Property Evaluation while bidding is still going on

dvdfan

I am applying for finance from the credit union for a small mortgage. They asked me to get a valuation on the house and provided me with a number for someone they use.

The situation i am in is i have a bid in but there are also other bids in all under the asking. Of course to be taken serious by the seller (which happens to be a bank) i will need a pre-approved loan to show i have the cash available (or at least that was the impression i was under)

So i rang the guy and explained and he said that to be honest getting it valued now while there was no sale agreed yet would do me more harm than good. Basically he said that if he valued it now he would be valuing it at the price of my bid which was the top bid, but he couldnt value it higher because there was no higher bids. But if he values it at lets say €40k and then the bidding goes higher he doesnt think they will approve the loan because im now paying more than the value of the house.

I was a bit shocked as i expected the value of the house would be based on location, condition of the house, furnishing etc but he seemed to suggest the bidding was the main thing affecting the evaluation. Maybe what he was trying to tell me was that he is not willing to value it higher than the max bid but again i thought strange because i believe the house in worth more and its selling much cheaper because the bank are likely just interested in covering their costs so i would have though irrespective of the bidding the valuation would have been much higher than the current sale price.

So i am in a bit of a pickle, the meeting to approve the loans is Tuesday, if i go in without an evaluation they might push the decision to the following week. If i go with an evaluation it sounds like that i might not get final approval if it goes above the evaluation. I rang the credit union and asked and they were unsure what to do, suggested putting a note in to echo what the guy doing the valuation said but i have a feeling what he was saying to me was more for my protection to avoid having it undervalued and might not be something i should mention. Im pretty green to all this so i would appreciate any advice.

Maybe the best way is to wait until after a sale price is agreed (assuming i get the winning bid) and then apply for the loan but i was under the impression if i already had the money ready with a pre-approval letter then it would help me in negotiating in a multi bid situation i.e i can close and pay quickly. Just to clarify, if the bid does go above asking i have access to extra cash so the amount i asked for should suffice even if bidding takes it above the asking

Archaeoliz

My understanding is that the valuation for a mortgage is more of a cross check that the buying/selling price is reasonable and that it will cover the bank's risk rather than a proper market appraisal.

dvdfan

Yeah and maybe thats why the bidding was important as this guy said to me because if there is bids in for around that amount it gives an idea of the price people are willing to pay which i would think is more important than what someone thinks its value is based on various stats. The more i am thinking about it the more i think it makes sense to only apply for the loan after the bid is accepted. I say that for a few reasons.

1 - I wont have to fork out for a valuation and survey for a house i might not even get a bid accepted on.
2 - If for some reason the price went well above what i anticipated i would at least have the option to apply for the extra finance
3 - Its probably a bit weird applying for a loan for a house with which bids are still coming in, in theory it could be 5+ houses before i have a successful bid and i would be applying/cancelling several times which is likely to annoy the people approving the loans and cost me a fortune on valuations and surveys

My only reservation is that if i could show them in advance i had credit already approved i think it would put me in a strong position vs someone that is applying for credit after they have a bid accepted.

Thats the trouble i have no idea what is normal practise, if i apply for the loan they might say what is this idiot at looking for finance when he hasn't even gotten a deal and i could do more harm than good. If anyone has been in a similar situation let me know.

Also if someone has been on the other end, i.e negotiating to accept a deal how does it work. For example if i was selling a house, i had 3 people interested. The guy with a 5k better offer said he was applying for finance, i would be wary of accepting the offer because i could be pushing out the guy who had the cash already approved/available. So thats the angle im looking at it from, if i dont get the finance they might not even give me serious consideration even if i have the highest bid. Hopefully someone has some insights.