Mortgage agreed in principle

AskAsk

We are selling a flat in London and we got an offer yesterday from a young FTB couple. 

I asked the estate agent if they have a mortgage agreed in principle and he said yes.  I asked him how much deposit are they putting down, he said 200k but it may be less as they may want to keep some of the money back for doing the refurbishment and paying for the lease extension and major works bill.

I asked him how much have they got agreed in principle and he said that is not information that he can disclose.

Is this normal practice for an estate agent?

Reason I am asking is why the secrecy?  Is he bound by some legal or moral code not to disclose the maximum level that has been agreed in principle?

I had sold a house recently in London with another agent in a different area of London and that agent was quite happy to disclose the maximum amount that buyers have attained on their MIP.

teaselMay

Aside from anything else that's expecting to enter a negotiation where you can see all of the other person's cards

AskAsk

teaselMay said:

Aside from anything else that's expecting to enter a negotiation where you can see all of the other person's cards

this is why i ask as i want to see how much they have to play with.  if they have a high MIP and 200k deposit, then they are a safer bet but if they have a very small MIP so that together with the 200k will not be enough to buy the property and they are likely to want to reduce the offer price later on in the process.

the EA is supposed to be working for me as I am the one who is paying his commission and I feel it isn't fair that he is not giving me all the information I need to make a decision on whether or not to accept the offer.

Hoenir

Does it matter what the mix of cash/mortgage is to you ?  The buyer is free to arrange their personal finances as they wish. 

TroubledTarts

Be thankful they have 200k deposit or up to as that should make things more likely to complete.

Just entered the next phase and no you don't have any right to know the finite details or the make up of your buyers funds just the assurity that the solicitors are happy.

AskAsk

TroubledTarts said:

Be thankful they have 200k deposit or up to as that should make things more likely to complete.

Just entered the next phase and no you don't have any right to know the finite details or the make up of your buyers funds just the assurity that the solicitors are happy.

this is my concern.  if you don't know their financial details then you could be wasting time and money accepting an offer that will have a good chance of failing because they haven't got enough of a mortgage and so are relying on the deposit, which won't be enough if the mortgage lender isn't going to lend them enough money.

every time a transaction fail, you would have wasted 2 months at least, if not more and solicitors fees to boot, so I always check on the buyer credentials before I accept an offer to make sure they have buffer and less likely to be offering a bait offer, with the intention of reducing it later on in the process when they know you have less choice.

but it is interesting to hear that you think sellers are not entitled to know the buyers' financial credetials and that is kept a secret.  Maybe it shouldn't be? and there would be less messing around by buyers if the sellers are fully informed of their financial status?

AskAsk

Hoenir said:

Does it matter what the mix of cash/mortgage is to you ?  The buyer is free to arrange their personal finances as they wish. 

yes, the more cash a buyer has, the better chance it will go through as they have more cash to make up the difference when the bank values the property lower than expected, which they can do, or when the survey comes back and there is work to do and so the buyer would have more money to deal with this scenario, else they would need to walk away because they don't have the funds.

Gentoo365

They can't divulge the information unless the buyer wants to share (e.g. as part of the negotiation to show they are able to proceed and have low risk of issue if the lender valuation comes in a bit low).

I would just ask the estate agent whether the buyers have their finances in order and trust the estate agent. Remember the estate agent cares as much as you about this as they only get paid if it completes. 

The fact they have 200k and are considering using less suggests they have some 'buffer' if there are issues. This is a good thing and much better than an FTB maxing out their budget.

Also, frankly, a mortgage in principle just requires someone to ask for a quote and pass some basic checks. It doesn't really prove much. Nor does a buyer saying they have access to more funds. 

AskAsk

Gentoo365 said:

They can't divulge the information unless the buyer wants to share (e.g. as part of the negotiation to show they are able to proceed and have low risk of issue if the lender valuation comes in a bit low).

I would just ask the estate agent whether the buyers have their finances in order and trust the estate agent. Remember the estate agent cares as much as you about this as they only get paid if it completes. 

The fact they have 200k and are considering using less suggests they have some 'buffer' if there are issues. This is a good thing and much better than an FTB maxing out their budget.

i guess you are right but it is frustrating that he doesn't share the information.  i find that EA doesn't always work for the seller and will get duff buyers for you in the hope that you will agree any reduction or the buyer will find a way to fund the purchase.

to them it isn't a big issue as they don't lose any money if the transaction fail, unlike the seller.

A high MIP means that they have a high credit worthiness so it shows how much they can raise.  If someone has a low MIP, then that is all they can raise and no more based on their financial situation.  So it is important to choose someone who has a good ability to raise funds.

TroubledTarts

If you want to be sure of their financial situation instruct your solicitor to do nothing first before confirming your buyers situation with their solicitor before spending any money on anything else.

AskAsk

TroubledTarts said:

If you want to be sure of their financial situation instruct your solicitor to do nothing first before confirming your buyers situation with their solicitor before spending any money on anything else.

that is a good point.  is that possible?  i have never done that before but then the EA that I have dealt with in the past have all been very forthcoming with the buyers' financial details, even sendng me screenshots of their bank statement balance in some instances!