EA insists I see mortgage adviser before I can make an offer....

ILW

chris_m wrote: »

Easy, if the EA sees documentation showing you have a mortgage in principle for, say, £180K and you put in an offer for £150K they know you have another £30K available - it's like playing poker with a marked deck.

But surely the buyer is the one that decides how much they are prepared to pay, the amount they have available is totally irrelevent.
If you went into a shop and the assistant knew you had £10.00 in your pocket, would you then pay £10.00 for a box of matches?

vikingaero

retepetsir wrote: »

How on earth did they manage to get 'EA of the Year' awards so many times :rotfl:

Snakes voting for snakes.

shimano

ILW wrote: »

But surely the buyer is the one that decides how much they are prepared to pay, the amount they have available is totally irrelevent.
If you went into a shop and the assistant knew you had £10.00 in your pocket, would you then pay £10.00 for a box of matches?

Not exactly a good analogy. The "box of matches" are fixed at a price. A house price is most cases is governed by what essentially is a loose sealed bid process. It becomes even more flawed if the seller/represenative (ie the estate agent) knows how much you have. There is no such thing as Chinese walls in these places, they all talk to each other.

There is a huge, massive difference between offering 150k with them knowing you have 180k available, or you offering 150k creating a perception that you are your limits, and only you know you actually have an additional 30k to play with.

princeofpounds

But surely the buyer is the one that decides how much they are prepared to pay, the amount they have available is totally irrelevent.

Certainly not. Although you might be correct if we had perfectly rational buyers, a foolproof way of valuing houses and a market with transparent rules that's just not the case. A little game theory will teach you much more about the real world and the process of price discovery.

The position of a buyer depends on both availability and willingness to spend capital. If they have one of those negotiating legs kicked out from underneath them it's like trying to run a three-legged race in a negotiation as any line they draw in the sand is known to be just a matter of willingness and not a potentially 'genuine' line.

For example, if a seller knows that a buyer can afford 150k, and has offered 130k, then they can quite easily invent a fake counter-offer in the full knowledge that they know where the true line in the sand is. That means they can try for 149 instead of 135, or risking 151 for instance. Quite an advantage.

betmunch

princeofpounds wrote: »

they can quite easily invent a fake counter-offer

No they cant. Your not allowed to make up fake offers. Trading standards will have you on that!

Even so, even with a fake offer or not, the buyer can always say "no, my offer is £xxx,xxx"

Rather than looking at it as money an EA got out of you, why not look at it as how much you saved getting the house under the maximum you were prepared to pay?

If you ever have to offer over this maximum then you walk away

princeofpounds

Your not allowed to make up fake offers. Trading standards will have you on that!

In theory you are right, in practice it happens all the time and TS don't give a monkey's.

the buyer can always say "no, my offer is £xxx,xxx"

Yes, if buyers were perfectly rational and non-emotional that might work, but we have to live in the real world. Knowing your opponent's position is a serious advantage in negotiation (indeed, if buyers all behaved as you suggest, there would be no such thing as negotiation!).

Even if the participants are perfectly rational, but are forced to use probabilistic estimates of their opponent's preferences (i.e ability and willingness to pay), knowing some information about your opponent's preferences a priori gives you a better set of outcomes, if you accept the critical risk theory of negotiating.

Imagine you are in a football stadium and not allowed to bring any food from outside. How weird would it be that if you wanted a pie, the kid serving it asked how much money you had in your pocket? If you had £3.65 and the pie was priced at £3.50, then it's a fair bet you would be a buyer at £3.65, but critically the seller does not have to lose any custom from the other buyers who only had £3.50 in their pocket and would never have looked at the pie were it priced at the higher level.

This is not intended to be a direct analogy for house selling, but simply to point out that knowing your opponent's position can be a great advantage in negotiation and gives a structural advantage to the seller.

Think about it another way when it comes to houses. If I offer 120k, but can afford 150k, and I really think it is worth 120k, sure I can stick at 120k. But if the vendor says 'what about 120.5k?' I'm probably going to take it because they can always be sure to extract the simple opportunity cost of me going to another bunch of houses and making another offer.

shimano

Phantom counter offers are rife, in the 1.5 years spent looking for a property the amount of times that I put in an offer, a mysterious buyer comes in with an offer a lot more than mines, I withdraw, then 1 week later they withdraw, would I put my offer back in.

The best was I offered asking for a flat I liked 1 year ago (249k)...someone apparently had cash and offered 270k no mortgage needed..i withdrew...2 weeks later i got a call "the buyer couldnt get a mortgage"...err you said they were a cash buyer?!?!

Another good one was a flat was up for 350k, was on market for 8 months, didnt move on price. I offered 300k, again another buyer etc etc, 1 year later its still for sale, and now 280k.

Most estate agents are like dogs on heat....

vikingaero

betmunch wrote: »

No they cant. Your not allowed to make up fake offers. Trading standards will have you on that!

Even so, even with a fake offer or not, the buyer can always say "no, my offer is £xxx,xxx"

Rather than looking at it as money an EA got out of you, why not look at it as how much you saved getting the house under the maximum you were prepared to pay?

If you ever have to offer over this maximum then you walk away

:rotfl::rotfl::rotfl:

Oh dear betmunch. How much teeth do you think TS have? I'd argue it's a false set with a fair few missing. I'm really wondering if you're in a golden period because in a way your naivety is quite charming.

It doesn't take a Brain of Britain to know that in some offices the MA will willingly tell the EA the figures, if the MA won't then chances are the EA can sneak a peek at the file on the desk, and worst case the EA Manager will have keys to the files and tell his juniors.

ILW

Negotiating on a basis of "its all I can afford" is pathetic and does not work. You risk just talking yourself into a corner. A buyer needs to grow some and negotiate on a basis of "this is what I am prepared to pay".