Estate Agent sold house based on "Deposit"

YakJack

Hi everyone,
I'm a first time buyer currently looking for a property. My partner and I found one we loved last Thursday, and viewed it on Friday.

It really was the perfect house for us. The estate agent there recommended that we put in the asking price (which we were happy to do and we were wiling to go £15,000 over the asking price) as he believed it would go to best and final. He said that they were interested in deposits on mortgages etc, and that it would mean people could sort their finances out over the weekend (felt weird to me). I explained that we were in a great position to buy as we had literally just got our mortgage in principle sorted 3 days beforehand. He also mentioned that the house was popular (it was clear to see why) and no other viewings could be booked the day after we saw it.

Fast forward to Monday and we had to contact them. He replied explaining they had "15 offers" and that they were taking all information "regarding deposits etc" to know the "next instruction". It felt very vague to me, and we replied telling him to just let us know whenever he needed our info.

Halfway through the day my partner called him up and asked him what the situation was. He had somehow assumed we had a 10% deposit? We had more but had given him no information on this, so I grew suspicious. Later in the day he called us back and said the house had gone to someone with a 30% deposit. We weren't even asked to put in our highest offer?

I am naïve to the house buying world but it's been playing on my mind since yesterday. Did he ask everyone who saw that house to put in the asking price so a friend could get it cheaper? Why did he not ask us for our top offer? Why does our deposit even matter to them when our MIP is in place? I almost feel like posting an anonymous letter (with a number/email) to the house explaining that we were willing to put in a high offer but never got the chance.

Thanks in advance to anyone who can explain this to me. I don't want to sound ignorant

Hannimal

I am sorry you lost the house and I understand why you feel confused by this. I also felt these questions were invasive as I don't share information about my income and savings with people without a good reason. However, they ask because they need to know this information so that they can best protect their client's interest.

If you were selling a house and you had two offers, one from someone who was reluctant to disclose how much they had for the deposit, another who had 30%, which one would you accept? It's a no-brainer.

When I was house hunting I viewed several properties and none of them even let me view without telling them how much I had in deposit and confirming that I had a MIP. The estate agent has the seller's interest in mind. They want a buyer who is likely to be able to complete the purchase. Especially at a time when so many mortgage applications have fallen through. There was a house I put an offer on, I really wanted that house, but it went to a cash-buyer who made a smaller offer. These things happen, more houses will come along. The odds are they had plenty of offers and they just wanted to accept one that sounded most reliable for them. 

AdrianC

Remember - the EA doesn't decide who buys, the seller does.

So... Put the boot on the other foot... Put yourself in the seller's place.

You've listed the house, it's got a shedload of offers. Who do you choose to buy it?
Do you simply say "Who's going to pay most?"
But that runs the risk of lender downvaluation, doesn't it?
So who's going to be best able to withstand a downvaluation? Somebody with more equity.
Perhaps they looked at a "shortlist" of potential buyers who they felt were most proceedable in the face of a potential downvaluation, then asked them for their best offer...?
Sorry, you missed that cut, because you didn't give the information requested.

You were told that equity was a consideration - yet you refused to give the information. The assumption was made that you were a fairly typical 90% LtV. Not an unreasonable assumption.
In the seller's place, I think I'd simply have crossed you off. Getting huffy and saying "Why do you want to know? I have an AIP. That's all you need to know" marks you as somebody more likely to give hassle over irrelevant details - something that FTBers have gained a reputation for.

Loza2016

I’ve recently been the seller in this situation. 

I had 3 offers plus someone that wanted second viewing before they offered. 
Offer A 5k under they had sstc
offer B 6k over and willing to go higher but hadn’t   seen the house in person. 

Offer C Already sold and living with parents with large deposit. 

And then D who wanted a second viewing with their parents as they were FTB and wanted to put in an offer. 

As the seller I took C and cancelled D second viewing. I could’ve gone to best and final offers but was happy to sell for the asking price to C. If there had been any problems with valuation then I knew she could still afford the property. Thankfully there wasn’t. We sold within 5 days of going on the market. 

moneysavinghero

The EA asked for your deposit information. You did not provide this. So he presumed your deposit was the minimum 10% (until 5% deposits come back). The house went to the person who provided the information asked for.

Unfortunately the sellers are in the driving seat, if they want to know your inside leg measurement and your pets favourite toy then you have to play the game and provide that information otherwise they will just deal with the people that do provide this information. Maybe the seller was not interesting in getting the best price, maybe they were just happy to get asking price but wanted assurance that who ever they chose would have the best chance of making it to completion. 

hazyjo

Not everyone will take it to best and final offers. Pretty decent to just go with their favourite, for whatever reason, rather than who'll pay more.

Bigger deposit trumps FTB for me any day.

Sorry you lost out. Hopefully you'll find something you prefer.

Seashell517

YakJack said:

I am naïve to the house buying world but it's been playing on my mind since yesterday. Did he ask everyone who saw that house to put in the asking price so a friend could get it cheaper? Why did he not ask us for our top offer? Why does our deposit even matter to them when our MIP is in place? I almost feel like posting an anonymous letter (with a number/email) to the house explaining that we were willing to put in a high offer but never got the chance.

