Should i sell my property on consignment

[GOLDBUGGY]

On 9/11/2559 at 1:49 PM, blackcab said:

 

If:

 

1. You want 8 million for it, and

2. He pays you 8 million for it in a Kai Faak (SRR)

 

I don't see the problem.  It would cost you 9 million to redeem the property, but if you don't want to redeem it then take the 8 million.

 

He wants a 9 million baht redemption value so you can't redeem the property back for less than he paid you for it.

 

From the buyers point of view he can't lose. From your point if view you get you 8 million.

Why would a person who is willing to pay you cash for the full price of the property, in this case 8 MM, ask the seller for a redemption price of 9 MM, in the form of an IOU or Mortgage, when he knows full well ahead of time that the seller has no intention of buy it back from him. If that makes perfect sense to you then go for it. But I think most would say it doesn't and that should be enough to stop this deal.

 

On paper the seller is getting 8 MM, but owes the buyer 9 MM. If the house of worth 8 MM then why would he walk away from 1 MM that is owned to him. Who knows what collection methods he has to get this money. I would not enter this deal for no Love or Money. No Way!  

[blackcab]

13 minutes ago, GOLDBUGGY said:

Why would a person who is willing to pay you cash for the full price of the property, in this case 8 MM, ask the seller for a redemption price of 9 MM, in the form of an IOU or Mortgage, when he knows full well ahead of time that the seller has no intention of buy it back from him. If that makes perfect sense to you then go for it. But I think most would say it doesn't and that should be enough to stop this deal.

 

On paper the seller is getting 8 MM, but owes the buyer 9 MM. If the house of worth 8 MM then why would he walk away from 1 MM that is owned to him. Who knows what collection methods he has to get this money. I would not enter this deal for no Love or Money. No Way!  

 

Sorry, but you have completely misunderstood. This post is about a Sale with the Right of Redemption. There is no mortgage. There is no IOU.

 

The seller wouldn't owe the buyer anything. The seller would have an option to redeem the property for 9 million, but it would be their choice whether to exercise the option or not.

 

I have no idea why the buyer wants the deal done this way though. 

[Grubster]

On November 9, 2016 at 9:21 AM, silver78 said:

Thanks Farma, what we know is that man is very reach and he has a big company so i don't undestand why he is interested to do that rather that buy the property directly. I know he will pay lower tax but of course this isn't the main reason

He is scamming you tell him all or nothing. There is no good reason for this.

[Grubster]

1 hour ago, GOLDBUGGY said:

Why would a person who is willing to pay you cash for the full price of the property, in this case 8 MM, ask the seller for a redemption price of 9 MM, in the form of an IOU or Mortgage, when he knows full well ahead of time that the seller has no intention of buy it back from him. If that makes perfect sense to you then go for it. But I think most would say it doesn't and that should be enough to stop this deal.

 

On paper the seller is getting 8 MM, but owes the buyer 9 MM. If the house of worth 8 MM then why would he walk away from 1 MM that is owned to him. Who knows what collection methods he has to get this money. I would not enter this deal for no Love or Money. No Way!  

I agree with you 100%. Why play games either buy it or don't , anything else is unnecessary so just forget it.

[GOLDBUGGY]

On 10/11/2559 at 9:10 PM, blackcab said:

 

Sorry, but you have completely misunderstood. This post is about a Sale with the Right of Redemption. There is no mortgage. There is no IOU.

 

The seller wouldn't owe the buyer anything. The seller would have an option to redeem the property for 9 million, but it would be their choice whether to exercise the option or not.

 

I have no idea why the buyer wants the deal done this way though. 

I am sorry but I think you need to read the Op's Post again. His exact words are:

 

"What i understood, it's the guy give us 8 millions, then we go together to the land office, we give him our chanote and we sign a document which stipulate that we borrow 9 millions from him but he said without interest. After a few months without give back any money or interest we sign another document and he get the property."

 

Notice where he says "we sign a document which stipulates that we borrow 9 million from him". 

 

So what name you want to give this document as in IOU, Mortgage, or whatever, it is one that states he borrowed 9 million from him. But did he? No!

