How to handle a best and final offer scenario

chasingfreedom

We have been wanting to buy for a long time. We are finally in the position with a 95% ltv mortgage, have an AIP and deposit ready to go and put in an offer on a property yesterday. The market is ridiculous locally, hardly any properties coming on and then everything gets swamped when it does. There are 3 offers so far including ours plus 1 more potentially. I offered full asking price so as not to lose the property and seems others must have done the same because they now want to go to best and final offers. 

We don't have much spare cash after our deposit and fee's are taken into account and I am worried that if I offer above asking price and it gets down valued we will have a gap we can't fill with spare cash. I would happily for example put another 5k down if i knew the mortgage would cover it. The house is up for 240k, on Zoopla the estimate is 224k-248k. Its had a new kitchen and dining room/kitchen knocked through into one area in the last few years, is decorated to a high standard etc. The fact there were 4 offers in 1 day says people are happy to pay that price. We are currently renting so have no chain and we hope that will help us too. 

Any advice on how best to proceed? Do we go up to maybe 243k, which I know we could cover with cash if the valuation came up short? Or do we assume the mortgage can cover it? We have an AIP for 277k but I guess that makes no difference if they decide the house isn't worth it. Help!!!

princeofpounds

You are already on a very tight budget with a low deposit. If you just assume the mortgage will cover it and you do get a downvaluation then you will have already spent hundreds in fees for a transaction that falls apart. Personally I wouldn't want a loss like that when I was barely patching together the ability to buy in the first place.

As for best and final - just submit your best and final offer. It does not mean everyone offered the asking price; it tends to be used whenever there is real competition for a property, even if the original offers were below asking. 

chasingfreedom

princeofpounds said:

You are already on a very tight budget with a low deposit. If you just assume the mortgage will cover it and you do get a downvaluation then you will have already spent hundreds in fees for a transaction that falls apart. Personally I wouldn't want a loss like that when I was barely patching together the ability to buy in the first place.

As for best and final - just submit your best and final offer. It does not mean everyone offered the asking price; it tends to be used whenever there is real competition for a property, even if the original offers were below asking. 

Yes, I don't want to waste my time and money either. I had assumed everybody was at asking price so that's interesting to know its probably not necessarily the case. Thanks.

steampowered

I would go up a bit if it is a property you want and that is what you need to do to secure the property.
If it is down valued and you cannot fill the gap you can always renegotiate at that point.

chasingfreedom

steampowered said:

I would go up a bit if it is a property you want and that is what you need to do to secure the property.
If it is down valued and you cannot fill the gap you can always renegotiate at that point.

Yes I'm thinking the same now, I just hope somebody doesn't go in with the same thoughts and chuck a silly amount at it. I've been researching and it seems some people purposefully go as high as possible knowing they'll negotiate it again later. 

The_Real_Cheddar_Bob

put it this way, sometimes agents ask you in a number of ways to spend extra money. 

properties are like mushrooms. if no joy, find another one 

ciderboy2009

One other thing - ignore Zoopla price estimates - it's very rare that they bear any resemblance to the actual value of a property.

Ramouth

I wouldn’t offer more than you can cover.  Mortgage valuations rarely come in above asking price regardless of what the property sells for - why would the surveyor take the risk?  

You can’t pretend to be surprised by a surveyor saying the property isn’t worth more than the asking price so I can’t imagine the vendor having much sympathy.  If finances are so tight now might not be the best time to be competing for very popular houses.

chasingfreedom

ciderboy2009 said:

One other thing - ignore Zoopla price estimates - it's very rare that they bear any resemblance to the actual value of a property.

Usually less in real life?

chasingfreedom

Ramouth said:

I wouldn’t offer more than you can cover.  Mortgage valuations rarely come in above asking price regardless of what the property sells for - why would the surveyor take the risk?  

You can’t pretend to be surprised by a surveyor saying the property isn’t worth more than the asking price so I can’t imagine the vendor having much sympathy.  If finances are so tight now might not be the best time to be competing for very popular houses.

Unfortunately all houses in my area are popular, there are so few coming on the market. 10 houses on the market in the last few weeks within our price range (less than 300k) We have a few thousand spare but we are also conscious we have solicitors, moving costs etc to pay on top of our deposit so don't want to overstretch.

Slithery

chasingfreedom said:

ciderboy2009 said:

One other thing - ignore Zoopla price estimates - it's very rare that they bear any resemblance to the actual value of a property.

Usually less in real life?

Could be either way, they're just generally a useless number.