Bank Sale Query

MuddyDog

Myself and the OH went and looked at a house that we were told the bank (I don't know which bank) were selling in agreeance with the previous owners. A few days later we put a bid in with the EA and she said she'd call us back with any information. Two weeks passed with no call so we rang the Estate Agent yesterday and were told that there have been 5 bids on the property with the current highest bid being 7.5k more than our bid. She said that she was waiting on the banks solicitors to contact them to advise on how to proceed with the sale. She said she's sure the bank will want to sell the house given the high interest in it and the bids being above asking price but she has to wait for further instruction from them. I queried whether we should outbid the top bidder at present but she said don't as the solicitors of the banks may just take the "best bid" instead of the highest, meaning if someone were to have cash for the whole amount then they'd be seen as the best candidate most likely. She said she'd call when she hears from them as she is legally obliged to.

Is this standard practice with bank sales? We are first time buyers and are mortgage approved so I'm not sure why a cash buyer is preferable especially if our mortgage is with a different bank than the bank that's selling as they'd be guaranteed the amount of money straight up, right?

Jet Black

There could be something wrong with the property that might be an issue with the bank giving a mortgage on it. I'm just finishing buying a house from a bank at the moment and bids were taken as normal with highest bid winning.

Be warned, banks are a nightmare to deal with. This is going on now 9 months now. Took 3 months just to accept my offer. Wanted signed contracts in 7 days or they'd pull the sale (solicitor said it was rare but could still happen) But the biggest stress was they don't offer loan approval clause. This means you'd lose your deposit and could be sued if you fail to complete the purchase. If I could go back I'd never deal with them and won't be in the future.

MuddyDog

Jet Black wrote: »

There could be something wrong with the property that might be an issue with the bank giving a mortgage on it. I'm just finishing buying a house from a bank at the moment and bids were taken as normal with highest bid winning.

Be warned, banks are a nightmare to deal with. This is going on now 9 months now. Took 3 months just to accept my offer. Wanted signed contracts in 7 days or they'd pull the sale (solicitor said it was rare but could still happen) But the biggest stress was they don't offer loan approval clause. This means you'd lose your deposit and could be sued if you fail to complete the purchase. If I could go back I'd never deal with them and won't be in the future.

The EA did say that it'll probably be a bidding process when the banks solicitors get back to them, but I'm not sure what other process it could be that the EA has to wait for confirmation on?!

Nua

There are at least 2 extra layers of processing in a bank sale that I've come across so far - the bank consenting to the sale (3 months after going sale agreed in my case) & an audit to evaluate their security (that their debt will be covered, in my case 9 months after going sale agreed! I'm still waiting to hear does that mean recalculating asking price since the market has risen & that the bank will end up relisting property at higher price) So since the sales drag out longer than you'd expect, bidders' mortgage offers can expire - so that's why the preference is probably for cash buyers. As the other poster said, it's a nightmare cos all you have is extra layers of bureaucracy to deal with but if you get what you want at the end of it, it's worth it! Best of luck

MuddyDog

Nua wrote: »

There are at least 2 extra layers of processing in a bank sale that I've come across so far - the bank consenting to the sale (3 months after going sale agreed in my case) & an audit to evaluate their security (that their debt will be covered, in my case 9 months after going sale agreed! I'm still waiting to hear does that mean recalculating asking price since the market has risen & that the bank will end up relisting property at higher price) So since the sales drag out longer than you'd expect, bidders' mortgage offers can expire - so that's why the preference is probably for cash buyers. As the other poster said, it's a nightmare cos all you have is extra layers of bureaucracy to deal with but if you get what you want at the end of it, it's worth it! Best of luck

Won't the banks debt get covered from the other bank I am mortgage approved with though? If we pay 25% cash and the other 75% with a cheque from one of the banks we're mortgage approved with isn't that the same as a cash sale for them as they immediately receive all the money.

gaius c

Bit strange that the EA didn't have the courtesy to inform you that there was a higher bid. It might not be just the bank playing silly buggers here.

MuddyDog

gaius c wrote: »

Bit strange that the EA didn't have the courtesy to inform you that there was a higher bid. It might not be just the bank playing silly buggers here.

A little bit I suppose. I found it more strange that she said don't bid more than what is currently on it when I said should I consider it. She just said to wait until she knows how to proceed with the sale under direction from the banks solicitors.

Nua

MuddyDog wrote: »

Won't the banks debt get covered from the other bank I am mortgage approved with though? If we pay 25% cash and the other 75% with a cheque from one of the banks we're mortgage approved with isn't that the same as a cash sale for them as they immediately receive all the money.

What I meant is that the EA knows full well a bank sale will take longer to complete than a normal sale . . . So the danger is that the purchaser's mortgage offer could expire before the sale completes, setting back the whole process. But there could be other reasons to favour cash buyers too - hope it works out for you tho, it's horrible being in limbo!