 

And another thing. What would be the purpose to go to the Land Office when the title isn't changing hands? Think about that for a minute! If you go to a bank and borrow money to buy a car, do you have to go to the Land Office?

 

The only purpose I can think of is to put a 9 million baht lean (mortgage) on a 8 million baht property. This gives this person the right to take this property away from you if you don't pay him 9 million baht, and go after you later for a difference in what this property sells for later and what is owed on it. 

 

Come on Man! Think about it! Tell the buyer you will sign a paper saying he borrowed you 7 Million Baht after he pays you 8 Million Baht for your property and see how far that takes you. The end results are the same, aren't  they? He gets the property for 8 Million and the seller doesn't owe any more money afterward. 

[blackcab]

1 hour ago, GOLDBUGGY said:

I am sorry but I think you need to read the Op's Post again. His exact words are:

 

"What i understood, it's the guy give us 8 millions, then we go together to the land office, we give him our chanote and we sign a document which stipulate that we borrow 9 millions from him but he said without interest. After a few months without give back any money or interest we sign another document and he get the property."

 

Notice where he says "we sign a document which stipulates that we borrow 9 million from him". 

 

So what name you want to give this document as in IOU, Mortgage, or whatever, it is one that states he borrowed 9 million from him. But did he? No!

 

And another thing. What would be the purpose to go to the Land Office when the title isn't changing hands? Think about that for a minute! If you go to a bank and borrow money to buy a car, do you have to go to the Land Office?

 

The only purpose I can think of is to put a 9 million baht lean (mortgage) on a 8 million baht property. This gives this person the right to take this property away from you if you don't pay him 9 million baht, and go after you later for a difference in what this property sells for later and what is owed on it. 

 

Come on Man! Think about it! Tell the buyer you will sign a paper saying he borrowed you 7 Million Baht after he pays you 8 Million Baht for your property and see how far that takes you. The end results are the same, aren't  they? He gets the property for 8 Million and the seller doesn't owe any more money afterward. 

 

To answer your questions: The document that would be signed is a contract for the sale with the right of redemption of the property.

 

That contract would state that the owner borrowed 8 million, and that if they choose to redeem the contract they would have to pay 9 million.

 

What would be the point of going to the land office if the title isn't changing hands? That's the key point you need to understand: The title would change hands.

 

In the post number 1 the OP gave the Thai term for this type of sale: ขายฝาก 

 

I work for a company that routinely makes sale with the right of redemption contracts. I have a work permit that allows me to write and execute such contracts, and I am one of the very few foreigners that does.

 

I know that this process is not used in some countries, so it does appear very strange to sell a property then buy it back.

[trogers]

28 minutes ago, blackcab said:

 

To answer your questions: The document that would be signed is a contract for the sale with the right of redemption of the property.

 

That contract would state that the owner borrowed 8 million, and that if they choose to redeem the contract they would have to pay 9 million.

 

What would be the point of going to the land office if the title isn't changing hands? That's the key point you need to understand: The title would change hands.

 

In the post number 1 the OP gave the Thai term for this type of sale: ขายฝาก 

 

I work for a company that routinely makes sale with the right of redemption contracts. I have a work permit that allows me to write and execute such contracts, and I am one of the very few foreigners that does.

 

I know that this process is not used in some countries, so it does appear very strange to sell a property then buy it back.

 

But in your experience, all such rights of redemption are stipulated by the seller. And you are equally puzzled as to why in this post, the buyer is the one requesting it.

[KittenKong]

2 hours ago, blackcab said:

.... it does appear very strange to sell a property then buy it back.

 

It's a scam.

[GOLDBUGGY]

2 hours ago, blackcab said:

 

To answer your questions: The document that would be signed is a contract for the sale with the right of redemption of the property.

 

That contract would state that the owner borrowed 8 million, and that if they choose to redeem the contract they would have to pay 9 million.

 

What would be the point of going to the land office if the title isn't changing hands? That's the key point you need to understand: The title would change hands.

 

In the post number 1 the OP gave the Thai term for this type of sale: ขายฝาก 

 

I work for a company that routinely makes sale with the right of redemption contracts. I have a work permit that allows me to write and execute such contracts, and I am one of the very few foreigners that does.

