FTB Overasking Offers Rejected

fem_engineer88

Hello, 
I am looking at buying a property in South Wales, my search area is pretty wide so I am flexible on locations etc. I am a FTB with a decent deposit, AiP in place, solicitors in place, surveyor as well. Everything ready to go.
I have been putting in offers at or above asking price (up to £15k over) for a number of houses and all of them are being rejected, none of my offers were over my AiP or affordability limit so it shouldn't be a real issue. 
I know there are a lot of changes happening right now in the housing market, should I just hold off looking for the time being because of how crazy it is atm?
Is there something I could be doing better to make myself more attractive as a buyer to the sellers?

Gavin83

Are you losing out because others are offering more than you?

When you say you've got a decent deposit what percentage are we talking? Can you afford to pay £15k to the seller out of your own pocket? If I was selling I'd be extremely cautious of an over asking price offer from a FTB as when the lender inevitably downvalues it to the original selling price I expect the majority would find it hard to make up the shortfall. Assuming you can make up the difference maybe letting them know you'd be prepared to do so and showing evidence you can would make you a better proposition.

As for holding off, it's a question no one can answer. House prices might drop or you could find they're 10% more expensive in a years time. It's a guessing game. 

propertyhunter

I wouldn't hold off looking - just persevere. People will say this is the top of the market, others won't. Forget timing - find a house you like and you can afford today, with the aim to live there for 5 years. 

To make yourself more attractive, when putting your offer in highlight your LTV (higher deposit the better, as it means you're less likely to be subject to a 'down valuation' by the lender). Enclose details of your solicitor and your mortgage advisor, saying that you are good to go and have a mortgage product ready for the house you are buying. Even cc them into the email. Most importantly, highlight your lack of chain - and that you can move quickly if necessary. As you have no chain, you make them an attractive buyer for their onward purchase (if they have one). 

fem_engineer88

That's the weird thing, one offer was less than mine but a cash buyer, another was rejected because of my FTB buying position. The feedback is mixed. I understand a house going to a higher offer but when the rejection is not on that basis, I want to know how to make myself more attractive as a buyer. 
I have 10% on £155k max borrowing at the moment for me. I am limited on how much I could pay out of my own pocket if the house was down valued circa £5k.
I have been looking at surrounding properties and their prices are comparable to the state of what I am putting offers on and their valuations, generally the houses are on streets where they would go for what I am offering & more rather than less. 

K_S

@fem_engineer88 It sounds like you are doing all the right things, but you could still be getting outbid.

Based on my experience, this is a typical email (for the avoidance of doubt, it's a generic template, so not tailored to your post) that I send to my FTB clients with mainstream lender DIPs about making qualified offers, perhaps it might help you as well. Good luck!

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If your experience is anything like my other clients who are currently trying to buy in <area>, it is important that when you make an offer, it is fully qualified right from the outset. Ideally, it should highlight/include the following –

1. Making an offer over email so the EA (Estate Agent) cannot ignore it or avoid passing it on to the vendor.
2. Attach the <mainstream lender name> Decision In Principle (DIP) which indicates that you can borrow what you need (balanced with the con that this lets the EA know your max borrowing). Alternatively, I am happy to drop an email to the Estate Agent confirming that you are good to go on the mortgage part.
3. Attach proof of deposit: In your case that’ll be a good copy of the statements showing cash deposit. (you can leave this out if you’re not comfortable sharing but the EA will most likely ask to see it).
   
4. Confirmation that you have a named solicitor/conveyancer on standby (you don’t need to instruct one at this point).
5. Highlight any positives: That you are renting and chain-free, that is a big plus, especially if the property is vacant.
6. Confirm that you have a mortgage broker on standby and once an offer is accepted, an application will be submitted asap.
7. Keep an eye out for chain-free properties where your chain-free status holds additional value.

I know that some of the above is information that a lot of people don’t like to share or feel that the EA shouldn’t be asking for. And that feeling is absolutely valid. Unfortunately, in many parts of the country it’s a seller’s market right now due to the lack of supply, especially for houses and properties with good outdoor space. Even if your initial offer isn’t accepted, a lot of these transactions fall through very early (mostly buyers who don’t have a realistic idea of their borrowing options) and the EA goes back into the failed bidders list to see who was actually qualified and can proceed quickly. So you want to be in that list to maximise your chances of the bid being reconsidered at some point.

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propertyhunter

I don't understand prejudice against FTBs - we were all one at some point.

Try and stay positive. I would reiterate the fact that you can substantiate your offer and will make up the difference of any down val. My mortgage advisor actually sent an email to me confirming my position and I attached that to the offer email I sent to the EA. It shows you are proactive and clued up.  

SusieT

Perhaps not say that you are a FTB since some people will jeject an offer (e.g. FTB are sometimes asking for things that are required for rentingm but not required when a property is owned), and instead say that you are a chain free buyer, currently living ib a rental, or with frirnds, mum and dad. Then say you have a good deposit, and DIP for the mortgage. That may sound more attractive to some sellers. 

newsgroupmonkey_

fem_engineer88 said:

That's the weird thing, one offer was less than mine but a cash buyer, another was rejected because of my FTB buying position. The feedback is mixed. I understand a house going to a higher offer but when the rejection is not on that basis, I want to know how to make myself more attractive as a buyer. 
I have 10% on £155k max borrowing at the moment for me. I am limited on how much I could pay out of my own pocket if the house was down valued circa £5k.
I have been looking at surrounding properties and their prices are comparable to the state of what I am putting offers on and their valuations, generally the houses are on streets where they would go for what I am offering & more rather than less. 

You didn't answer the question directly that the above poster mentioned about being able to find the £15k, but you have indirectly above.

Consider this.

I'm selling my house for £150k, which is what the Estate Agent roughly reckons it's worth (they're not valuers, but they have a good idea).
A load of people get into a bidding war and eventually it goes up to £165k. That's from a FTB, but a cash buyer offers £160k.

I'm going to take the cash buyer every day of the week I'm afraid. There's a high chance that a bank's surveyor is going to value the place at £150k. The cash buyer doesn't care, but the FTB isn't likely to have £15k to throw at it.

Similarly, we're buying a place for £350k. We're porting £200k of mortgage at a 90% LTV rate, so even if it gets downvalued to £250k, it makes no difference.

Thrugelmir

fem_engineer88 said:

I have been putting in offers at or above asking price (up to £15k over) for a number of houses and all of them are being rejected, none of my offers were over my AiP or affordability limit so it shouldn't be a real issue. 

You are conflating two very different things. Affordability is not the point at issue. The bank is unlikely to agree with your valuation of the property. It's their money you are spending not yours. From the bank's perspective the property has to provide adequate security for the monies being advanced. In this regard they'll be considering a range of factors. Not least what may lie ahead for the broader economy. 

[Deleted User]

Putting in offers over asking just means that you will have a problem when the bank values it below your offer.

You can't win against cash and buy to let/big deposits.

nyermen

South Wales has been in the news for silly rental demands, I suspect you may be getting hit by BTL etc.

Also as others have said - bidding over is a double wammy, if I bid for a house worth 150k at 150k with a 30k deposit, my LTV is   80% (I think?  I'm tired today ).  If I bid 165k, the house is still worth 150k in the eyes of the bank, but my deposit pays the extra, so is now 15k - ie. 10% LTV.