Is it possible to buy a property with no money down? – I get asked this question all the time in my property seminars and it is one I answer in-depth in my P.I.P.S. course. The answer is yes and no. No that’s not a politician’s answer. I’ll explain here.

First of all it is considerably more difficult to buy property with little or no money down however it is possible.

In the P.I.P.S. course I run over several ways of financing ‘no money down, deals. Here is one of them which can be hard to achieve but in today’s climate, even though this is a developers market, it is possible.

Gifted or ghosted deposit

A great way (but difficult to achieve) is to get the seller to provide the deposit. Will they do this? The answer is SOMETIMES. It has become more common for developers of new property to offer cash back on completion, which is almost the same thing. This is how it works.

Example

Let’s say that you find a property advertised for £90,000. It will value at this price but you negotiate a buying price with the vendor at £75,000. Will vendors drop the 16% you want off the price? Again the answer is sometimes. Please read the chapter on ‘buying below market value’ for tips on how to make this happen. What you now need to get the seller to agree to is to price the property in the sale contract at £90,000 and give you back £15,000 on completion. An alternative is for the property to be priced at £90,000 in the contract, but the vendor to pay your £15,000 deposit. Which alternative is best for you depends on your mortgage company and what their rules are.

So, let’s say that you arrange a mortgage for 85% of the purchase price of £90,000, which is paid to the vendor on completion. He has agreed to give you back £15,000 – i.e. accept £75,000. Then he returns £1,500 of the money from the mortgage company to you. In this example you have put no money down and you actually get cash back when you complete the sale! Probably enough cash to cover most of your fees. Sounds good? Sure, but these deals can be difficult to put together.

What You Need in Place for a Seller-Financed Deposit Deal

• A property that will value at the full purchase price
• A reduced price agreed between you and the seller, who will also agree to give you
‘cash back on completion of the sale.
• A lender that will accept seller financing (most have never heard of it and you may
be in for some long conversations!)

This is only one way of negotiating a no money down deal and as you can see it’s good if you have a head for figures. There are a lot of smaller property developers willing to do the gift or ghosted method described above. When you have been in the property development game for a while you will get to know a lot of people and make a lot of contacts who will help you out on this type of deal as you will have a good name.

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