 

I know that this process is not used in some countries, so it does appear very strange to sell a property then buy it back.

I know what selling under "Consignment" means. You who claim to do these type of deals all the time then you should also know that when a Consignment Deal is arranged, then no money changes hands.

 

A Good example of this is that you have an expensive car you want to sell which is only one or two years old but you don't want to be bothered trying to sell it yourself. You take this car to an Auto Dealer in hopes to sell it to them but they don't want to give you the cash for what you are asking for it. Your car is expensive and a big cash outlay for them, so a gamble for them if they don't sell your car for a profit in a few months.

 

So to try and come to some deal that will satisfy both parties, you agree with the Auto Dealer to sell your car under "Consignment". In this case you bring your car to his Dealership and park it in his parking lot for a set period of time and lets say 3 months. You give the Dealership exclusive rights to sell your car for you on the condition that he pays you your selling price. Any moneys they get above your price they get to keep as Commission.

 

If the Dealership sells your car for you at your price plus their Commission, you then sign the car over to them so they can sell it to the third party and pay you right away. You can still sell your car privately but if you do before the end of your contract with the Dealership you have to pay them a Lot Back Price (Redemption Price) for there time and trouble and expenses for putting your car up for sale. If the car doesn't sell in those 3 months the seller can just take his car back or make another deal and perhaps lower his price. 

 

So that Consignment Type Sale makes perfect sense as no money changes hands until the actual property is sold to a third party. But in the Op's case it is different as he is paid the full price right away but yet on paper says he borrowed 1 Million more than that, which doesn't make sense at all. Especially when he has no desire to redeem this property.

 

Maybe the Op misunderstood the buyer who just wants exclusive rights to sell his property, or it is a scam. Either one I would say No to.  

 

 

 

 

  

[blackcab]

5 hours ago, trogers said:

 

But in your experience, all such rights of redemption are stipulated by the seller. And you are equally puzzled as to why in this post, the buyer is the one requesting it.

 

No, the conditions to redeem the property are set by the buyer (but have to be agreed by the seller. If the seller doesn't want to accept the buyer's conditions then they can try another buyer. In general, though, most buyers conditions are the same. Sometimes the conditions get eased a little if the property being sold is very desirable.

[blackcab]

1 hour ago, GOLDBUGGY said:

I know what selling under "Consignment" means. You who claim to do these type of deals all the time then you should also know that when a Consignment Deal is arranged, then no money changes hands.

 

In post 1 the OP gave the Thai term for the transaction. He also used the word consignment, probably because he did not know what a sale with the right of redemption is, and this was the best word he could find to explain it.

 

I have tried many times to accurately explain a sale with the right of redemption during this thread. That is the Thai term the OP used.

 

I also understand what consignment means, but I think in this case the OP is not consigning the property. It was simply a phrase he used for want of a better word.

 

Perhaps the OP could clarify if the deal he was offered was a sale with the right of redemption (ขายฝา) or an offer of consignment. As money would be changing hands, I believe it's option 1.

 

[trogers]

1 hour ago, blackcab said:

 

No, the conditions to redeem the property are set by the buyer (but have to be agreed by the seller. If the seller doesn't want to accept the buyer's conditions then they can try another buyer. In general, though, most buyers conditions are the same. Sometimes the conditions get eased a little if the property being sold is very desirable.

 

Then I would not call them buyers. More likely moneylenders...

 

If I am a bona-fide buyer, I would agree a price, and get the transaction done and title transferred as soon as possible after all the necessary checking of title.

[blackcab]

1 minute ago, trogers said:

 

Then I would not call them buyers. More likely moneylenders...

 

If I am a bona-fide buyer, I would agree a price, and get the transaction done and title transferred as soon as possible after all the necessary checking of title.

 

You're right, the line is blurred. Some people sell their property through a SRR and never intended to redeem it.

 

Others do intend to redeem and simply need quick cash.

 

The point of SRR is that the buyer is in the strongest position possible. This really helps in Thailand because trying to repossess a property and sell it in the case of a defaulted loan is often going to take such an amount of time that you would be losing money rather than making it.

