Our offer was higher but other buyer's deposit was bigger

[MoistExplosion]

That's the reason we lost out on our dream house, according to the EA. We're FTB so assume we're being very naive and missing something here, but it seems strange. Any thoughts, or tips on how we can make ourselves more appealing as buyers? Really disheartened by this process and feel as though we'll never get to own a house we actually want to live in.

We turned down a higher offer once because we didn’t think that the buyers would get a mortgage for that amount (sealed bids went higher than we expected). So a lower cash offer was preferable.

We’ve lost out on offers before and it’s really disheartening. Hope your search goes well and you find somewhere even better than the one you just missed out on. Keep in touch with the EA. We had 2 houses where the vendors came back to us 4-6 weeks after rejecting our offer (once where their agreed chain collapsed and another where they realised they had been holding out for too much)

Sounds a strange reason. Could be that the EA pushed the others as better buyers. Maybe because they are friends. Maybe because they have a better track record. Who knows, but it does sound strange.

I've read plenty about first time buyers getting mortgages pulled at the last minute during covid, as deposits needed went up, interests rates changed etc . A larger deposit wouldn't affect you so much on affordability, and could be seen as less risky

If you have a mortgage in principal for a certain amount i don't see why a larger deposit would help. But can you really trust what they say?

Lenders can be more picky the higher their LTV. And so have more potential to cause complications as the sale progresses. For example, some damp or something shows up in the survey. If the deposit is v low the lender might insist on a retention until the work is done. If the valuation comes back a bit under, they will be less likely to refuse the mortgage if the amount is much less than the deposit. Lenders are all about the risk v their stake.

It’s a few years since I last moved and so maybe things have changed- but how on earth does the EA know your financial position? Remember they don’t act for you as the buyer. In truth they mostly act for themselves. So they may ask these questions, but you absolutely don’t need to tell them. Enough to say your FTB with mortgage approved at bank. If you’re renting or not in a chain you can tell them that. But details of precise deposits, they can piss off!

Yes this is common. We were prioritised by our EA because we only needed a 60% mortgage. I think it’s because less than 70% mortgages are getting approved much faster, so ideally, if possible get your mortgage offer approved

How much is your deposit v theirs and what is the price?

@Apandemicyousay

It’s a few years since I last moved and so maybe things have changed- but how on earth does the EA know your financial position? Remember they don’t act for you as the buyer. In truth they mostly act for themselves. So they may ask these questions, but you absolutely don’t need to tell them. Enough to say your FTB with mortgage approved at bank. If you’re renting or not in a chain you can tell them that. But details of precise deposits, they can piss off!

Sadly you are very out of date.

These days you can’t book a viewing (let alone put in an offer!) unless you have sent your decision in principle and proof of deposit funds to the estate agent.

OP you can't.

Keep looking - someone will prefer you over someone else.

The reason may make sense or it may not.

This happened to me too. Great house, offer accepted. We had a decent deposit from the imminent sale of our house. We had our mortgage in principle in place, no concerns about affordability.

Vendor then dumped us for a buyer with a bigger deposit. This was a few years ago so nothing to do with the covid affecting mortgages.

Thanks for all of your replies. It was a £200k offer with a £30k deposit and DIP of £225k. EA knew we rent on a rolling monthly basis so would be able to go straight away.

Another poster here asking how does the seller know how much money the buyer has as a deposit and how much of it they're borrowing? How do they know that?

We're totally new to all this so when the EA asked we just answered. How cagey should we be in future? Don't want to come across like we've got some to hide or aren't serious buyers.

I brought a house for an allegedly lower offer two years ago on the basis I was most precedable. As a 90% deposit first time buyer and previous sale had fallen through they were just keen to not have the stress

You don't have to answer at all however when you make your offer someone who has a big deposit will mention it to the estate agent. I'm pretty sure mine asked about deposit size (and wanted me to see their stupid mortgage advisor/broker).

When you have a lot of equity in your home, you can be a bit picky.
I went a lower offer because the buyer wasn't in a chain.
My dp took a lower offer as the first time buyers who also offered let slip that they were still looking at other properties.
I think it's gut instinct. Who is going to go through with the sale without messing around which can often cost a lot more than the difference between offers.

I made this choice when selling my flat- there was only £5k difference between the two offers, both FTB but one only had 10% deposit whereas the other had around 30%. I’d heard horror stories from friends about mortgage offers being refused at the 10% mark even after getting the AIP (one ended up with their buyer having to pull out completely). So I went with the (slightly) lower offer.

However, that wasn’t the only factor- my EA advised that the buyer with the higher offer / lower deposit seemed less committed and ‘pickier’ (I.e. likely to ask for money off later down the line or pull out if any minor issues came up). Could this be true in your case, by any chance?

Yes I think we may have come over as more hesitant than we were because it was such a big thing. So they probably felt we might have dropped out which would have been a nightmare for them.

Your estate agent may have received a 'brown envelope' from the prospective purchaser. Put a note in the vendor's door about your offer and position. They may be completely unaware.

I suspect that the EA will ask and expect honest answers.

I think its also to do with worries about down valuations by the mortgage company surveyor. For someone with a bigger deposit it wouldn't matter, as they could just go into a different LTV bracket. For someone with a smaller deposit it means they have to find the extra cash or they don't get their mortgage. With the high levels of down valuations currently, I'd imagine a higher deposit gives more comfort.

It is a bit rubbish though so sympathies. We found an amazing property and got trumped by a cash buyer :(

Tbh I would have gone with the higher deposit, less chance they would have issues with mortgage offer and if valuations come in slightly under they would have more wiggle room.

It's tricky unless you are willing to save a bit more more and get to 20% deposit not 15% which is what you are at now.

I think it's probably due to the unstable situation with mortgage valuations OP. I've just sold my aunt's house and had several offers. I went with one £5k less but they had a 25% deposit which I thought would buffer against any potential reduction in their mortgage offer after the survey.

I'm sorry you lost out OP. If there is anyway you could scrape together more money for the deposit you could still counter offer?

When I was buying some years ago, the agent asked me to prove source of funds so they could see the breakdown of deposit, funds from equity, mortgage in principle. This was to protect the buyer, their client.

Absolutely correctly IMO so that the buyer knows you are serious and have funds available. Don't forget also that a mortgage in principle doesn't always translate to a mortgage offer. We obtained a MiP from our bank only to be turned down when we went to go through the full process.

A largely deposit would make this more unlikely and thus a "better" buyer.