Rejected offer but property on for auction.

indianabones

I made a starting offer of £185k for a house with "Offers over £200k" and this was rejected within 10 mins. The EA said vendor wants over £200k are you prepared to pay £200k? I said no, it's not worth £200k it needs re-wiring and central heating (doesn't even have a gas supply). There are other issues as well, but won't list everything.

I was prepared to go as high as £195k for the house, but it seems like they're set on their £200k, that is until this week when I have seen that the house is now going to be on auction in mid July for £180k (guide price). I managed to get that my offer of £185k was higher than 3 other offers they received in the last month.

So I'm hoping for some advice from you guys. Should I now start attending some other auctions to see how these things pan out? I've got a mortgage in principal from L&C who said I'd have no problems getting a mortgage given my situation if it were through normal means, however they are sceptical about being given a mortgage if I buy through auction.

Or should I give up? 1 month right now is a huge time for me, I want to buy asap cause of personal circumstances.

Any tips would really be appreciated.

G_M

auctions can be expensive- you have to pay for legals upfront before you bid, as well as any survey you want. You also need to apply for a FULL mortgage (not a mortgage in principle) - all before the auction day.

Guide prices are just that. a guide.

Youmight get it for 165K. It might go for 220, meaning you've lost all your outlay costs.

Try making your offer again before the auction though. sounds like the seller has accepted it needs work.....

glasgowdan

I'd make another offer of £190k, then walk away if they say no.

Cakeguts

If the guide price is 180k then they are expecting to get much more than that for it at auction. An auction guide price doesn't mean that it is the price the expect it to sell at. Guide prices are usually much lower than eventual selling prices.

indianabones

Cakeguts wrote: »

If the guide price is 180k then they are expecting to get much more than that for it at auction. An auction guide price doesn't mean that it is the price the expect it to sell at. Guide prices are usually much lower than eventual selling prices.

Yes I had a feeling that would be the case based on what I've read. Haven't got any experience of the bidding process though.

But if they've had it on the market for 200k for 2 months and 225k for 6 months prior to that, surely they're not expect to get more than 200k? Which means negotiating with me after I started off at 185k would have made sense?

Anyways if it's not meant to be it's not.

kilby_007

We made a 210K sealed bid on a "guide price 200K" property and there were other offers higher than ours. Didn't find out what it went for, but I've found this to be the case with most properties going for auction or informal tender. They routinely price them 10-20% under their valuation in order to whip up a frenzy of interested parties. People think about what they will do with the property and become invested/committed and before you know it they're outbidding eachother and overpaying for it. It's even worse with informal tender given the psychological effect of making sure your bid is higher than the others, some people over-bid tremendously to avoid being outbid on the day. My mum and dad renovate property and they've witnessed this first hand.

kilby_007

indianabones wrote: »

Yes I had a feeling that would be the case based on what I've read. Haven't got any experience of the bidding process though.

But if they've had it on the market for 200k for 2 months and 225k for 6 months prior to that, surely they're not expect to get more than 200k? Which means negotiating with me after I started off at 185k would have made sense?

Anyways if it's not meant to be it's not.

Estate agents overvalue property to get people's business. It sounds like they gave the vendor false hope that it was worth 225K, then after a period of it not selling the EA has convinced them that they can still achieve a good price with "offers over" (taking the "offers over" literally) and maybe the vendor was still expecting to achieve around 210K. Depending on area, 2 months is not a long time to wait for a sale. Realistically, if the vendor wants over 200K they're not going to start negotiating with you at 185K. I've learnt this lesson the hard way. Although it's common practice to offer under, a lot of vendors and EA's do actually mean "offers over" when they put it on their listings.

eddddy

Is it...

a) A conventional auction, where exchange of contracts happens when the hammer falls?

or

b) A conditional auction, where you pay a reservation fee when the hammer falls and exchange of contracts happens 28 days later?


If it's a), you really need to get a firm mortgage offer before you bid - a mortgage in principle isn't sufficient. Otherwise, the mortgage valuer and/or the solicitor may say the property is unmortgageable - and you'll be stuffed!

And so, if you are outbid, you lose your solicitors fees, mortgage application fees and mortgage broker fees.


If it's b), you can wait until after the auction to apply for a mortgage. But you lose your deposit if you can't get a mortgage. (The company that usually does these auctions requires a minimum deposit of £6k)

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