 

With a SRR the issue is clear cut. If the seller was allowed to stay in their property they would have a lease that expired either on redemption or the settlement date.

[GOLDBUGGY]

20 hours ago, blackcab said:

 

You're right, the line is blurred. Some people sell their property through a SRR and never intended to redeem it.

 

Others do intend to redeem and simply need quick cash.

 

The point of SRR is that the buyer is in the strongest position possible. This really helps in Thailand because trying to repossess a property and sell it in the case of a defaulted loan is often going to take such an amount of time that you would be losing money rather than making it.

 

With a SRR the issue is clear cut. If the seller was allowed to stay in their property they would have a lease that expired either on redemption or the settlement date.

Yes! That is the way I see it to. In the West we would call this something like a 2nd Mortgage (which carries a higher interest rate than a 1st Mortgage) as this looks to me more like a loan than a purchase. 

 

I can understand someone who may be strapped for cash and taking out a Loan on his property until the Rice Harvest comes in. Then paying off this Loan to redeem his property when he sells his Rice. But unlike a 2nd Mortgage though, there doesn't appear to be regular payments or a said Interest Rate. But like you also said the Bottom Line is blurred.

 

If you get 8 Million, and as the Op said he would, but have to pay back 9 Million to Redeem your Property, than the hidden interest rate is 12.5% per year. But since the payback period is only 3 months then the yearly Interest Rate is actually 4 times greater, or 50%. Although this may very well be legal here, as I am not sure.  

 

The Op is under the impression that he is not expected to, or required to, Redeem his Property, and he isn't.  But in My Book a Loan is a Loan and it is required to be paid back, even if you don't have the money to do so. His property serves as Collateral, but if this sale is not enough to cover the Loan there is nothing stopping them for going after the rest of it. 

 

I am not an Expert in not paying off my debts but I do know there are several ways in the West in which they can collect. Getting a Court Order to repossess your car and furniture and selling this at an auction is one way. Garnishing your wages from your employer is another. Hiring a Collection Agency to recover there loss in which they call you at home or at work, anytime of the day, and hound you to pay up until your grave, is yet another method. 

 

I am not sure if they have a Collection Agency in Thailand, unless it is a 150 Kilogram Gorilla standing at your door with a Baseball Bat, because as I said I am not an Expert in not paying off my debt, and this included Thailand. It is just something I would not want to be involved in. Of this I am sure!   

 

. 

[blackcab]

18 minutes ago, GOLDBUGGY said:

Yes! That is the way I see it to. In the West we would call this something like a 2nd Mortgage (which carries a higher interest rate than a 1st Mortgage) as this looks to me more like a loan than a purchase. 

 

I can understand someone who may be strapped for cash and taking out a Loan on his property until the Rice Harvest comes in. Then paying off this Loan to redeem his property when he sells his Rice. But unlike a 2nd Mortgage though, there doesn't appear to be regular payments or a said Interest Rate. But like you also said the Bottom Line is blurred.

 

If you get 8 Million, and as the Op said he would, but have to pay back 9 Million to Redeem your Property, than the hidden interest rate is 12.5% per year. But since the payback period is only 3 months then the yearly Interest Rate is actually 4 times greater, or 50%. Although this may very well be legal here, as I am not sure.  

 

The Op is under the impression that he is not expected to, or required to, Redeem his Property, and he isn't.  But in My Book a Loan is a Loan and it is required to be paid back, even if you don't have the money to do so. His property serves as Collateral, but if this sale is not enough to cover the Loan there is nothing stopping them for going after the rest of it. 

 

I am not an Expert in not paying off my debts but I do know there are several ways in the West in which they can collect. Getting a Court Order to repossess your car and furniture and selling this at an auction is one way. Garnishing your wages from your employer is another. Hiring a Collection Agency to recover there loss in which they call you at home or at work, anytime of the day, and hound you to pay up until your grave, is yet another method. 

 

I am not sure if they have a Collection Agency in Thailand, unless it is a 150 Kilogram Gorilla standing at your door with a Baseball Bat, because as I said I am not an Expert in not paying off my debt, and this included Thailand. It is just something I would not want to be involved in. Of this I am sure!   

