Help. Think we've offered too much for a house. Should we gazunder?

[RobinsonOnTheA24]

Clueless first time buyers here. Been looking for a house for a while, not finding much on the market, but found one that we liked last week which seemed to be a good price, viewed it on Saturday and we offered the asking price (£280k) straight away. Agent called Sat afternoon and said the buyers were very pleased and had provisionally accepted. Another buyer had made a matching offer but as they were in a chain and we weren't the vendors were inclined to go with us. However, as they hadn't had feedback from all the viewings they would call to confirm on Monday (today).

Got a call from the agent this morning to say that someone else had made an offer over the asking price, so they were now asking for our best and final offers. Spoke to them again this afternoon and they said that a third buyer had offered cash over the asking price and had "come in strong" (whatever that means). So after a brief conversation over the phone with dp we offered £286k, based on the fact that this is the absolute maximum we are likely to be able to pull together, including help from family and friends, but leaving no money to do any work on the house

Agent called back about an hour later to say they had accepted our offer, and now I'm panicking, thinking that perhaps it was completely crazy to offer £6k over asking, and also feeling depressed that we won't be able to do the work we had wanted to do on it.

It may all be taken out of our hands when we hear back from our mortgage advisor anyway, but if not, wwyd?

Am v embarrassed to be telling this tale of ineptitude, but would be very grateful for any advice.

Sorry, I'm making it far too complicated, all I mean is that how much cash you can keep in hand is going to depend a lot more on your deposit % than the final house price.

Interesting about the cash buyer; generally if a vendor likes the idea of a cash buyer they bite their arm off and dump everyone else because it's quicker and less hassle than selling to someone getting a mortgage (especially these days). The fact that they haven't, and gave you the "opportunity" to match the cash offer, whatever we think of that, does suggest that they actually want to sell to you, which is hopeful.

Anyway, hope you hear some helpful news today.

Thanks very much all of you for all that advice. I feel a bit clearer about it. I was afraid I might get a hundred responses saying "phantom cash buyer is the oldest trick in the book/you've been mugged" etc etc

SomethingSuitablyWitty I also think you could add the extra cash you were planning on retaining to your desposit and take a somewhat larger mortgage overall to cover extra costs and the work in the kitchen.

Do check in advance that your bank will do that, OP. We weren't allowed to borrow over what we needed to meet the price of the house, I think it's less common now because of stagnating prices.

If you really really want the house, the offer made is the correct offer. However, if you are ambivalent, you might be better waiting for another house. If so - you need to pull out soon.

Also, in future remember that you don't have to succumb to estate agent pressure. You just have to use the line "I need to discuss this with my DP with the benefit of our calculations in front of me. I will call you tomorrow." If they then say that an answer is needed immediately, they are talking crap (because if you come in with a higher offer the following day, the sellers are still going to accept it.

One thing I would also say - if the estate agent ever suggests sealed bids I would run like the wind.

Madbuslady, thanks for that, yes I see what you mean. I don't know what to make of the mystery cash buyer. It wasn't an opportunity to match his offer - it was best and final offers, so I have no idea what the cash buyer was offering, or whether they even exist. Estate agent just said he had "come in strong" .

Did you ask what they had offered?

Oh they might still be lying shits . Whether or not you want to call their bluff is a judgement call, based on how happy you are otherwise with the deal, affordability, fair price, ideal house etc (and I observe you're not 100% happy).

If it was my dream home and I could easily afford it, I wouldn't give a toss about some snotty little estate agent's negotiation-fu. On the other hand, I have called an agent's bluff before because I wouldn't have been broken-hearted if I'd lost the house, and was right. Mind you, that was a very slow market and when he said "I could get three more buyers in there next week" I just laughed and he joined in!

Of course part of the problem is having to do all this with only a decision in principle in front of us, rather than a solid mortgage deal, so we don't truly know how much we can afford yet. Which makes me think that it wouldn't be unreasonable to reduce our offer if necessary once we've got news back from the broker (although risky of course).

Yes thanks for that madbuslady - I didn't want to put the OP wrong and while I was able to do this (and indeed had to do it), I am not in the UK and the system may vary a bit in different EU countries.

Well, we have been in the exact position of your vendor, and the cash buyer really did exist and really did make the best final offer (and we sold to them, sorry ) so it isn't unheard of.

it's difficult. i can't honestly say it's our dream house, because we are already having to move away from an area where we ideally would like to stay because of prices. And also because of prices it's not as big as we would like in the long term. But for 5 or 6 years it could be pretty good. And when we were viewing dd stood in the garden and, with all the romantic zeal of an almost 7 year old, said "it would be a dream come true to live here" which has swayed us somewhat.

I'm sort of reassured to think that the estate agents might not have been lying

I haven't much trust in EAs either, having been spun many a tale of other keen buyers jostling to get in, who mysteriously failed to materialise, even when we took several days to arrive at an offer. Ignore as far as humanly possible: hard of course when they are your only source of information on a house you really want.

Sorry OP - didn't want to drag you down again! it's just impossible to know!

at your 6 yo. That's not what you need, is it!

thanks tawse - I do like a direct answer. In retrospect an offer under asking might have been a good idea, but I can assure you it's not a buyers market in the particular area/price range we are looking at. 3 beds moving very fast here (think it's to do with the surge in the birth rate or something).

You don't know what her market is like, tawse, "the UK" isn't one big housing market. I am taking as read what the OP said about the market where they're looking - ie few houses go on sale, and a previous close to the asking price offer of theirs was turned down.

tawse. Wow what an unnecessarily nasty and ignorant post!

I sold mine in this market and did very well indeed with lots of buyers all trying to buy it. I got more than was expected. Not everywhere is the same.

What matters is demand in one area, not an overall of the whole of the UK. Now THAT'S stupid!

tawse given that OP has said that the asking price was on the low side and that you have no clue where this property is, that's a ludicrous post.

OP - I've lost out three times on sealed bids when I've gone over asking each time. One went for 10% over asking price. Supply / demand.

Actually for a three bed property (assuming it has no obvious issues) you are sensible to offer the asking price. Three beds are still the houses that estate agents can shift, and tend to get quite a lot of viewers and offers made.

My DH and I offered over the asking price for our three bed 6 months after the markets collapsed. We did that to ensure (1) anyone who went over our price would have to pay lots more in stamp tax and (2) because nice three beds that we could just move into without major works were not often on offer and would always go incredibly quickly. We also went from viewing to offer within 15 minutes.

You will have an idea of your local market OP, and if you want this house, you need to offer accordingly.

3 bedroom properties are selling very fast around here. Often before prospective purchaser can view them

I didn't see tawse's post, but I agree that there is huge geographical variation in housing markets. Last month a semi-derelict six bed detached on my street came on the market. It had been split into flats and needs loads of work. A friend tried to see it but the EA knocked her back - they had so much interest that within days they were in a bidding war which culminated in a sale price way, way above the original asking price, which was £1m

Anyway, OP, my sympathies as buying a house is hugely stressful and you do sound stressed . I would forget all about feeling bamboozled and worrying about whether you're being scammed - not that that isn't possible, but there's no evidence of it, is there? Just concentrate on whether you want this house, and whether you can afford it. An extra £6k will not make much of a difference over the lifetime of the mortgage, provided you're not already stretched to your limits.

A word of warning about that kitchen, though. I allowed £20k in my mortgage to cover the costs of doing up our ugly, shabby house. By the time we moved in, that pot had shrunk to £10k. The difference was swallowed up by lots of unanticipated costs - extra searches etc. Buying and moving is hugely expensive and really knocks you back financially. Two years on, with everything costing more and my pay frozen three years running, I'm just relieved that we ended up buying one of the cheaper houses we viewed.

It's scary stuff, and if you're not in the position of being able to easily afford your dream house (like 99% of us) you will be forced to part with crazy sums of cash in exchange for some inevitable compromises. Only you can know whether you're likely to come up with a better deal than this current house in your local market. Best of luck whatever you decide to do.