Property Ombudsman - Financial Evaluation

_Ed

Apologies if this has already been discussed. I tried a few searches but couldn't find what I was looking for.

I have made an offer on a house, and it's currently with the owner. The EA has informed me they want to pass me to their mortage dept to check our financial viability. I informed them I will not be taking mortgage advise through them, and already have a mortgage approval in principal.

However, the EA replied they still need to go through this as a check (not mortgage advice) to see if I am viable before the offer is accepted.

I called with the EA head office and they directed me to the Property Ombudsman - Sales code of practise:

7. Financial Evaluation
7a At the time that an offer has been made and is being considered by the seller, you must take reasonable steps to
find out from the prospective buyer his source and availability of the funds for buying the property – and pass this
information to the seller. Such information will include whether the prospective buyer needs to sell a property, requires
a mortgage, claims to be a cash buyer (*) – or any combination of these. Such relevant information that is available
should be included in the Memorandum of Sale – but caution must be exercised with regard to personal data covered
by the Data Protection Act.

Ideally, I'd like to send a copy of the AIP, with the value blanked out (as the offer is for less than the AIP), but was told that would not be acceptable.

Thoughts?

ILW

Why not just give them the info they require?

Winkle1908

Dont know how ethical this is but on the 2 occasions I have got a mortgage I have spoken to the Mortgage advisor (different both times) and asked them to reduce my hours on the AIP so it sits at only a tiny bit over the price accepted on the house.

Both mortgages have gone through successfully too. Its a bit long winded but if you really have issues with supplying this information to the EA/vendor then might be worth a try.

Winkle1908

This was meant to say so it reduced my wage and therefore reduced the amount we could borrow.

ILW

Winkle1908 wrote: »

This was meant to say so it reduced my wage and therefore reduced the amount we could borrow.

How does that help, surely it is what you are prepared to pay that matters?

_Ed

ILW wrote: »

Why not just give them the info they require?

Because they will see that I have a AIP for a decent amount more than I'm offering and as such may try to encourage me, using whatever means, to offer more.

It's the Estate Agent's job to maximise sale value on behalf of their client, and of course that is well aligned with the incentive to maximise their own commission.

Of course, it's in my interests to do the opposite, and I feel this weakens my position during negotiation.

princeofpounds

If you like, oint him right back to TPO Code of Practice clause 7c. Tell him:

- that you are willing to submit the necessary information for the financial evaluation of proceedability but you will not be seeing his mortage advisor. If they persist on insisting this then you will make a formal complaint, contact the TPO and trading standards, and also contact the vendor directly to inform them that the EA is blocking a genuine offer to try to get a mortgage commission.
- that you want written confirmation your offer has been passed to the vendor, as is their legal duty

7a By law, you must tell sellers as soon as is reasonably possible about all offers that you receive at any time until
contracts have been exchanged (in Scotland, missives have been concluded) unless the offer is an amount or type
which the seller has specifically instructed you, in writing, not to pass on. You must confirm each offer in writing to
the seller, and to the buyer who made it, within 2 working days.
7b You must keep a written or electronic contemporaneous record of all offers you receive including the date and time

of such offers and the seller’s response.

7c By law you must not discriminate, or threaten to discriminate, against a prospective buyer of the seller’s property
because that person declines to accept that you will (directly or indirectly) provide related services to them.
Discrimination includes but is not limited to the following:

●

Failing to tell the seller of an offer to buy the property.

●

Telling the seller of an offer less quickly than other offers you have received.

●

Misrepresenting the nature of the offer or that of rival offers.

●

Giving details of properties for sale first to those who have indicated they are prepared to let you provide

services to them.

●

Making it a condition that the person wanting to buy the property must use any other service provided by you or
anyone else.

Ah - I notice this probably revolves around the actual value on the AIP. You can ask your lender for an AIP with an upper value around the offer you are making if you like. But as pointed out, you can offer whatever you like and make it a flat offer, take it or leave it. Disclosing an AIP is not quite as dangerous as your full financial situation as it's only part of the info.

ILW

_Ed wrote: »

Because they will see that I have a AIP for a decent amount more than I'm offering and as such may try to encourage me, using whatever means, to offer more.

It's the Estate Agent's job to maximise sale value on behalf of their client, and of course that is well aligned with the incentive to maximise their own commission.

Of course, it's in my interests to do the opposite, and I feel this weakens my position during negotiation.

That is a rather pathetic negotiating stance, and seldom works.
Negotiate on a basis of what you are prepared to pay, not how much you can borrow.

_Ed

Affordability is a pathetic negotiating stance? You are of course entitled to your own opinion.

I can assure you though, I will only be offering what I am prepared to pay and not what I can borrow - hence an offer a lot less than the AIP.

ILW

_Ed wrote: »

Affordability is a pathetic negotiating stance? You are of course entitled to your own opinion.

I can assure you though, I will only be offering what I am prepared to pay and not what I can borrow - hence an offer a lot less than the AIP.

So when you say I can only borrow XXX so that's my limit and the EA replies " So you would obviously be happy to pay more if you could get the loan", you have lost all your negotiating stance in one go.

Better to say "I could afford to buy this place 10 times over, but XXX is what I am prepared to pay".

That will get you a better deal in the end.

martinsurrey

_Ed wrote: »

I called with the EA head office and they directed me to the Property Ombudsman - Sales code of practise:

7. Financial Evaluation
7a At the time that an offer has been made and is being considered by the seller, you must take reasonable steps to
find out from the prospective buyer his source and availability of the funds for buying the property – and pass this
information to the seller. Such information will include whether the prospective buyer needs to sell a property, requires
a mortgage, claims to be a cash buyer (*) – or any combination of these. Such relevant information that is available
should be included in the Memorandum of Sale – but caution must be exercised with regard to personal data covered
by the Data Protection Act.

This does not say find out and audit/verify any information, they have to find out, you've told them enough said.

they cannot refuse to pass this information on and cannot claim that they are legally required to know, they arrnt.