 

. 

 

You still think of this as a loan or a mortgage, and it's not. It's a sale. I understand the concept is new to you, but nonetheless, it's a sale.

 

The critical point is that the ownership of the property changes from the seller to the buyer. That does not happen with a loan or a mortgage.

 

SRR can have regular payments (monthly or quarterly) and it can (and usually does) have a fixed interest rate. In Thailand, the maximum interest rate for SRR is 15 per cent per year.

 

Nobody who does SRR uses any form of collection agency. They don't need to - they already own the property and they will sell it to get their money back.

 

The OP does not have to redeem his property. He does not have to pay 9 million to get it back. It is not a loan. There is not 1 million in interest payments that have to be paid back.

 

This is Thailand. Things work differently here.

[GOLDBUGGY]

21 hours ago, blackcab said:

 

You're right, the line is blurred. Some people sell their property through a SRR and never intended to redeem it.

 

Others do intend to redeem and simply need quick cash.

 

The point of SRR is that the buyer is in the strongest position possible. This really helps in Thailand because trying to repossess a property and sell it in the case of a defaulted loan is often going to take such an amount of time that you would be losing money rather than making it.

 

With a SRR the issue is clear cut. If the seller was allowed to stay in their property they would have a lease that expired either on redemption or the settlement date.

I agree with what you are saying and it does makes sense, but you keep losing sight of the fact that the Buyer (Lender) is offering the full Sales Price of the property and a Redemption Price exceeding it's value. That is the part that makes no sense as the Buyer (and as you said) is in the strongest position. 

 

Let's look at this deal again. Let's say the Seller is in need of money right away so he can put 5 Million Down on a bargain price for new property he wants to buy, but his buying time is very limited. He knows the Fair Market Value of his property is 8 Million, but the Markets is slow right now and he doesn't have any offers. He knows on a quick sale he could get 6 Million but doesn't want to take a 2 Million loss as he thinks he can easily get 8 Million.

 

A Lender comes into the picture and offers the Seller a 5 Million Loan and a Redemption Price of 6 Million and an additional 6 months to sell his property. The Seller gets the money he needs right away plus and extra 6 months living there to sell his property for 8 Million. If he does sell it then he ends up with 7 Million after paying the 1 Million Redemption Price, which is still 1 Million more than putting up for a Fire Sale at 6 Million. If he sells it for 7 Million he still ends up the same as if he sold it at the Fire Sale to get the money he needed for his new property.

 

For the Lender who lent the 5 Million, even if the Seller doesn't Redeem this property he is going to make money as he knows he can sell it quickly for at least 6 Million. If it is Redeemed, the Lender again makes money and the Seller gets what he wanted to.

 

But if the Lender lends the full value of the property, how does the Lender make any money at all here, if the Seller just walks away? In fact if he is forced to sell it on a Fire Sale, he stands to lose 2 Million here. So please explain to me how the Lender in this Ops Case stands to make any money here for lending 8 Million if the Seller simply walks away. Especially, and as you said, he is the one in the stronger position.    . 

[GOLDBUGGY]

26 minutes ago, blackcab said:

 

You still think of this as a loan or a mortgage, and it's not. It's a sale. I understand the concept is new to you, but nonetheless, it's a sale.

 

The critical point is that the ownership of the property changes from the seller to the buyer. That does not happen with a loan or a mortgage.

 

SRR can have regular payments (monthly or quarterly) and it can (and usually does) have a fixed interest rate. In Thailand, the maximum interest rate for SRR is 15 per cent per year.

 

Nobody who does SRR uses any form of collection agency. They don't need to - they already own the property and they will sell it to get their money back.

 

The OP does not have to redeem his property. He does not have to pay 9 million to get it back. It is not a loan. There is not 1 million in interest payments that have to be paid back.

 

This is Thailand. Things work differently here.

Maybe things work differently in Thailand. But the one thing that doesn't change is that strangers don't make deals unless they see a way of getting something from that, like money. 