When you're selling there's more to consider than just price. Someone might make a really high offer and then when the property is valued the mortgage lender disagrees and the buyer starts asking for a price reduction... Whereas if the seller had gone with a cash buyer there's no mortgage valuation and it's likely the price offered is the end price.

In your case, the 30% deposit means any difference in offer and mortgage valuation is more likely to be absorbed by the buyer instead of them asking for a price reduction, and it's also likely be easier to get the mortgage as lenders view it as less risky. Bit odd that the agent didn't ask your deposit amount, but if he was juggling 15 offers then maybe he heard 'FTB' and just assumed it would be 10%. Too late now though, so move on and find something else.

AdrianC

Loza2016 said:

I’ve recently been the seller in this situation. 

I had 3 offers plus someone that wanted second viewing before they offered. 
Offer A 5k under they had sstc
offer B 6k over and willing to go higher but hadn’t   seen the house in person. 

Offer C Already sold and living with parents with large deposit. 

And then D who wanted a second viewing with their parents as they were FTB and wanted to put in an offer. 

As the seller I took C and cancelled D second viewing. I could’ve gone to best and final offers but was happy to sell for the asking price to C. If there had been any problems with valuation then I knew she could still afford the property. Thankfully there wasn’t. We sold within 5 days of going on the market. 

C is a no-brainer in that situation.

A - you're at the mercy of a chain AND they want to pay less.
B - you're at the mercy of "Oh, no, we don't actually like it after all."
D - you're at the mercy of "Mummy says no"

saajan_12

YakJack said:

Hi everyone,
I'm a first time buyer currently looking for a property. My partner and I found one we loved last Thursday, and viewed it on Friday.

It really was the perfect house for us. The estate agent there recommended that we put in the asking price (which we were happy to do and we were wiling to go £15,000 over the asking price) - did he know that? May have been suggesting at asking as opposed to under asking. 
as he believed it would go to best and final.  He said that they were interested in deposits on mortgages etc, and that it would mean people could sort their finances out over the weekend (felt weird to me). - becoming increasingly common, and might be the vendor's request, especially with SDLT creating urgency. 
I explained that we were in a great position to buy as we had literally just got our mortgage in principle sorted 3 days beforehand. He also mentioned that the house was popular (it was clear to see why) and no other viewings could be booked the day after we saw it.

Fast forward to Monday and we had to contact them. He replied explaining they had "15 offers" and that they were taking all information "regarding deposits etc" to know the "next instruction". It felt very vague to me, and we replied telling him to just let us know whenever he needed our info. - well the info would be x% deposit, DIP for £y, and the 'when' would be now, given the popularity and urgency on viewings surely. You could have just replied with the info, rather than stalling further. 

Halfway through the day my partner called him up and asked him what the situation was. He had somehow assumed we had a 10% deposit? We had more but had given him no information on this, so I grew suspicious. - well if they're in a rush, he may not have time for umpteen back and forth emails, so made a reasonable assumption. Someone with a large deposit would usually advertise that to make their offer more attractive. 
Later in the day he called us back and said the house had gone to someone with a 30% deposit. We weren't even asked to put in our highest offer? - well with 15 offers, they'll likely have plenty to choose from in a bidding war between the top 5 say.. A high offer that gets beaten down by a mortgage undervaluation is meaningless, while 30% deposit guy might be able to stick to their offer. 

I am naïve to the house buying world but it's been playing on my mind since yesterday. Did he ask everyone who saw that house to put in the asking price so a friend could get it cheaper? - no evidence of that
Why did he not ask us for our top offer? - because a high offer may not be the vendor's priority.. eg speed (esp given SDLT deadline) or higher deposit might be worth more to them. 
Why does our deposit even matter to them when our MIP is in place? - because the mortgage may be quicker eg just a desktop valuation for a low LTV, and because the lender might down value, meaning you either
a) increase LTV -> easier at 70% than at 90%
b) lower offer -> ie your high bid was meaningless
I almost feel like posting an anonymous letter (with a number/email) to the house explaining that we were willing to put in a high offer but never got the chance.

Thanks in advance to anyone who can explain this to me. I don't want to sound ignorant

Basically if the property was that popular, then they may get the same result with a bidding war from the best few offers, rather than slowing down the process doing the back & forth with everyone. Also the vendor may have other priorities eg speed or avoiding renegotiation post mortgage valuation. 

Mahsroh

Can only re-iterate what others have said really. When he suggested you go in at asking price, that was his way of saying that there is too much interest to consider going in BELOW asking price. He has no idea you're prepared to go over the asking price unless you tell him. 

For all the reasons outlined above, if an EA asks for you proof that you have a AIP or for funds of deposit, provide it. Just explaining that "we're in a great position" doesn't really help the EA / Vendor. Anyone could say that. 

If you were really keen on the property that conversation with the agent on Friday really was your chance to make him aware that you are the perfect buyer because a. You have a sizeable deposit (and here's the proof) and b. you're FTB therefore not in a chain and c. you love the house that much that even though it's on the market for X, you're prepared to go slightly over and offer Y. 

As a vendor, you'd have been pretty high up on my list with those set of circumstances. But the EA / Vendor didn't know any of this, other than the fact you're a FTB. 

YakJack

Legitimately every reply was helpful here! Thanks to all of you. Lesson learned. Feel a bit better about it now