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?

Your EA was being true about Spring being the busiest time for both buyers and sellers.
The Broker stuff is a load of bollocks though.

When we bought our house, we were cash buyers as we had already sold and living in rented. The EA wanted £1000 from us "as a gesture of good will". I asked him what would happen to the money. He said it would be kept by the EA and returned to us on completion of the sale.
I told him no!

No, it's not usual.

I've just bought a house and am currently selling one. Both estate agents I have been involved with offered a mortgage consultation but I just told them my mortgage was being arranged by my IFA. Once I'd had an offer accepted I had to provide a copy of my agreement in principal, ISA statements which is where some of my deposit is, and a signed Gifted Deposit declaration from my parents along with copies of their bank statements.

Can you go to the owners and tell them the EA is obstructing the process.

In principle is more than sufficient.

Bank statements can easily show your deposit. You can easily decline their offer and tell them breezily that it's not compulsory and confirm that they will indeed pass your offer whether you accept their broker or not. The market is very bad for vendors, it has been during the last year and the same house keep on getting reduced but their starting prices were insanely, artificially inflated so they are not really cheap or a bargain now either! Doesn't he know that

EA called back. Thankfully he stopped talk about the in house mortgage brokers.

Vender said no to our offer at 95% asking price. EA said that vendor has got 3 offers before which were at least 25k higher than our offer but unfortunately those buyers have been 'flakey' which explains why the house is still not sold. But that has set the expectations of vendor.

I was hoping to have a counter offer to start the negotiation. We can go up a bit but I feel the vendor is still very vague in term of expectation and not sure raise the price now is a good idea. Plus adding another 25k makes the house a bit expensive... compared to others nearby.

Maybe we should continue with viewing and see what spring brings to market!

What do you think the house is worth compared to other properties in the area?

Offer up to that amount, don't go above.

Good question.

There is another house with same size of bedrooms across the corner priced 75k below this one. Looks a bit more run-down outside but nothing fundamentally wrong with it. That was offer in excess though. Seems like a good price but it also has not sold after +6 months on the market and I wonder why.

Another bigger one with one extra bedroom is asking for 50k more but also been on market for +6 months. Maybe +50k is fair price to pay for one extra bedroom? We can potentially afford it but it is on upper end of our budget.

Also not sure how much I can use those asking prices as benchmarks as those are not sold.

By looking at sold prices I do think the asking price of this house would have been fair if it were a couple of years ago but market seems to have changed (this is SW London after all, price drop was deepest after Brexit) and there are not so many transactions last 6 months. I am not confident to pay 2017-2018 prices....

buyinghouse there's no need for you to pay a price that is too high in your estimation. There will be more houses coming on the market now that Brexit is confirmed and as you say rues for BTletters are changing in April.

The EA might not be entirely truthful about their bei g offers of 25k more, or even if there were, the reasons why they fell through. When the EA agent describes 3 buyers in a row as 'flakey' it probably means the offers didn't exist or if they did there arevotherbissues with the house which led to it falling through. Flakey is a very vague term, designed to make the buyers look bad and not put any onus on the vendor or the property itself. Remember his job is acting for the seller and to get as high as possible and what the EA earns is based on that.

If you want to increase your offer, then fine....but proceed with the offer you want to give and based on market info not what this EA says. Have a clear limit in mind and don't breach it. You might get the property or you might not.

Winkworth?

You could ask the estate agent if he has any other properties that fit your criteria - it would let the vendors know you won't hang around!

Haven't read TFT but if the house is cured rented out have the tenants been given notice to vacate?

Currently not cured

Load of rubbish. We only showed our agreement in principle when offer was agreed.

They are trying to get you to use their mortgage broker as commission will be involved. You don't need their broker so don't need an appointment

I'd be tempted to put a letter through the door explaining your offer and that the agent doesn't want to forward it to them. Explain you have an agreement in principle which they have seen. It's so wrong when they do this.

@TARSCOUT the house is currently rented out and according to the EA the tenant is on rolling contract with 2 months notice. Vendor apparently has not given notice. I think they want to keep the tenant for as long as possible for the income. When I extended the offer I wrote down the term that contract exchange could only happen once tenant moves out and EA did not object.

@WombatChocolate @sunshinesupermum yes indeed I don't feel it is a good decision to pay over the odds. If everything EA said about the offers was true then I can more or less work out the figure the vendor is willing to accept. This will be about 10k more than the max we are willing to pay. So I guess we will carry on looking other properties instead of bothering to up our offer a bit and still get rejected.

If EA has been lying about other offers and vendor was actually willing to sell at a lower price than I inferred, then EA's strategy here is actually costing them a sale.

I think it’s a bit of a nerve, but their reasons are presumably a) to avoid time wasters, and b) they have a cosy shared-commission arrangement with the MB.
When my dd bought her first house, she was asked to do the same with the EA’s in-house mortgage broker.

Being in a hurry to buy, she complied, and he found her what he said was the best deal.
She went home and found exactly the same deal online for quite a bit less in fees.
When she told him, he said he’d match it. Which would indicate that commission was still satisfactory.

I will say, however, that having used both the in house MB and their recommended solicitor (she had no other recommendation) the purchase was wrapped very quickly - offer accepted to completion in 6 weeks - presumably they were all anxious to move it on and get their money.

I’d told her to expect 3 months at least.

We had this tried on us with an estate agent. We had a broker, AIP & proof of deposit. The agent said we had to sit down with their in house broker for an affordablity check before he would put the offer forward. And if we didn't, the vendor would wonder what we have to hide. We then had the imaginary cash offer on the table as a ploy to get us to increase our offer. Turned out we were the only one who offered! Do not trust estate agents one bit and stick to your guns.

You have an agreement in principle so that is good enough. They are legally obliged to put your offer to their clients. The agent gets a commission from the mortgage broker but you are in no way obliged to use them. Perhaps the agent is trying to take advantage of the fact you are unfamiliar with the process here. There is a reason estate agents are considered as trustworthy as used car salesmen!

Sit tight. Tell the EA ''that's ok, actually, I've seen something else cheaper that could work''.

Flakey people may have raised the vendor's expectations, but they haven't had a NON-flakey offer they were prepared to take yet. If it's still on the market in a month, go back in with 5k more.

The other "potential" buyers would have been flakey because of the tenants in the property.

Even if the tenants are given notice that is no guarantee that a Court Order and bailiffs aren't needed to evict them which can take months.

Find another house that doesn't have tenants in it unless you are able to wait up to a year to move in.

This sort of thing happens a lot - "oh but someone else offered more money, they won't accept less". Someone may have offered £25k more, but they didn't follow through, so it's irrelevant really. Currently no-one is offering to buy it for an additional £25k. The seller may hope for that amount but it doesn't mean anything.
Also, as others have said, three flaky buyers - really? More likely that they had one buyer who changed their mind!

They just want the commission. An agreement in profile is sufficient to show you have the funds. They are pulling a fast one.

Do not see their broker. You are under no obligation to do so.

The FCA doesn't look kindly on this. EAs, unfortunately, are not regulated. Brokers are. Perhaps point this out?