 

Please explain to me how the Buyer here stands to make any money at all if the Seller doesn't redeem his property, which he would be a fool to do this? He paid 8 Million for the property which I gather is the full value. So I can't see him flipping this property to make a quick buck here either. If he just likes the property then why not just buy it and put the property in his name and not piss around with this other stuff. Things are different in Thailand but people still buy and sell property the normal way to. 

 

So explain how the Buyer, who as you said is in the strongest position, stands to make any money here when he knows the Seller has no intention of Redeeming this property, and then maybe I can see a purpose for doing it this way. As I am sure most people here, who wanted to buy a property, or sell it, would just do that the normal way.  

 

What are the advantages to the Buyer and Seller?  

[GOLDBUGGY]

44 minutes ago, blackcab said:

 

You still think of this as a loan or a mortgage, and it's not. It's a sale. I understand the concept is new to you, but nonetheless, it's a sale.

 

The critical point is that the ownership of the property changes from the seller to the buyer. That does not happen with a loan or a mortgage.

 

SRR can have regular payments (monthly or quarterly) and it can (and usually does) have a fixed interest rate. In Thailand, the maximum interest rate for SRR is 15 per cent per year.

 

Nobody who does SRR uses any form of collection agency. They don't need to - they already own the property and they will sell it to get their money back.

 

The OP does not have to redeem his property. He does not have to pay 9 million to get it back. It is not a loan. There is not 1 million in interest payments that have to be paid back.

 

This is Thailand. Things work differently here.

Your are right in that this would not be a Loan or a Mortgage. If the Interest Rate Maximum is 15% per year and they are charging 12.5% for 3 months Redemption Price, this is probably closer to Loan Sharking, which is probably not legal in Thailand I am sure. But as Shakespeare once said, a Rose is still a Rose by any other name.

 

Prostitution is Illegal in Canada and many places of the world. So to get around that law, and to jump through the hoop they formed Escort Agencies. No law saying you couldn't rent a woman for the evening to take out on a dinner date, or a movies, or just private conversation. What happens between them latter in the privacy of there own bedroom, between two consenting adults, is there own business. But a Rose is still a Rose by any other name.    

[blackcab]

27 minutes ago, GOLDBUGGY said:

A Lender comes into the picture and offers the Seller a 5 Million Loan and a Redemption Price of 6 Million and an additional 6 months to sell his property. The Seller gets the money he needs right away plus and extra 6 months living there to sell his property for 8 Million. If he does sell it then he ends up with 7 Million after paying the 1 Million Redemption Price, which is still 1 Million more than putting up for a Fire Sale at 6 Million. If he sells it for 7 Million he still ends up the same as if he sold it at the Fire Sale to get the money he needed for his new property.

 

For the Lender who lent the 5 Million, even if the Seller doesn't Redeem this property he is going to make money as he knows he can sell it quickly for at least 6 Million. If it is Redeemed, the Lender again makes money and the Seller gets what he wanted to.

 

But if the Lender lends the full value of the property, how does the Lender make any money at all here, if the Seller just walks away? In fact if he is forced to sell it on a Fire Sale, he stands to lose 2 Million here. So please explain to me how the Lender in this Ops Case stands to make any money here for lending 8 Million if the Seller simply walks away. Especially, and as you said, he is the one in the stronger position.    . 

 

OK let's go through this again:

 

"The Seller gets the money he needs right away plus and extra 6 months living there to sell his property for 8 Million".

 

You still haven't grasped the fact that the seller cannot sell the property, because with an SRR they have already sold the property to the buyer. The property does not belong to the seller any more. They have to raise money another way.

 

"But if the Lender lends the full value of the property, how does the Lender make any money at all here, if the Seller just walks away? In fact if he is forced to sell it on a Fire Sale, he stands to lose 2 Million here. So please explain to me how the Lender in this Ops Case stands to make any money here for lending 8 Million if the Seller simply walks away. Especially, and as you said, he is the one in the stronger position."

 

I can't speak for the buyer. I don't know them. I can only assume the buyer doesn't want to make a profit on this deal, they actually want to own the property, and that by using an SRR they will find a tax benefit over an outright purchase. That's the only reason to structure the deal this way. 

