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Bidding war going ABOVE asking price

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  • Running_Horse
    Running_Horse Posts: 11,807 Forumite
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    NickDurham wrote: »
    I'm genuinely interested to know a way out of this.
    Don't bid on a house you will not be able to proceed with?:confused:
    NickDurham wrote: »
    if I'm really being made to offer too much, then the valuation will be way below my accepted offer and so they'll either HAVE to come back down to a reasonable offer OR I walk away having lost about 400 quid - not nice, but it's a hit I could take without it affecting my ability to buy another house at least.
    I'm guessing that's what used to be called good old-fashioned timewasting; putting in bids you cannot back up in the hope it will all be OK in the end.

    I would be really angry if you did it to me, and have been in your position and walked away from a house we could not afford. It was tough, but had to be done.

    Plus it's really not a good idea to be buying the best house in a not so good area anyway.
    Been away for a while.
  • NickDurham
    NickDurham Posts: 102 Forumite
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    Running_Horse wrote: »
    Don't bid on a house you will not be able to proceed with?:confused:
    I'm guessing that's what used to be called good old-fashioned timewasting; putting in bids you cannot back up in the hope it will all be OK in the end.

    I would be really angry if you did it to me, and have been in your position and walked away from a house we could not afford. It was tough, but had to be done.

    Plus it's really not a good idea to be buying the best house in a not so good area anyway.

    The area isn't bad, just not the best.

    I don't see how I'm timewasting. I can afford the amount I will offer. The question - as is surely the case with almost EVERY house purchase - is whether the bank's valuation matches your offer.
  • jasper12
    jasper12 Posts: 189 Forumite
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    NickDurham wrote: »
    So you think I should refuse and just not offer any more? I'm genuinely interested to know a way out of this, as it seems a way of inflating the offers to a level that they muyst know can't be backed up by a bank's valuation.

    It all depends upon how much you like the house. :o

    Judging from what you've been saying you have seen a LOT of properties in the area so you are probably well placed to know how much it suits you and what the pricing is like for the area.

    Even in todays market, popular properties are still going to over asking price. Just so long as you aware that the vendor may not play ball and reduce the price if the mortgage val comes in lower.. especially when it has gone to sealed bids. But you appear to be aware of this possibility, hence the discussion about not spending too much at first on surveys.

    The problem is is that if someone isn't relying totally on mortgage monies, has got cash, and really wants the property, then they can pay above the valuation. Whether this is to be advised or not is up to them!

    Good luck whatever you decide!
  • SandC
    SandC Posts: 3,929 Forumite
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    NickDurham wrote: »
    I don't get your point. If the valuation comes back at the same price we are offering then fine. If it is lower, then I don't see how the vendors could complain. Neither we nor anyone would be able to get a mortgage to pay more than that.

    I'm guessing that even in the current market, when a property is very popular and a one-off, then there's a chance it will go for more than the asking price.

    But the valuation is never going to come back at the price you are offering - currently £2000 over asking price and potentially £5k over asking price - unless it was priced under the EA valuation for a quick sale.

    A vendor is often likely to put their house up for the highest valuation they have had - they want to get as much as they can for their house - even more so at the moment as people are tending to be a bit in denial about the value of their house compared to 2 years ago.

    So yes, a house even now can go for more than the asking price - but that will always be in a scenario where the lender doesn't take the risk. You might only be borrowing £100k say so the lender won't mind what you pay for it so long as it's valued at £100k + 15% or more for their peace of mind. Their valuation will reflect what they consider the house is worth - what you pay for it is what you consider it's worth.

    I just think it's shady to offer £135k only to take that away after the lender will value it what they are asking for it now. They were never going to value it higher, unless it's under priced.
  • NickDurham
    NickDurham Posts: 102 Forumite
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    SandC wrote: »
    But the valuation is never going to come back at the price you are offering - currently £2000 over asking price and potentially £5k over asking price - unless it was priced under the EA valuation for a quick sale.

    A vendor is often likely to put their house up for the highest valuation they have had - they want to get as much as they can for their house - even more so at the moment as people are tending to be a bit in denial about the value of their house compared to 2 years ago.

    So yes, a house even now can go for more than the asking price - but that will always be in a scenario where the lender doesn't take the risk. You might only be borrowing £100k say so the lender won't mind what you pay for it so long as it's valued at £100k + 15% or more for their peace of mind. Their valuation will reflect what they consider the house is worth - what you pay for it is what you consider it's worth.

    I just think it's shady to offer £135k only to take that away after the lender will value it what they are asking for it now. They were never going to value it higher, unless it's under priced.

