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

googler

ConfusedofYorkshire wrote: »

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

How did the EA find this out?

thequant

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.

Affordability is not the problem in todays market, ultimately anyone who can pay rent can service a mortgage.

What is a problem is deposit, as this is what protects the banks if you fail to pay the mortgage and hence why the goverment is coming up with with all of these new fangled schemes.

But from a buyers perspective anyone coming along with a 5% deposit who is needing a goverment handout to buy a place is not going to be respected by a vendor due to the risks that you present.

And it is these risks which are key, even if those risks are not there, the vendor doesn't know that and there is nothing you can do about it, it is a classic information asymmetry and you can't expect a complete stranger to give you the benefit of the doubt.

thequant

Alphamare wrote: »

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.

I think you need to be educated a little about how valuations work, despite you paying it for it, the valuer works for the mortgage company.

When they call it a "valuation survey" this is actually misleading, what the survey is asking is will the bank get its money back if the buyer defaults on the mortgage?

The is influenced by the deposit, the larger your deposit the more leeway the surveyor has for passing the valuation. This means if you have a larger deposit the more likely the valuer will pass the survey at the agreed price even if you have actually overpaid. Likewise on the flipside for lower deposit mortgages the more likely they are to fail even if the agreed price is a good one.

On top of that, surveyors have a 20% margin of error before they can be held liable for their valuation, so I wouldn't rely totally on a valuation survey to protect yourself.

tara747

ging84 wrote: »

you can afford to buy a property in zone 1
that means you have either had to be saving for a very long time or be earning well above the national average and well well above the national average for a young person
stop belittling everyone and assuming they earn as much money as you and just !!!! it all away in the apple store and starbucks

Clearly, you didn't read thequant's post properly before your little rant. How embarrassing for you.

BillJones

Alphamare wrote: »

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.

Yes, you try to renegotiate, but sellers are not obliged to drop all the way to your valuation. They understand full well that the next buyer may pay a higher price.

I'd been waiting twelve years for my flat to become available, and was not about to walk away over a £100k difference of opinion with a guy who knew little to nothing about the building. Far, far better to simply find a bigger deposit.

movilogo

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!).

It annoys me when sellers haven't got a clue where they are moving to!

Usually these are sellers who don't have a pressing need to move. If they are downsizers, they want to maximise their pension plot and won't move unless very close to asking price offer is received.

These houses stick in the market for a long time without any reduction to asking price.

There is not much good offering on such houses because even if offer is accepted, they may take 6-8 months to find their new dream home, by the time your own circumstance may change considerably (e.g. reduction in income etc.)

thegirlintheattic

BillJones wrote: »

Yes, you try to renegotiate, but sellers are not obliged to drop all the way to your valuation. They understand full well that the next buyer may pay a higher price.

They may do, but anyone buying with a mortgage will find it difficult with a lower valuation, and many sensible people wouldn't pay much more than the valuation price.

spender717

What a load of rubbish that you'll lose out on other houses due to only a 5% deposit! :rotfl:

We just bought our 4 bed house with a 5% deposit and offered more than a cash buyer and the vendor accepted our offer - and we're in the SE!

I never told the EA in the beginning how much our deposit was, he asked us where our deposit was coming from, I.e equity etc.

Also, depends on the buyer. FTB'S or like us, owned our starter home for 8 years, so have a proven history of repaying a mortgage.

Have a AIP lined up which will help you when offering.

Road_Hog

spender717 wrote: »

What a load of rubbish that you'll lose out on other houses due to only a 5% deposit! .

Actually, you're the one talking rubbish. Having sold a property recently, I can tell you exactly how it goes.


I accepted an offer on the property, the buyer had a 10% deposit. The following day, the estate agent rings back and says, we've got another buyer who will match the price, but has a 40% deposit and that they recommend that I go with the second buyer, as the sale is more likely to go through.


Having already spent the best part of 5 months with a former buyer, I took the estate agent's advice. It's a cruel hard world, but when you've had your fingers burnt, you don't want to stick them in the fire again.