[GOLDBUGGY]

58 minutes ago, blackcab said:

 

You still think of this as a loan or a mortgage, and it's not. It's a sale. I understand the concept is new to you, but nonetheless, it's a sale.

 

The critical point is that the ownership of the property changes from the seller to the buyer. That does not happen with a loan or a mortgage.

 

SRR can have regular payments (monthly or quarterly) and it can (and usually does) have a fixed interest rate. In Thailand, the maximum interest rate for SRR is 15 per cent per year.

 

Nobody who does SRR uses any form of collection agency. They don't need to - they already own the property and they will sell it to get their money back.

 

The OP does not have to redeem his property. He does not have to pay 9 million to get it back. It is not a loan. There is not 1 million in interest payments that have to be paid back.

 

This is Thailand. Things work differently here.

The Op said he was required to sign a document saying he borrowed 9 Million from the Seller.

 

Maybe the school you went to was different than mine but in My Book when you sign a Document saying you borrowed money from someone, it is called a Loan. Just by calling this the Redemption Price, or Buy-back Price, or Balloon Payment, or Apple Cart, doesn't change the fact it is a Loan. 

[blackcab]

5 minutes ago, GOLDBUGGY said:

Your are right in that this would not be a Loan or a Mortgage. If the Interest Rate Maximum is 15% per year and they are charging 12.5% for 3 months Redemption Price, this is probably closer to Loan Sharking, which is probably not legal in Thailand I am sure. But as Shakespeare once said, a Rose is still a Rose by any other name.

 

Prostitution is Illegal in Canada and many places of the world. So to get around that law, and to jump through the hoop they formed Escort Agencies. No law saying you couldn't rent a woman for the evening to take out on a dinner date, or a movies, or just private conversation. What happens between them latter in the privacy of there own bedroom, between two consenting adults, is there own business. But a Rose is still a Rose by any other name.    

 

Let me explain how SRR normally works:

 

You own real estate. You need cash and you agree a SRR. The standard way of doing business would be that the buyer would get the current land office assessed value. Let's say the assessed value was 1 million baht. The buyer would give you 50 per cent of this, or 500,000 baht, less the interest of 15 per cent (75,000 baht). So you would receive 425,000 baht cash.

 

You would have 1 year to redeem the property. To do this you would have to pay 425,000 baht plus any land office fees or charges.

 

If you redeem the property the buyer makes 15 per cent. If you don't redeem the buyer will sell the property quickly to recoup their cash.

 

As you can see, there is ample scope for the buyer to break even or make an additional sum on an unredeemed property.

[GOLDBUGGY]

12 minutes ago, blackcab said:

 

OK let's go through this again:

 

"The Seller gets the money he needs right away plus and extra 6 months living there to sell his property for 8 Million".

 

You still haven't grasped the fact that the seller cannot sell the property, because with an SRR they have already sold the property to the buyer. The property does not belong to the seller any more. They have to raise money another way.

 

"But if the Lender lends the full value of the property, how does the Lender make any money at all here, if the Seller just walks away? In fact if he is forced to sell it on a Fire Sale, he stands to lose 2 Million here. So please explain to me how the Lender in this Ops Case stands to make any money here for lending 8 Million if the Seller simply walks away. Especially, and as you said, he is the one in the stronger position."

 

I can't speak for the buyer. I don't know them. I can only assume the buyer doesn't want to make a profit on this deal, they actually want to own the property, and that by using an SRR they will find a tax benefit over an outright purchase. That's the only reason to structure the deal this way. 

Sorry but I don't buy your story.

 

Nobody does things like this out of the kindness of there heart. No Gain...No Pain! Nobody is going to pay you the full value of your property and let you live there for free for 6 months. Nobody I know for sure. Well, except maybe my mother and even that is a big maybe.

 

What Taxes Benefits? Income less Expenses? Profit less Loss? Where do you see any of that here? Losing 1 Million to get a 350,000 Tax Break is not Good Business!  .   

[blackcab]

16 minutes ago, GOLDBUGGY said:

The Op said he was required to sign a document saying he borrowed 9 Million from the Seller.