    Thanks SandC - believe me I've been running these thoughts through my head for hours. I've just been to the EA to talk this through. They are alltoo aware that the valuation will probably be lower and they have told the vendor this and that he should be prepared to negotiate once the valuation is in. All of which - as I pointed out to them - makes a mockery of continuing to ask for higher bids. They seemed to acknowledge this, but said I should just offer what we would feel OK paying. I can only think that they are doing this so that they are in a better position to negotiate when the valuation comes in - i.e., if the valuation is 8k lower than the offer rather than 4k, they are thinking they could get a higher "middle point" to agree on. It seems to me they should be thinking about likelihood of getting mortgage, security of job, % deposit, etc of us and the other bidders rather than highest bid, given that they and the vendor seem to have accepted that the valuation will be lower. I don't think I can be accused of wasting THEIR time given all this!
  • trumpton
    trumpton Posts: 1,070 Forumite
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    To some buyers it will not matter if the valuation is below what they have offered. If they can make the difference up with a larger deposit they could still buy the house. I would be wary of relying on a low valuation in order to buy. Also, the winning bid does not have to be the highest, it can be the best bidder who is in the best position to proceed. If you don't get this house, there wil be others, I'm sure, but good luck anyway.
  • NickDurham
    NickDurham Posts: 102 Forumite
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    trumpton wrote: »
    To some buyers it will not matter if the valuation is below what they have offered. If they can make the difference up with a larger deposit they could still buy the house. I would be wary of relying on a low valuation in order to buy. Also, the winning bid does not have to be the highest, it can be the best bidder who is in the best position to proceed. If you don't get this house, there wil be others, I'm sure, but good luck anyway.

    That's the problem: we are both, apparently, in exactly the same position in terms of ability to proceed. If the others can make up the difference, then so be it, let them have the house. As for relying on the valuation, well, given the way things are and the way EAs value property, I'd say the bank is the best (conservative) guideline for what a house is worth. As someone said earlier, they're not going to give me more than they think the house is actually worth.
  • wondergroove
    wondergroove Posts: 18 Forumite
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    This is EXACTLY what happened to us and I feel for you. We went ahead and purchased our house. It was a repo but had loads of potential. It had been on the market for a year and a silly price and they gradually reduced over time. The EA advised our offer was decent but were waiting on the bank to agree, they refused. We upped our offer by a few grand, the EA knew we wanted this place and then said they have received another offer above ours, we upped ours again so did they by £500 above what we had offered, how would they know to offer £500 more. Wwe were then told they needed a final offer by 1pm the next day. We again upped our offer at about 12.45pm, the EA advised they had not heard back from the other bidder?? I cannot be 100% sure that there was not another bidder but we still think we have got a good deal. We ended up getting the property for £70k less from what it was up for this time last year. I know in someways if there was not someone else bidding we probably could have got the place for a couple of grand less, I will never know.... Out of interest who are the EA, just wondering if its a general ploy or one adopted by particular agents. We went through Haart and they were appalling...Good luck!
  • NickDurham
    NickDurham Posts: 102 Forumite
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    wondergroove wrote: »
    This is EXACTLY what happened to us and I feel for you. We went ahead and purchased our house. It was a repo but had loads of potential. It had been on the market for a year and a silly price and they gradually reduced over time. The EA advised our offer was decent but were waiting on the bank to agree, they refused. We upped our offer by a few grand, the EA knew we wanted this place and then said they have received another offer above ours, we upped ours again so did they by £500 above what we had offered, how would they know to offer £500 more. Wwe were then told they needed a final offer by 1pm the next day. We again upped our offer at about 12.45pm, the EA advised they had not heard back from the other bidder?? I cannot be 100% sure that there was not another bidder but we still think we have got a good deal. We ended up getting the property for £70k less from what it was up for this time last year. I know in someways if there was not someone else bidding we probably could have got the place for a couple of grand less, I will never know.... Out of interest who are the EA, just wondering if its a general ploy or one adopted by particular agents. We went through Haart and they were appalling...Good luck!

    Robinson - up in the North East. Going to put the bid in in an hour. Given that they and the vendor KNOW all bids above what is currently on the table are NOT going to be viable after the valuation, we're going to go in high. It seems utterly ludicrous given that all parties are fully aware these offers are NOT going to end up being the agree price. But if that's the way the EA wants to play it... :confused:
  • Pssst
    Pssst Posts: 4,803 Forumite
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    In all my dealings with EAs i have rarely felt that they were acting in a professional and honest manner. They are not to be trusted.

    I'd rig for silent running and let them contact you. If it goes,it goes. There will be others.
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