Estate Agent Advise

PaulyH

My partner and I have just agreed a price on a non traditional construction build. The estate agents know that our mortgage is with HSBC who won't lend 90% on this type of construction. They have used the line that the beneficiaries of the estate (Its a bereaved estate purchase) would only except our offer if we sit down for a full financial check and mortgage meeting with the estate agents or our offer wouldn't be accepted.

We have obviously accepted the offer of a meeting for the sake of losing out on the house but we are perfectly capable of doing our own shopping for a mortgage and feel blackmailed into this meeting which just is not necessary and intrusive by an estate agent I just do not trust one little bit.

Are their actions legal? I'm surprised an agent can tell you our offer would only be accepted if you have a check and a mortgage meeting with their financial advisor with a clear view to try and sell you a mortgage they recommend.

princessamy86

Why don't you shop around for your mortgage, get your agreement in principle and take that in with you to the meeting to show that you have the means to buy the property. It is legal, they are definitely pushing the appointment on you to try and sell you a mortgage from their advisor, but you never know there might actually be a good product their advisor can recommend. Some vendors set a stipulation that potential buyers must be financially qualified, and I would have thought that is particularly relevant in this type of case where a mortgage may be difficult to obtain. Just remember, they can't force you to take a mortgage out through them! Best to go prepared though, take your AIP from a different lender but also have an open mind as they may just find a better product for you.

IHS88

Hi PaulyH

This is typical estate agency sharp practice and I believe, against the law.

However, I assume the estate agent want a financial check as non standard construction properties can in 99.9% of cases, only be bought with cash. There would be no point organising solicitors etc, erecting a "sold board" if you haven't got the cash (and I mean cash not mortgage) to do the deal.

I'm concerned you're considering purchaing a property of non standard construction. Are you planning on altering the construction after you purchase to ensure that the property becomes mortgageable?

Non standard construction properties are in 99.9% of circumstances unmortgageable, making them very difficult to sell - even in a strong market.

My friendly advice would be to walk away unless you plan to make major alternations to the property.

Wishing you every success.

pie81

PaulyH wrote: »

I'm surprised an agent can tell you our offer would only be accepted if you have a check and a mortgage meeting with their financial advisor with a clear view to try and sell you a mortgage they recommend.

the danger is not just that they try to sell you a mortgage they recommend. the REAL danger is that they have all your financial details so they know how much you can afford and they pass that info to the estate agents who then use that information to try to push up your offer. Foxtons have been slapped on wrist for doing exactly this.

I would say NO, all that should concern them is whether you have a concrete mortgage offer in place.

chickmug

My job, if I was acting for my seller client, is to make absolutely sure we know the full facts of those making offers. This includes where the total amount of purchase price would come from whether it is a mortgage, savings account or wherever. Not the specific details but to know of the loan requirement so therefore how much of their own money they will have.

Surely those selling will understand this as they would not want a chancer to offer and to find out somewhere down the line the buyer is short and asking for a reduction.

Now here’s a real fact in agency work ---- and other agents will confirm this. Those who are the most guarded with their financial circumstances are the ones most likely to be spinning a tale and be very tight on funds. Goodness knows why they do this but some do. We’ve had those who do not like being asked, even though we would be very sensitive and polite, and who have tried to approach the seller direct saying we had been unreasonable. But I can’t recall any seller that was drawn into this ‘web of deception’ approach.

Furthermore members of the NAEA must adhere to this rule: -

c) You must take reasonable steps to find out from the prospective purchaser his source and
availability of the funds for buying the property and pass this information to the client.

In our case we satisfied ourselves but didn’t tell the sellers the specifics (loan required and cash available) other than we were persuaded the buyer could afford the property. We were just so pleased we had a sale and never played silly games of trying to nudge up the offer because we knew the buyer had some leeway.

Some will say why can’t my solicitor deal with this direct with the agent but: -
Many solicitors will not see this as their role.
Many will not see it is as that pressing.
Many will have the same problems as the EA in getting the right documentary evidence.
Solicitors will not expect to ring a broker and/or lender like an EA does

I appreciate peoples reluctance to give the information away but like all other things in life it is the way the agents explains why it is needed.

Again if I were acting for you, as a seller, wouldn't you want me, as agent, to verify the buyers capability of getting the money?

Bear in mind if I was acting for you and went about it the way you suggest there are serious flaws. I have dealt with more than one FA who has bullshi**ed through to tell me their client can get the finance and so NO PROBLEM. But there could be and are regularly problems. I for one do NOT take the word of all FA's as some are low in integrity but would take the word of local ones who have a proven track record of which I am aware.

Three cases, just before I retired last year, were three 'hard to sell' properties all £500,000 + and in each case the FA said no problems. I let the seller decide whether to proceed as I felt they were all too tight and in each case, one by one, there was a shortfall with the offer. In each case the FA's, who all were from out of my area, arranged a personal loan of between £15,000 and £25,000.

So what happens is that the FA says 'no problem' but because the buyer is borrowing right up to their limits and there may be a down valuation or another factor which means they have to dig a bit deeper but not a penny more available

Sorry to labour this point but all agents, acting for the seller, MUST make sure they DO know more the details than some are suggesting. If they didn't how would the seller feel a couple of months on and the buyer can't raise the full amount of money - the only course of action for the buyer is to gazump?

However if you are on the buying side and trying to dodge giving the information that is your prerogative but you will need to find a poor or weak agent to avoid being taken to task on the matter.

PaulyH

Thanks for the advise people.

IHS88 what you have just said is in stark contrast to everything I have heard and read about concerning post war Laing Easiform Non Traditional Construction houses. I'm not disputing what your saying but these houses are in the 2 classed as 'non defective' under some 1985 housing ruling concerning NTC houses. So just interested in what qualifies you to issue a warning for us to walk away. We're buying in a city that was heavily bombed during WWII and has a huge amount of these houses which sell all the time. Abbey National lean't on the very road we've bought on only 2 years ago.

Just wanting a little clarity as your advise appears a little 'contrversial' to me.

PaulyH

Thanks for that advice Chickmug and I understand the need to qualify us as a buyer but we have proved we have the capacity to purchase already having had a 90% mortgage atually in placed (not just agreed) with HSBC and we also know we can get 90% mortgages on this property with othere lenders (and so do they) so not sure why we need to be qualified any more than that?

princessamy86

You need to be further qualified because nobody has actually agreed to lend you 90% on this actual property. It's all well and good in theory but until they have proof that you can mortgage this property, they can't be sure that you can buy it.

PaulyH

Yes - I suppose that makes sense.

princessamy86

Good luck though, with any luck you can find a different mortgage product over the weekend and then present it to them next week. Stand your ground!

PaulyH

I would still like to have some justification for the advise to walk away from the purchase.

The facts stated that in 99.9% of circumstances these houses are unmortgageable must be grossly incorrect as there are huge number of these houses occupied by people with mortgages!!??