Asked to pay seller 10k due to high sealed bid

davidmcn

brazillondon wrote: »

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?

No, because there are lots of people around with cash, either to top up what the bank aren't prepared to lend, or who don't require a mortgage at all. 38% are cash purchases - not sure how the rest of it breaks down but I doubt 90% LTV mortgages account for over 50%.

phill99

You may wish to but some Vaseline as you are about to be well and truly shafted.

Senior_Paper_Monitor

Butt has two Ts

dc197

mildredalien wrote: »

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...

I agree with the above, this is my understanding too.

kinger101

It's what edddy said. Been there before. The agent is just doing their job and finding out who is in the best position to proceed. You need to decide;

(a) do you still want the property if the valuation comes short;
(b) if yes, how short;
(c) will it effect your LTV and hence interest rate;
(d) will it eat up every last bit of your spare cash, meaning you can't spend any money on the house when you move in (carpets etc)?

I bought in a village where there wasn't really much in the way of recent transactions to benchmark to. I told the estate agent £X was still okay, £Y wasn't.

It was irrelevant in the end because the valuation matched my offer.

Of course, there's nothing stopping you changing your mind if and when the valuation comes short, but the EA wouldn't take you seriously again.

Caz3121

brazillondon wrote: »

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?

you need to look at these in isolation and together

example
AIP £400k
House valuation £300k
Purchase price £350k

90% mortgage would mean bank would cap at £270k and £80k (10% deposit on valuation plus addition £50k offered over valuation) would need to be found elsewhere

If you want to take a 90% mortgage of £400k then you are looking for a property with a valuation and purchase price of £440k

If you want to offer more than the valuation you need to have that cash available in addition to your deposit

It sounds like they want you to commit to paying £10k over whatever the valuation comes out as. If you don't have an additional funds then it is time to adjust your offer to what you can afford or wave goodbye to the property

In many cases people can pay more than the valuation by adjusting their deposit
eg valuation £300k deposit of £150k so LTV of 50%
want to offer £350k which reduces deposit to £100k (with £50k being the 'extra') meaning LTV increased to 67%

JJG

Caz3121 wrote: »

If you want to take a 90% mortgage of £400k then you are looking for a property with a valuation and purchase price of £440k

If you want to offer more than the valuation you need to have that cash available in addition to your deposit

Not quite. If you wanted to borrow £400k on a 90% morgatgae you could buy a house at £444,444 maximum valuation and purchase price.

csgohan4

brazillondon wrote: »

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

Appreciate your thoughts.

That is a big mistake and you are being fleeced for it

AdrianC

csgohan4 wrote: »

That is a big mistake and you are being fleeced for it

Only if you allow the EA to dictate what you offer and if/when you walk away.

csgohan4

AdrianC wrote: »

Only if you allow the EA to dictate what you offer and if/when you walk away.

But if they know what you can afford, they can push you higher with 'lastminute' buyers bidding higher than you