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Low level of borrowing affects bargain power

  • 22-01-2015 10:15am
    #1
    maskabun
    Registered Users Posts: 128 ✭✭maskabun


    I got to know from a mortgage advisor the buyer should use AIP (Agreement In Principle) with care when making offers on properties because the level of borrowing available to the buyer could erode buyer's bargaining power with Estate Agents.

    Can any one explain how/why does it erode the buyer's bargain power?
    Tagged:


Comments

  • #2
    L1011
    Moderators, Business & Finance Moderators, Motoring & Transport Moderators, Society & Culture Moderators Posts: 67,523 Mod ✭✭✭✭L1011


    Telling an EA what you're approved for sets what they're going to do their best to make you pay, that's why. Keep quiet about any amounts

    Ditto making multiple offers of the same amount on multiple properties can reveal what your AIP amount is


  • #3
    by the seaside
    Registered Users Posts: 380 ✭✭by the seaside


    L1011 wrote: »
    Telling an EA what you're approved for sets what they're going to do their best to make you pay, that's why. Keep quiet about any amounts

    Ditto making multiple offers of the same amount on multiple properties can reveal what your AIP amount is

    I understand this argument, but I've never had a problem with it as a buyer. You must be very clear with the EA that affordability is not the issue but value. You may be able to afford 200,000, but you will not pay more than 190,000 because it's not worth it.

    But keeping it to yourself is not a bad tactic if that's your preference.


  • #4
    Claw Hammer
    Registered Users Posts: 6,153 ✭✭✭Claw Hammer


    maskabun wrote: »
    I got to know from a mortgage advisor that if the level of borrowing available to the buyer is low then the buyer should use AIP (Agreement In Principle) with care when making offers on properties as it could erode buyer's bargaining power with Estate Agents.

    Can any one explain how/why does it erode the buyer's bargain power?

    Funny how the mortgage advisor gives you advice which suits his interests. The bigger the loan, the more commission.


  • #5
    seamus
    Registered Users Posts: 68,317 ✭✭✭✭seamus


    "What's your ceiling?"

    A crafty trick used by estate agents for millenia :D

    Never tell them. The estate agent works for the seller, and their goal is to extract as much as they can from the buyer as quickly as possible.

    Things which can be in your favour are to tell them that you are mortgage approved (they know that you're not going to throw out offers you can't afford), or even better to tell them that you're a cash buyer.
    you will not pay more than 190,000 because it's not worth it.
    ...and then the agent tells the seller that and you buy it @ €190k even though the seller would have accepted 180k.

    It simply makes no sense to reveal your ceiling unless you've just offered the max you're willing to pay.


  • #6
    by the seaside
    Registered Users Posts: 380 ✭✭by the seaside


    seamus wrote: »
    "What's your ceiling?"

    A crafty trick used by estate agents for millenia :D

    Never tell them. The estate agent works for the seller, and their goal is to extract as much as they can from the buyer as quickly as possible.

    Things which can be in your favour are to tell them that you are mortgage approved (they know that you're not going to throw out offers you can't afford), or even better to tell them that you're a cash buyer.

    ...and then the agent tells the seller that and you buy it @ €190k even though the seller would have accepted 180k.

    It simply makes no sense to reveal your ceiling unless you've just offered the max you're willing to pay.

    I should clarify. When you make an offer for e.g. 190k and they ask how much you can afford, you say, I'm not paying more than 190k because that's what I value it. Obviously first you need to trick out of the EA what the seller's floor is first.


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  • #7
    The Spider
    Registered Users Posts: 1,273 ✭✭✭The Spider


    Look for godsake, don't ever tell anyone how much cash you have, tell them how much you're prepared to pay for that particular house, if you had twenty grand in the bank and went to look at a second hand car for five grand, you wouldn't tell the used car salesman you had twenty grand when all you were prepared to spend was five.

    Seriously anyone who tells an estate agent anything to do with their finances is silly, all he's thinking is how can I get that cash off of him.


  • #8
    by the seaside
    Registered Users Posts: 380 ✭✭by the seaside


    The Spider wrote: »
    Look for godsake, don't ever tell anyone how much cash you have, tell them how much you're prepared to pay for that particular house, if you had twenty grand in the bank and went to look at a second hand car for five grand, you wouldn't tell the used car salesman you had twenty grand when all you were prepared to spend was five.

    Seriously anyone who tells an estate agent anything to do with their finances is silly, all he's thinking is how can I get that cash off of him.

    Nah. It drives them completely mad. Where's your sense of fun?


  • #9
    The Spider
    Registered Users Posts: 1,273 ✭✭✭The Spider


    by the seaside wrote: »
    Nah. It drives them completely mad. Where's your sense of fun?

    Well an estate agents job is to get as much cash off of you and he may persuade you to spend more than you wanted.


  • #10
    by the seaside
    Registered Users Posts: 380 ✭✭by the seaside


    The Spider wrote: »
    Well an estate agents job is to get as much cash off of you and he may persuade you to spend more than you wanted.

    He won't persuade me. But he might beg like a little doggy.


  • #11
    Bob24
    Registered Users Posts: 10,905 ✭✭✭✭Bob24


    The Spider wrote: »
    if you had twenty grand in the bank and went to look at a second hand car for five grand, you wouldn't tell the used car salesman you had twenty grand when all you were prepared to spend was five.

    Seriously anyone who tells an estate agent anything to do with their finances is silly, all he's thinking is how can I get that cash off of him.

    Sure, no need to volunteer information if not forced to.

    Having said that, because you have 20k doesn't mean you are stupid enough to pay that money for a car that is worth 5k.

    It probably is much more important to know the market, not get emotionally attracted to a particular property, and know to stop bidding when the price gets unreasonable.

    If someone's way of buying is that whenever they start bidding on a property the will keep bidding until the agent tells them they can have it or they have maxed out their approved mortgage - I'd say these people have much more of an issue.


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  • #12
    Lizbeth Shapely Ink
    Closed Accounts Posts: 5,029 ✭✭✭ Lizbeth Shapely Ink


    Our answer to this a few evenings ago was - it depends on the house, we will not offer more than what we believe it's worth.

    And that was the end of it.


  • #13
    by the seaside
    Registered Users Posts: 380 ✭✭by the seaside


    Bob24 wrote: »
    Sure, no need to volunteer information if not forced to.

    Having said that, because you have 20k doesn't mean you are stupid enough to pay that money for a car that is worth 5k.

    It probably is much more important to know the market, not get emotionally attracted to a particular property, and know to stop bidding when the price gets unreasonable.

    If someone's way of buying is that whenever they start bidding on a property the will keep bidding until the agent tells them they can have it or they have max out their approved mortgage - I'd say these people have much more of an issue.

    Some friends went to buy their first flat and one of their sets of parents came round with them. One said loudly, 'Oh this is just beautiful. Don't worry if you can't afford the asking price, we'll help you out with the balance.' They had a hell of a time after that getting it for the right price.


  • #14
    Bob24
    Registered Users Posts: 10,905 ✭✭✭✭Bob24


    by the seaside wrote: »
    Some friends went to buy their first flat and one of their sets of parents came round with them. One said loudly, 'Oh this is just beautiful. Don't worry if you can't afford the asking price, we'll help you out with the balance.' They had a hell of a time after that getting it for the right price.

    Well yeah OK - I am not saying you should tell the agent "here's my money, please take it" either :-)

    Thanks Mum and Dad :-D


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