 

Maybe the school you went to was different than mine but in My Book when you sign a Document saying you borrowed money from someone, it is called a Loan. Just by calling this the Redemption Price, or Buy-back Price, or Balloon Payment, or Apple Cart, doesn't change the fact it is a Loan. 

 

Ultimately, the OP gave the Thai expression for the deal. The deal is an SRR.

 

The OP didn't know what an SRR is, which is probably part of the reason they came here for advice.

 

You can call it what you want. The OP called it ขายฝาก and followed by saying that what he understood was...

 

The OP didn't understand what ขายฝาก was. Now you are taking his misunderstanding and running with it.

[blackcab]

12 minutes ago, GOLDBUGGY said:

Sorry but I don't buy your story.

 

Nobody does things like this out of the kindness of there heart. No Gain...No Pain! Nobody is going to pay you the full value of your property and let you live there for free for 6 months. Nobody I know for sure. Well, except maybe my mother and even that is a big maybe.

 

What Taxes Benefits? Income less Expenses? Profit less Loss? Where do you see any of that here? Losing 1 Million to get a 350,000 Tax Break is not Good Business!  .   

 

As another member of this forum says, "I can explain it for you, but I can't understand it for you".

 

In the absence of any additional input, I'm going to be leaving the thread at this point.

Edited November 13, 2016 by blackcab

[GOLDBUGGY]

5 minutes ago, blackcab said:

 

Let me explain how SRR normally works:

 

You own real estate. You need cash and you agree a SRR. The standard way of doing business would be that the buyer would get the current land office assessed value. Let's say the assessed value was 1 million baht. The buyer would give you 50 per cent of this, or 500,000 baht, less the interest of 15 per cent (75,000 baht). So you would receive 425,000 baht cash.

 

You would have 1 year to redeem the property. To do this you would have to pay 425,000 baht plus any land office fees or charges.

 

If you redeem the property the buyer makes 15 per cent. If you don't redeem the buyer will sell the property quickly to recoup their cash.

 

As you can see, there is ample scope for the buyer to break even or make an additional sum on an unredeemed property.

Yes I agree! And this is exactly what I said.

 

But you told me I was wrong, they paid full price for the property, for some imagined tax break, and things work different in Thailand. 

[GOLDBUGGY]

12 minutes ago, blackcab said:

 

Let me explain how SRR normally works:

 

You own real estate. You need cash and you agree a SRR. The standard way of doing business would be that the buyer would get the current land office assessed value. Let's say the assessed value was 1 million baht. The buyer would give you 50 per cent of this, or 500,000 baht, less the interest of 15 per cent (75,000 baht). So you would receive 425,000 baht cash.

 

You would have 1 year to redeem the property. To do this you would have to pay 425,000 baht plus any land office fees or charges.

 

If you redeem the property the buyer makes 15 per cent. If you don't redeem the buyer will sell the property quickly to recoup their cash.

 

As you can see, there is ample scope for the buyer to break even or make an additional sum on an unredeemed property.

Oh Yeah! The Op said 8 Million with a redemption price of 9 Million in 3 months. So your 15% Interest Rate is shot right out the window. That is 12.5% for 3 months and 50% per year. 

 

Sure! I can understand somebody being in desperate and in need of money, who can't get a bank loan and can't wait to sell his place. So getting the money you need now and giving the Lender 12.5% every 3 months or until you sell your property may be your only option. But I wouldn't call this normal or how things are done in Thailand. Desperate Times calls for Desperate Measures anywhere in the world.   

[autoc]

Sorry, you all seem to perfectly know what you are talking about, as often on this forum, but why nobody can explain what is the scam behind this ?

 

Why the buyer would give 9 millions without taking full property ?

 

And what is the risk for the OP, to have to return the money and get his house back ?

 

What reasons can a stupid buyer tell to explain that he will give you 9 millions but maybe want it back later ?

 

 

 

 

 

[autoc]

On 11/10/2016 at 5:24 PM, lungnorm said:

I don't follow. He gives you 8 million so what is all the other crap about. 8 million is your price he gives you 8 million you register the sale and its all over. No need for any of the other crap. It sounds like a scam when you add the rest of it into the deal. 

 

 

This is what I do not understand, why talking about anything more when the seller gets the money he wants ?