorts Melbourne market
     
  19. Big Will

    Big Will Well-Known Member

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    You might be able to get away with doing 1k once a week but that would take you 3 years to flush it all out.
     
  20. tobe

    tobe Well-Known Member

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    In vic the FHB stamp duty concession changes dramatically at $600k. From stamp duty of $15k to $30k. I would have thought the government would have stepped up the changes to avoid this kind of invitation to fraud, but no. Interesting to see how much it might have distorted the market at that level.