Buying: 'Do I need a broker' and 'Tipping off an estate agent'

LandOfConfusion

I'm a FTB with a significant deposit and I have a couple of questions re: mortgage brokers & estate agents.

Firstly, looking at the various "Best Buy" tables I seem to be able to access some extremely low 10-year fixes. Given that I won't be borrowing much is there really any point in paying circa. £500 to a mortgage broker, especially as it looks like I could get an extremely attractive rate without going though one?

Secondly if I'm reading things correctly most offers are made though an estate agent. Now while I don't have an issue with that, it occurs to me that I'd be tipping off the EA (the vendor's agent) as to how much I could afford. And given that the sale could fall though and that I might end up dealing with the same EA but on another property, is that really such a smart idea?

davidmcn

LandOfConfusion wrote: »

Secondly if I'm reading things correctly most offers are made though an estate agent. Now while I don't have an issue with that, it does occur to me that I'd be tipping off the EA (the vendor's agent) as to how much I could afford. And given that the sale could fall though and that I might end up dealing with the same EA but on another property, is that really such a smart idea?

I'm not sure what you're suggesting the alternative might be? If a property is being marketed via an estate agent then you'll almost inevitably have to make your offer to them. Doesn't stop you from negotiating appropriate prices for particular properties.

AdrianC

As far as the second goes, how much you can afford doesn't affect how much you want to offer on any particular property.

AnotherJoe

Not all brokers charge.
If you can get a good rate without one and you have a simple mortage (eg no debts,CCJs or other complexities) then you probably don't need one.
Why do you think you'd be "tipping off " the EA as to how much you can afford? Not understanding that. Whenever I've made an offer I've said "tell the vendors my offer is £x". WHeres the tipping off?
Even if you were tipping them off, the EA is focussed on getting a sale not squeezing every last penny out.
If they encourage you to bid too much then your mortgage may become borderline and other similar issues may increase the chance of it falling through. EA would far rather easy deal at (say) £250k than stretch to £5k more for say £50 extra commission and increase the risk the deal falls through. Sellers should bear this in mind when thinking EAs work for them!
Lastly, let's say you tell the vendor directly "my offer is £250k" because your worry is if it falls through the EA knows you can afford 250 and the next house is 235. First of all do you think the vendor will keep your bid secret from the EA?? So your cunning plan falls at the first hurdle. Second , the mortgage co will likely value that second house at 235 max anyway.

TL;DR you don't have to use any broker and your concerns are unfounded.

LandOfConfusion

Wow, thanks for the quick replies!

I've been told that I shouldn't reveal my price ceiling to vendors as it could make negotiations harder, but once the EA has an idea of what I can afford that becomes somewhat difficult to do.

It would have been nice to be able to make an offer without them knowing the details, at least at first.

Oh well.

kingstreet

Brokers are not about the difference between 0.015% on the rate v a fee of £995 or a fee of £875.

We're about ensuring your and your property's circumstances match lender criteria and you get not only the best possible financial deal, but the smoothest and most hassle-free transaction.

How do you feel about the extra stress of a lender with systems issues which will ask you for the same item three times, losing it twice and taking three weeks longer to get to mortgage offer for that 0.015% saving; compared with the lender working with the broker to get you from application to offer in seven to ten days, keeping you updated at every stage?

£500? That's double what we charge...!

davidmcn

LandOfConfusion wrote: »

I've been told that I shouldn't reveal my price ceiling to vendors as it could make negotiations harder, but once the EA has an idea of what I can afford that becomes somewhat difficult to do.

Obviously, you don't reveal your price ceiling for a particular property to the vendor or their agent. But neither ought to have an expectation that you're likely to spend every penny you have on their property.

AnotherJoe

I've been told that I shouldn't reveal my price ceiling to vendors

Who told you that? Did they mean the max you'd pay for that property? Yes, thats a good tactic. The maximum you can possibly pay for any property? Why would you do that?


You seem to be working from the wrong mindset that what you offer is based on what you can afford. What you offer (finally after negotiations) is based on what you think the property is worth not what you can afford. Maybe you could afford £300k and you are looking at a £300k three bed or a £250k two bed. You decide on the 2 bed. Should you pay £300k just because you can afford it? No, the two bed is worth £250k so why would you pay more.

The only reason your price ceiling is useful, and it will help you, is when you say "I cant afford more than £x", at that point the vendor is effectively issued with an ultimatum, but you can make the same ultimatum even if its not your ceiling "my final offer is £X".

Start from a position of strength rather than acting as if you "must" pay towards the maximum you can afford.

Lastly you wrote

It would have been nice to be able to make an offer without them knowing the details, at least at first.

... so how do they know the details ?

LandOfConfusion

AnotherJoe wrote: »

Not all brokers charge.

I understand some make commission from the lenders they recommend but if they add no other value then going direct does look to me like the best choice. It's just that lots of guides (and people!) push brokers but I'm just not seeing the value.

AnotherJoe wrote: »

If you can get a good rate without one and you have a simple mortage (eg no debts,CCJs or other complexities) then you probably don't need one.

Yes, that sounds like me.

AnotherJoe wrote: »

Why do you think you'd be "tipping off " the EA as to how much you can afford?

Because then they'd have an idea of my price ceiling.

I should also disclose I've previously worked with an ex-EA and can completely believe that they would try to screw the buyer for an extra few quid in commission if they thought the capacity was there and they could get away with it.

AnotherJoe wrote: »

If they encourage you to bid too much then your mortgage may become borderline and other similar issues may increase the chance of it falling through.

True but I'm financially conservative and intend to use the large deposit / minimal mortgage fact to my advantage, and I can see them using that extra mortgage capacity as ammunition.

AnotherJoe wrote: »

EA would far rather easy deal at (say) £250k than stretch to £5k more for say £50 extra commission and increase the risk the deal falls through. Sellers should bear this in mind when thinking EAs work for them

Thanks. That's good to know.

AnotherJoe wrote: »

Lastly, let's say you tell the vendor directly "my offer is £250k" because your worry is if it falls through the EA knows you can afford 250 and the next house is 235. First of all do you think the vendor will keep your bid secret from the EA?? So your cunning plan falls at the first hurdle. Second , the mortgage co will likely value that second house at 235 max anyway.

I see your point. Just that it makes it a little more difficult to plead young + at mortgage limit.

gycraig_2

Offer what it's worth. A millionaire doesn't pay 300k for a 200k house it doesn't matter how much cash you ha e you offer and they accept or decline there's no need for pleading

AnotherJoe

LandOfConfusion wrote: »

I

Because then they'd have an idea of my price ceiling.

Ive still missed how the EA appears to magically know your expenditure price ceiling.

LandOfConfusion wrote: »

I see your point. Just that it makes it a little more difficult to plead young + at mortgage limit.

Dont start from that as your negotiation tactic. Dont even consider that. Expunge it.

Your max bid is what you think its worth (why would it not be???)
Your age? Irrelevant. What you can afford? Only relevant if you are genuinely at your max and this is also what you think its worth.Otherwise, irrelevant.