Asked to pay seller 10k due to high sealed bid

brazillondon

Hello there,

I’ve submitted a sealed bid offer on a house - 50k above the asking price of 350k (have simplified the figures). Advice given at the time was that if the house is deemed by the bank to be worth a lot less than the offer - than I would not be expected to pay any higher.

We’ve heard from the EA since, and been told that our bid was among the highest. We’re now being informed by the EA that the valuation is likely to be little more than the original asking price, and if this is the case - would I be happy to pay 10k to the seller from my deposit to help somewhat make up the difference between what I’ve offered and the upcoming valuation.

Is this common? It really doesn’t sit well with me but this is a property I want.

Any advice?

Thank you

marksoton

brazillondon wrote: »

I’ve submitted a sealed bid offer on a house - 50k above the asking price of 350k (have simplified the figures). Advice given at the time was that if the house is deemed by the bank to be worth a lot less than the offer - than I would not be expected to pay any higher.

:rotfl:

And i believe in fairies....

Foxtrot Oscor Vendor......

Miss_Samantha

Yes, it's quite common to be led up the garden path by estate agents.

mildredalien

I thought that bank valuations never valued higher than the currently accepted offer? My understanding was that if they thought it was worth less they'd lend less, but if they think it's worth more they will 'cap' at your offer as that's all they have to lend you then...

Basically they are having you on!!

AdrianC

Well, would you?

If not, then say "Thanks, no thanks.". If it means that the vendor won't sell to you for the valuation figure, then it means the vendor thinks their house is worth more than the rest of the world does.

Hoploz

How do they know what your bank will value it at?

If your accepted offer is 400k, your bank may agree. What sort of LTV would your mortgage be? If low LTV they'll prob just tick the box and agree with your valuation of 400 if they are only lending 200k.

I don't understand why they are talking your offer down at this stage. Clearly you value it at 400. If bank values it at 350 then fine you will pay 360. You get a better deal. People buy things at above lender valuation all the time without any cloak and dagger under the counter dealing.

If however you are hoping to get eg. A 90% mortgage then you'd be in trouble as they would be asked to lend more than it's worth which is not possible.

Does the EA know your financial details? What LTV is it?

AdrianC

Hoploz wrote: »

How do they know what your bank will value it at?

Because the sale's fallen through twice already when valuers have balked?

brazillondon

Thank you for the replies.

I've since gained an understanding of why such a request would be made. Which is: the bank will only lend out what it deems the property to be worth - and thus my relatively high offer can't be met if the bank deems the property to be worth a lot less. Given this, I can understand why I'd be asked to stump up cash myself if the bank will not meet the offer I've made. This is of course a choice I can decide against - and then there's the other buyers for whom I'm 'competing' against.

The EA does know my financial details I expect, as our broker/advisor works in-house with them.

Appreciate your thoughts.

eddddy

I strongly suspect there is some confusion here.

I think the EA is simply saying something like:

- You have offered £400k, If your bank values the property at less than £400k, will you still proceed at £400k? (i.e. your deposit might have to be, say, £10k bigger than you expect)


The EA may be asking the same question of others who maybe offered between £395k and £405k.

The EA is trying to separate out those bidders who will proceed at their bid price irrelevant of their bank's valuation, versus those that would want/need to renegotiate, if the valuation is low.


TBH - that's not really too unreasonable.

jbainbridge

Strikes me that the EA and vendor are taking the mick. Is it really 'that' special?

brazillondon

I agree eddddy, that's how I am coming to understand the situation now.

This does make me wonder: in the case of a 90% mortgate (which I expect to be the majority upon which offers are made), wouldn't that make the offer process a little pointless if it's always going to come back to what the bank's valuation is? (i.e you can offer all you like, up to the max of your AIP, but in reality most will be limited to what the bank will deem the property to be worth). Given that the AIP takes your deposit into account - will it not be rare for most to ever have significant extra money to help make up the difference between their offer and what the bank will ultimately lend?