House offer declined because we only have 5% deposit yet we offered highest bid

Suemcg1982

Hi

We were involved in a best and final offer situation today over a chain free property and both parties trying to buy the house were first time buyers.


We offered the higher amount but lost the house as the other party has a bigger deposit.


Firstly, what does it matter to the vendor how much deposit we are putting in they will get all the money offered by way of a combination of cash and mortgage. Secondly, when an estate agent asks what deposit we have do we have to disclose this?


The agent has made me feel terrible as she took some joy in telling me that as we only have 5 percent deposit this will probably happen to us a lot as other buyers will look better than us on paper.


Any advice/ answers would be appreciated

GwylimT

You don't look as secure as a buyer, just as if there were two potential buyers, one with a mortgage and one a cash buyer, a vendor is likely to choose the cash buyer.

jjlandlord

Because sometimes the potential buyer goes too high and then he realises that he cannot get a mortgage.
That's probably want the vendor thought here.

Have you got the mortgage in place? If so have you told the vendor?

rob404uk

What are your salaries? How much are you trying to borrow? Do you have a agreement in principle?
This may help.
Also, if the agent is predicting that the surveyor may recommend a lower than offered value on the property a buyer with a larger deposit is more likely to be able to make up the difference. Therefore they are less risky

shop-to-drop

I guess your mortgage was less likely to be approved. Particularly if you are the highest bidders as the mortgage valuation would more likely be less and with a small deposit that would be too big a risk for the bank.

Suemcg1982

We have an agreement in principal, which is a conservative amount based on our salaries and a lot lower than the maximum amount we can borrow.

So basically we haven't got a hope of getting an offer accepted because we have a small deposit? Yet can easily afford our mortgage

rob404uk

I think you will get an offer accepted, this is just the opinion of the verdor you attempted to purchase the property of. One upon a time people bought with 105% mortgages

shop-to-drop

When there are other offers on the table too it will be more of an issue. I doubt many vendors would straight refuse you when you are the only interested party or maybe other parties are all in chains.

Mallotum_X

Suemcg1982 wrote: »

We have an agreement in principal, which is a conservative amount based on our salaries and a lot lower than the maximum amount we can borrow.

So basically we haven't got a hope of getting an offer accepted because we have a small deposit? Yet can easily afford our mortgage

No, as not all buyers/agents will take that view, and not all houses will have two competing buyers.

Make sure you have other things ready, have you a solicitor lined up, anything to give you some minor plus points may help next time.

Are you able to increase your deposit amount at all, even if you still get a 95% mortgage, having more cash available may hel pif this situation arose again (even if the extra cash is a loan from family you pay back once the house is secured).

Buzzybee90

Suemcg1982 wrote: »

We have an agreement in principal, which is a conservative amount based on our salaries and a lot lower than the maximum amount we can borrow.

So basically we haven't got a hope of getting an offer accepted because we have a small deposit? Yet can easily afford our mortgage

If you have a good salary... Save for a bigger deposit?

ConfusedofYorkshire

i dont think i would tell an EA how big my deposit is. its really none of their business.