Lost out on house due to another bidder having a larger deposit. Why?!

[firsttimemumtobe122]

Lost out on a house today because it came down to the deposit amount each bidder had and they chose the one with the highest deposit. Even though my bid was highest (there probably wasn't that much in it).

Because I am porting my mortgage from my current property my deposit would be quite low. But I've made over £100k in profit from my house sale so could easily offer a much higher deposit, and get a new lower mortgage. I have just decided to port my mortgage due to the fact I have a good rate, and would prefer to avoid spending a couple of thousand in the early repayment fine. I honestly did not know my deposit would be so important, and I still don't understand why. I'm devastated to have lost out, and am blaming myself badly for this deposit hiccup.

I offered 16k over asking and my buyer is chain free. I honestly thought this put me in a really strong position, never once did deposit amounts occur to me!

When I received offers on my house, I never once questioned the bidders deposit. It doesn't matter to me if the buyer has a huge sum they are smacking down as a deposit or are mortgaging themselves up to their eyeballs. As long as I get the price I want I'm happy? Makes no difference!!

Can anyone explain this to me please? So I don't get stumped again when it comes to bidding on the next house.

Then why are sellers and estate agents pricing 15% below? Sounds very very odd and illogical.
To generate interest

Consistently for that particular catchment? That makes little sense. No one ever realised that for this particular catchment houses are priced 15% below value BUT the bank rocks up and values them less? How does this square up and make sense?

I have never heard of people using cash to close the gap between Bank valuation & asking/offer price. The only outcome I'd expect in that scenario is a renegotiation down to Bank valuation price. Which would result is a higher percentage deposit anyway.

It is madness to pay over the odds for a property. You instant put yourself into negative equity...

Did you actually meet the sellers OP? They may have prefaired the other buyers for a number of reasons, not least the deposit amount, which is important. Getting a mortgage is tuff at the moment, the more deposit the better.

Regarding valuations, ultimately the valuation that really matters is how much you as the buyer thinks the place is worth. Valuations by suveryors can be all over the place, and are a matter of opinion by the valuer, in some cases they need to use a best guess when there are a lack of comparables.

If valuations are a matter of opinion for valuers who are qualified professionals then what does that say about the price made up by the seller or the agent?

Ultimately it is not just what a buyer thinks the property is worth. The bank is lending the money and can put a spanner in the works. A cash buyer would be looking for a good deal and paying over the odds is not the usual thing cash buyers are looking for. It is an absolute monstrous thing to do for estate agents and sellers to prey on the emotions of some buyers by forcing them to make nonsensical financial decisions that could spell disaster and stress for them. Karma does exist.

OP once something sounds messy walk away. You will get over this house. You really will.

@Newtomarket I do believe everything happens for a reason, I've learned a good lesson here and I'm sure an even better house will come up for us. Thanks xx

For those who would like an update! We found the most incredible house I've ever seen yesterday, it had previously sold but chain fell through so went back on the market. I hadn't seen it as I had been searching 3-4 beds and this is a a 5 bed at the lower end of our price range. Location is perfect too! We have put an offer in this evening after viewing it and luckily we aren't competing against any other offers, we find out tomorrow 😁 and this time I clearly explained my deposit situation to the EA and they completely understood 🥳 wish us luck, I can't face any more house hunting heartbreak!!

@firsttimemumtobe122

For those who would like an update! We found the most incredible house I've ever seen yesterday, it had previously sold but chain fell through so went back on the market. I hadn't seen it as I had been searching 3-4 beds and this is a a 5 bed at the lower end of our price range. Location is perfect too! We have put an offer in this evening after viewing it and luckily we aren't competing against any other offers, we find out tomorrow 😁 and this time I clearly explained my deposit situation to the EA and they completely understood 🥳 wish us luck, I can't face any more house hunting heartbreak!!

That’s a happy update! Hope you get it :)

I always thought something is worth what the buyer is willing to pay ? Not what someone else thinks it’s worth .

why buyers offer high secure the property and then try to negotiate down to lender's valuation, the bidding is pointless then.
lenders would not give a toss whether your property is undervalued, the bigger the gap(real value vs lender's one) the better for them.
I know for a FACT two properties in my previous block are identical, lenders came back with two very different valuation.

I’m in Scotland and the offer doesn’t include any information about deposit, just the amount offered and proposed entry date.

Is it normal in England, and other parts of the UK, to provide details of how a property purchase is to be funded?

Chumley, willingness to pay does not automatically confer value into something. It may be worth that to the buyer but not to the bank whose money the buyer has the pleasure of using. The asset does not belong to the buyer. That is why an independent valuation is needed.

There are two buyers in the equation- the person wanting to buy the house and the bank who is also buying it (and bears the risk if the person fails to pay).

There would be no “valuations” if, as you seem to think, the worth of a property is solely determined by a buyer’s willingness to pay.

If the buyer is a cask buyer, they can do as they please. No bank is involved. But cash buyers expect a discount and are unlikely to want to pay more. That’s the advantage of being a cash buyer.

More generally, to protect people against themselves, laws are put in place to stop people from being ripped off. This idea of willingness to pay being the bottom line determiner of value can lead to untold abuses of uninformed or emotionally driven decisions.

Munsy7, no two properties are identical. Differences in maintenance and general upkeep can make a huge difference. Even differences in position of the flats can matter.

@firsttimemumtobe122

For those who would like an update! We found the most incredible house I've ever seen yesterday, it had previously sold but chain fell through so went back on the market. I hadn't seen it as I had been searching 3-4 beds and this is a a 5 bed at the lower end of our price range. Location is perfect too! We have put an offer in this evening after viewing it and luckily we aren't competing against any other offers, we find out tomorrow 😁 and this time I clearly explained my deposit situation to the EA and they completely understood 🥳 wish us luck, I can't face any more house hunting heartbreak!!

We got the house, I can't believe it. We were initially looking to get a smallish 3 bed that we would stay in for about 5 years, we dreamt one day of owning a period home with lots of character but we've just secured a 5 bed Victorian end terrace that has been completely renovated by the previous owners, we will live here forever. Everything happens for a reason!!!

Yeahhhhh

@firsttimemumtobe122 Great to hear that!! Congratulations!!!!

That's fantastic OP!!!!

The larger the deposit the less demanding the lenders are.

If your deposit is significant many lenders will just do a desk top valuation. We had an mortgage offer issues in 3 days in August as a consequence where there’s a 4 week + wait for many.

That’s amazing,! What a result :)

@Chumleymouse

I always thought something is worth what the buyer is willing to pay ? Not what someone else thinks it’s worth .

I guess in the case of a mortgaged property the main buyer is the bank. So the house is indeed worth what the buyer, aka the bank are happy to pay.