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

Shoey1610

As a FTB with a 7% deposit and hoping to hit 10% before we buy, I think the key to this debate is that it works both ways.

After reading on this thread about the reasons sellers are cautious about dealing with FTBs with low deposits I can understand some of the rationales. Fair enough, I say.

On the flip side, I am unlikely to make an offer on a house, even if I really like it, if the sellers onwards plans seem vague or if it has been on the market for a long time (as I assume others have seen something my inexperienced viewing has missed!).

If I make an offer and someone says no because I have a low deposit, it is as much their prerogative as when I say no to making an offer because I want a nice garden.

There will always be other buyers, there will always be other houses. Why get stressed? What will be, will be eventually.

kingstreet

Alphamare wrote: »

How was my reply not on topic! Sheesh!

Besides who is to assume that someone with a bigger deposit has any spare money after their deposit and fees than someone else with a smaller one.

I know affordability can be an issue with 95% mortgages but what happened never should have happened to us. They didn't even know or ask about our borrowing ability which should have made us a better bet than the other guy who was borrowing his limit although with an undisclosed amount bigger deposit. He offered and got the property for less than the asking price which is what we offered.

I wasn't pointing at you. A number of posts had drifted away from the topic and onto a discussion about HTB and the merits, or otherwise, of 95% mortgages.

Someone with a bigger deposit may have the scope to reduce their deposit and borrow to a higher LTV if they need money to bridge a retention.

Road_Hog

ConfusedofYorkshire wrote: »

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

You obviously haven't sold a house recently, I have, I completed on Tuesday and I'm a landlord.


Financial restrictions and the modern culture of people, mean that selling a property isn't what it used to be 20 years ago. Estate agents (and sellers) need to know that the buyer has the funds in place to commit to purchase. Secondly, surveyors are dead scared of being sued these days, so always list every slight defect they can find, which then sets the mortgage company on edge.


The property I sold, was a bog standard two bed terrace in London, no chain. It has taken me since the 1st June last year to get rid of it, even though it was competitively priced. The first buyer came back and said he had trouble with the mortgage. So, I changed estate agents and the new ones vetted all the new buyers.


It cost me about £350 in extra solicitor's fees for the original aborted sale. So I certainly will only be going with estate agents that check all financial details in future.

theGrinch

you will be perceived a more risky buyer.

sebtomato

Paulaviki wrote: »

The estate agents we've spoken to said we are in a very favourable position. In fact we put an offer on a place under the asking price but someone else bid the asking price and the estate agent's were very keen for us to match the offer because of our good position.

The estate agent is not the one lending you the money, so what they think has got very little value to be honest. Also, they haven't look at your pay slips, outgoings, current credits etc.

When I bought my place a few years ago, the place had been "sold" already four times, but the sale fell through each time, as people were making offers but then couldn't get a mortgage. It was of course time consuming and costing money each time to the seller.

Since I had a higher deposit, I looked more likely to actually buy the place, and therefore offered less than others (also helped by the fact that the seller disclosed way too much information). What matters at the end is whether the money will be available.

IMHO, an agreement in principle has got very little value, and the bank will go through all salary pay slips, outgoings, credits etc only when you actually apply for a mortgage.

Despite having a 30% deposit, and another 15% in savings (so basically almost 50% of the property value in cash), and a borrowing ratio of only 2x salary, the bank did ask many questions and looked line by line at my bank statements and salary slips. This was 3.5 years ago, so maybe the rules have been loosen a bit now, but this gives you an idea.

movilogo

Even outside London, it is quite common for EAs vetting buyers before they pass any offers to vendors.

BillJones

When we bought our current place, we had a 50% deposit, and wanted to borrow 1.7* our joint salary. This should have made everything as smooth as you like, but the lender's valuation came in a bit lower than we were willing to pay, and suddenly things got very tight (as in we had to raise about £100,000 in cash in a few weeks). We got there, but it'd have been less tricky if we'd have 60%, 70% or 80% deposit, and it'd have been perfectly rational for the vendors to sell to someone at this higher level than to us.

Al the way down at 5% deposit, and the risks are multiplied quite heavily. If the lender knocks even a couple of thousand off what they will lend, the sale could well fail, and the sellers understand this fact.

It's a bit tough, I know, but they are being pretty rational by taking deposit into account.

Prothet_of_Doom

The issue would be the Mortgage valuation. Assuming you have a certificate with a loan agreed in principle, at 95%, but the valuation is lower than your offer. What happens ? They only loan you 90% of the value? Where do you get the other 10% ?

Alphamare

Personally I would not pay more than its valuation for any property. This isn't an issue with buyers but with sellers over pricing their properties. Surely you would just renegotiate. Our offer was conditional upon valuation and survey and this is common practice.

Prothet_of_Doom

Shoey1610 wrote: »

On the flip side, I am unlikely to make an offer on a house, even if I really like it, if the sellers onwards plans seem vague .

:T

Having been bitten twice by sellers, who didn't need to move, but having come into better times, could afford something bigger and better, when they found they couldn't find their 'dream' home, so the last time I moved, I was very wary, of anyone who was vague.

My criteria was a) You are selling because you have died. b) you are selling because you have a job 200 miles away, c) you are selling because you are a builder, and need to keep turning over renovations, to pay for the next project.


I walk past my dream home everytime I walk the dog, the one where I refused to put in an offer, due to them not having viewed a single house. The one identical to my house, but with a double garage and a corner plot, and not a single garage, and a postage stamp garden and shared drive.

They did move eventually. 7 years later. They had a for sale sign up for 3 months every summer. :rotfl:and took it off the market mid sept. Idiots. :rotfl: