Putting in an offer on a house. EA asked us to 'financially qualify' with their appointed mortgage broker?

[buyinghouse]

So we are looking to buy in SW London. Viewed a house yesterday that we liked and called EA this morning to put in an offer for 95% of asking price.

The agent immediately started to pitch that as first step we should talk to a specific mortgage broker to get ourselves 'financially qualified' before he could proceed passing on the offer to the vendor.

I asked if that is their standard practice and if the said mortgage broker works for the same firm. He said the broker is independent but they just have a very good working relationship.

I said I have got an agreement in principle with one high street lender with a decent deposit (>20%). Wouldn't that be enough proof that I am financially capable to proceed with the offer? He said agreement in principle is not sufficient. I would either need a decision in principle, which he does not recommend for various reasons, or go through this mortgage broker.

(I did google decision in principle later and it seems to be the same thing as agreement in principle!)

I found it a bit fishy so decided to put my offer in email anyway and insisted that he passes it on to the vendor. He replied that he would but said I need to be ready to up it by another 20k to stand a chance.

We have bought and sold houses in our home country in Europe but this is first time we do it in UK.

Is this tactic common? I am not sure if there are indeed many buyers who do not have their financial in place and EAs are weary of them, or they just assumed that we do not look like the kind of couple that can afford a house in SW London? Or am I over-thinking it?

He might be on commission. I would contact the lender you found and tell them youd like to put an offer in and can they agree it in writing for you. Do not agree to paying 20k extra. His job is to put your offer forward, nothing more.

Where I live you have to prove you have the funds when the offer is accepted.

That sounds a bit dodgy to me. When we were buying a couple of years ago, EAs did all want to see a mortgage decision in principle, but i doubt they can insist you use their broker. I think they are obliged to pass all offers on to the vendor regardless though?

Yes I totally understand the requirement to show the proof that I could afford the offer. I got the decision in principle online and attached it to the offer email.

I am a bit confused that EA was pushing so hard for me to use the specific mortgage broker though - he spent most time of the call explaining why that is a fantastic idea for me!

Do they get paid if I use this broker or some other kind of benefit?

I doubt very much that you need to see an in-house broker tbh, the EA should put your offer forward anyway. The vendors may want proof of your ability to buy but as you said, I don't think the in-house financial adviser is necessary. Going from what I've read on here though, it is a common tactic so I wouldn't take it personally!

Standard practice. All they do is check you have the funds. Nothing untoward

@HappyHammy what do you mean by he might be on commission? Does it mean if he could up the offer by 20k he gets paid significantly more? I was under the impression that their fee is a fixed percentage of sold price so a bit extra does not matter a lot for them at the end (except for the increased chance of vendor accepting offer obviously)

Also during the viewing I asked if there has been offers he said 'almost, but it fell through' but today he said the vendor has rejected an offer higher than mine. Not sure what to believe (or believe nothing!)

I won't do this. I'm happy to provide proof of deposit and a copy of the decision in principle but I'm not sharing my financial details unless I want too.

When you look for a mortgage you go for the best deal and shop around, I wouldnt use one just because an ea knows them. You dont need proof unless the offer is accepted anyway.

I would be tempted to put a note through the door of the property

It’s standard these days for EAs to make enquiries about how you will finance the purchase and they will prefer to see that you have at least a mortgage in principle, to save wasted time on a purchase that will ultimately fall through due to lack of financing. If you already have that in place and can show it then there is no obligation for you to meet with their financial advisor.and whatever they say about being independent someone will almost certainly be on a kickback somewhere.

You are under no obligation to use the in-house broker - they just want to earn commission on both the house sale and on your mortgage! It sounds like the typical behaviour of an EA driven by targets. The markets are so slow at the moment that EAs are desperate! Just put the offer in writing with your proof of funds and he will be obliged to pass it on. Don't increase your offer until yours is declined and don't believe anything EA tells you! If you do need to increase your offer only increase it by a small amount you feel comfortable with. Some sellers will always reject your first offer just to see how much you will come back with next time. Stand your ground and hope for the best but be prepared to walk away. With the current shortage of buyers you should get a good deal.

Use your own, they will be tied agents and not independent. Always use an ifa, they will find the best deal for you

It's codswallop to twist your arm to agreeing to an appointment in which you'll be expected to hand over all.your private financial info and then they will hard sell you one of thier mortgages.
EA probably gets a referral or commission.
You have a mortgage in principal and the supporting written confirmation and if it's well within date there is no need for anything else.
Ask EA to pit your offer forward and offer your MIP confirmation. If they say you need to ser this broker ask for written legislation saying so.

It is standard for the estate agents to ask for proof that you can afford the amount you have offered, so you could be asked to show proof you have the deposit (such as from a bank statement) and a copy of the decision in principle you have from the mortgage company (agreement in principle and decision in principle are the same thing - it is the document from the lender saying they will lend you that amount).

What they cannot do is insist that you use the broker they recommend and that should not impact your offer at all. If it does then they are on very thin ground and there are very strict rules around referrals and bribery (which referrals can fall under).

If you did not have a mortgage broker they could recommend one (like an agent may recommend a conveyancer/solicitor if you do not have one) but they cannot force you to use them or say your offer being accepted is at risk if you do not.

Most estate agents work on a percentage commission, so they get a percentage of the sale price. If they are pushing you to the broker then they may be getting a referral fee from the broker (i.e. the broker gives them money for the referral). I am not sure if it is the same with a mortgage broker, but from a solicitor side, the estate agents have to tell people if they get a referral fee. It could be he is saying you may need to up it by £20k as if you do not use the broker and he loses out on his share of the referral fee then he wants you to up the price so he can get it back out of the sale commission so he doesn't lose out.

He is obliged to put your offer forward, you are entitled to use any broker you like (including direct with the bank) and unless he comes back and says that the seller will not accept the offer then do not up your offer (and only then if you want to).

I have never needed to do that. It's also a good way for the EA to find out how high an offer he might be able to wring out of you.

Thanks for the comments!

Good recommendation to not trust what they say. They have given so much misleading information so far in the short time I dealt with them. (e.g. giving me impression that it is obligatory to use their in-house advisor) and conflicting statements (vendor rejected offer at X, vendor almost got an offer, etc)

This feels frustrating... I just want to buy a house at a fair price and have a straightforward transaction! It was a lot easier in another country where I owned property before...

Oh, and obviously EA said with spring coming there will be loads of buyers and interest level on this house will be HUGE! (House was on market since Oct with 1 price reduction before Xmas, like many others in the area)

By the way, do you think we will see more BTL properties for sale before capital gain tax change in April this year? This house is currently rented out and not sure if the vendor would like to sell in time to avoid new tax bills..

Have you looked at any other houses, we here on mn love a good house search if you give us your budget and preferred area. Do you want a btl house with a sitting tenant?

I am a bit confused that EA was pushing so hard for me to use the specific mortgage broker though

That is how they make most of their money (the individual staff in shitty, sales driven EAs, that is). As PPs have said- avoid a broker recommended by these cowboys like the plague.

It is unlawful for them to refuse to pass on your offer. Ask if they have passed it on; if they say no, put the offer in writing and give them 24 hours to do so, if they still don't get in touch with the TPOS and pop a note through the vendor's door.

www.gov.uk/buy-sell-your-home/estate-agents

Foxtons?

As others say, proving you have funds/mortgage in principle is usual, but this normally happens after an offer is accepted. The EA should not refuse to forward an offer until they have this info.

Of course, if you can easily photocopy a bank statement to show deposit money (or several if the money will be pulled in from various locations) plus something in writing about. Mortgage at the same time as making an offer it will only strengthen your case.

I don't think you should worry about the offering of an extra £20k if you don't want to, but you do want to display the offer you are making in the best possible light - so others might offer the same amount - you probably can't beat a cash buyer who isn't needing to sell, but by providing paperwork upfront you can be in the strongest position you can put yourself. Therefore, supply whatever you already have.

I would refuse to see their appointed person. Somewhere along the line, there will be benefits for the EA and its best not to use the solicitor or financial adviser they recommend but have entirely neutral people.

If this falls through, before you make another offer elsewhere, get all your paperwork and something from the mortgage co in writing. That way you can provide the EA with everything to strengthen your position and they won't be able to make a case for you seeingi their advisor.

I was going to say Foxtons too! Remember, their job is to act for the seller - they don’t have your best interests at heart.

I’m guessing you’re not British and they are trying to exploit your supposed naivety by bullshitting you. Ignore them.

Thanks all for the replies again!

feesh - indeed we are not British. But it does not mean we are stupid with this process. I do have a feeling that they are trying to take advantage of it.

It isn't Foxtons but a local one in the area. I am afraid it would be too outing to name the firm. (Don't think they would have got multiple offers this morning)

We are not looking for BTLs - we are looking for a home to live in ourselves. It just happened that this house we offered on has tenant in situ but they seem to be nice and aware that the house is for sale when we viewed. For same reason I cannot send a note via the door as vendor does not live there.

Happy to take some suggestions on house hunting! We are looking for:

• 3-4 beds, house or flat
• Max 850k, maybe stretch a bit but really don't want to
• DH drives to Chertsey for work hence SW London
• I work in the center so preferably easy to get to Waterloo via train and walking distance to a station. We are also looking at tube stations in the south that isn't too far to drive to Chertsey (South Wimbledon or Colliers Wood for example)
• Need to be in catchment/ close enough to a decent state primary school. I have seen some properties in areas presumably good for schools (e.g. Kingston) but the actual property won't be close enough so that would be a no go.
• We don't really care about garden (2 jobs and kid leaves no time for the leisure) hence flats work fine too but we do worry a bit about resell value if we buy a flat.
• Preferably walking distance to restaurants/ cafe/ supermarkets as we are not really into the quiet suburbs. We can bear some noise/ smaller space for that sake.

I remember having our arms twisted to do exactly the same by a SW London estate agent. We were naive first time buyers so said yes. The in-house broker then tried to flog is all manner of life insurance/critical illness policies to the tune of £350 per MONTH. And that was ten years ago

When we put an offer in it was passed to the vendor right away and they accepted. Then we had to provide our AIP certificate and proof of deposit, along with photocopies of our passports (and my visa) for the estate agent to make the online listings say SSTC.

They did try to get us to take out a mortgage with them, but we have a great broker who had already done the work of finding a mortgage that worked with our situation.