House Sale Fallen Through

[FortonServices]

Thought we'd sold the house. Had started looking at onward purchase. Saw something we liked last Saturday.

Heard yesterday that despite having an AIP, the buyers lender won't allow them to borrow as much as the AIP said, so they can't fund the purchase ☹️. This is due to interest rates going up and affordablity tests.

Oh no sorry to hear this :( was there any other offers?
I know it’s hard to see past the negative aspects but hopefully you’ll get it on the market quickly again!
how much are they down by? X

How frustrating, but do try not too worry too much. There are numerous buyers out there, and according to the agent who has just shown me round a house this afternoon, most of them are cash.

I was ‘allowed’ to view the house. One of 6 out of the 30 who applied for viewings and I was told an offer would be required by Monday.

I genuinly don't think selling is an issue at all a.t.m. Finding something, being allowed to view it and having an offer accepted, is the big stumbling block.

i have now made four offers on properties in the last month and all went at least £50k over asking and at least £100k over what I thought they were worth.

We had 12 viewings booked in for an open day. 5 cancelled or didn't show. We had 2 offers but the highest one was complicated (divorcing and it seemed messy financially), so we went with the 2nd highest. A first time buyer couple.

They're down by 12%. The lender has also valued our house at less than the offer.

I do feel a bit bad not negotiating with them but we need full price to pay for the onward purchase.

Another open day it is!

I think maybe it's a bad time to be offering if you're maxing yourself out, based on an AIP. It sounds like lenders are now taking into account the rises in the cost of living and interest rates. I think for the next round, we will look at the buyer's position more carefully and check that they aren't overstretching.

@hannahcolobus

Yes, I've read about it on the news but wasn't aware it was having an impact yet.

I suppose we this to go through too. We have an AIP but we also have a large deposit (about 50%).

How are you supposed to know that?
Our AIP from a mortgage broker (which estate agents don't want) states a range.
Our AIP from the bank (which is the only one estate agents want to see) states that we're approved for the exact figure that we requested. You'd have no way of knowing whether it's at the top of our budget, or otherwise.

In actual fact we're being very conservative, and can more than afford the amount we requested a bank AIP from. But you'd have no way of knowing, all it would say was 'buyers approved for X', you'd look at X and go 'oh no that's too close, goodbye'.

Should we getting a very large AIP just to show that we can? Doesn't that look even stranger?

Also @FortonServices this thread is serendipitous! I see @hannahcolobus has said the same just, read after I posted.
Sorry for your sale falling through (can assure you it's just as stressful for the buyer), but I always thought the AIP should reflect my budget, not how much I could actually borrow.
I was a bit worried that vendors would think something was wrong if our AIP was too high. Maybe they'd think we wouldn't actually be approved (and hence why asking for a cheapr house), or try and negotiate upwards once they saw how much we could actually afford (although we could just say no).

Off to make it a bit higher...

Wait a minute.. would you then require payslips if the AIP isn't an indicator of anything?

When we made an offer recently, we had to have an appointment with their financial advisor to discuss our finances before our offer was accepted. This was with an AIP in place.

@DomPerignon12

I don't know the answers to your questions. It was something the agent said earlier.

One option is possibly to only accept offers from those with 20% plus deposits. As lenders will be less strict with them perhaps?

I'll speak to the agent on Monday and report back.

@hannahcolobus interesting, thanks!
What do they mean by '100% solid'?
If they were only going for 2x salary/large deposit that to me would be 100% solid.
3.5 - 4 x salary is generally 'standard', so I would consider that very likely to be approved barring adverse credit scores or similar issues. Still not 100% solid though. People with committed spends like childcare, or 'risky' jobs, or a lot of income from overtime might be getting rejected with 4x when they'd previously been accepted.

What I've heard is not necessarily mortgage rejections, but down valuations. Banks are no longer willing to lend for stupid prices, so buyers have to make up the difference. No room in deposit, so the sale falls through.

That's interesting. We re going to be going through the buying process too, once our is SSTC. It might be worth making sure we've got all our paperwork together. Assuming they wanted pay slips, proof of deposit etc?

@FortonServices i guess it just depends on the vendor, but thanks for your info.
Obviously as a buyer with less than that it would be a bit sad being rejected by vendors, but as a vendor I'd just want my sale through, so totally get it. You gotta do what you gotta do...

We didn't need payslips, just talked through deposit and our salaries and outgoings.

Ok so they just went off what you said without anything to back it up? Not sure what the point of them doing that is tbh because people could claim they earn anything.

What I've heard is not necessarily mortgage rejections, but down valuations. Banks are no longer willing to lend for stupid prices, so buyers have to make up the difference. No room in deposit, so the sale falls through.

Our agent warned us about this when we first went on the market and said they were trying to manage buyers bidding too high - as they were just getting down valued by lenders.

Looks like affordability is now being looked at more closely by lenders too.

Interesting, as agents are responsible for a lot of the overbidding.
I was advised by parents (and people who had bought houses before) to start low... offer 10K below asking and then negotiate upwards.
However many properties are 'offers over', and clearly undervalued. One property I saw was priced for slightly under the Xhundred mark, when it should have fetched at least 10K more. It had 30 viewings on the open day, and eventually sold for 50K over, FTB with a mortgage. The agents clearly knew what they were doing.

Pricing is very difficult, agreed, but it used to be the norm to price ambitiously, and then accept downward negotiations. At least you'd get people who could actually afford the higher price, and it was the minimum a vendor wanted. Doing it the other way round might attract lots of interest, but nobody actually knows how much the vendor is willing to accept. Lots of offers from people who can't actually afford it who then use the mortgage downvalution to negotiate a lower price.

*not minimum sorry maximum

I would second @DomPerignon12 point about down valuations having just come through this as a seller. In our area it remains a very hot market with most properties going over asking price with multiple offers. We got a good over asking price offer on our house that was pretty much in line with the market. But when the mortgage valuation came in it was 5% below asking price and buyers couldn't make the difference up, so we negotiated down a bit, rather than put it back on the market.

Estate agent and mortgage brokers said problem was you can't even get in the running to be considered with an offer for the prices the mortgage companies are valuing at. There is still huge demand, so it is pushing those with smaller deposits who can't make up the funds up, out of the game. They are also seeing a lot of sales starting to fall through.

@Neednameinspiration exactly that.
There was thread on here the other day... the title was either 'Has anyone noticed what's happening to the market' or 'offers under asking'... something of that sort where a PP pointed this out, triggering angry reactions from sellers.
However if people aren't even going to be considered with a low offer there's really nothing they can do, but offer higher, just like you said. Quite a few people usually have some ££ in reserve (for selling fees, moving costs etc) but it's anybody's guess as to how much that is.

The volatility of the market and vendor expectations are also an issue though. Only a few months ago houses were still flying off the shelves, the shadow of covid was falling, yes Russia was at war with Ukraine but people expected the rest of the world to fix it.

We're now seeing things spiraling, and it's only just starting to filter through. People needing to renew mortgage offers may very well see a lower amount if a sale takes to long to proceed, and prices may very well drop for new properties coming onto the market in the next couple of months. However I'm unsure if people will stay put and not sell (meaning supply drives up the price for the few buyers in good cash positions), or whether people will try to hurry up and move while they can still get a mortgage, adding a flurry of new properties before things get bleaker towards year end.

*shadow of covid was falling away

Whole system needs overhauling.

AIPs are worthless on their own, the vetting process should be check deposit, check AIP and receive an undertaking from a mortgage broker and also ask potential buyer to pay a deposit if offer is successful.

This weeds out the individuals who can’t afford or hope to afford.