Accepting a lower offer on a house

swingking

I've just been involved in a bit of a bidding war on a house. It has caused the property to go 60k above the asking price. My house is sale agreed, contracts exchanged and we are due to close in 4 weeks. Long story short is even though I'm the highest bidder, the sellers have chosen to go with the underbidder which are 10k below our offer. They're mortgage approved and said they're more secure. Surely the bank will only give what the house is worth? Which is definitely not 60k above asking? I know we're dependent on our sale completing first but in 4 weeks I'll be a cash buyer. Can someone shed some light as if they were never going to accept our bids, why let us bid in the first place. I think there might s something dodgy going on somewhere

jimmycrackcorm

You say you'll be closed in four weeks.
How much money would you bet on it?

It could be that the seller is on a bind to close sooner because they are in a chain and buying themselves so their purchase could cost them more than the 10k if they got delayed.

e.r

swingking wrote: »

I've just been involved in a bit of a bidding war on a house. It has caused the property to go 60k above the asking price. My house is sale agreed, contracts exchanged and we are due to close in 4 weeks. Long story short is even though I'm the highest bidder, the sellers have chosen to go with the underbidder which are 10k below our offer. They're mortgage approved and said they're more secure. Surely the bank will only give what the house is worth? Which is definitely not 60k above asking? I know we're dependent on our sale completing first but in 4 weeks I'll be a cash buyer. Can someone shed some light as if they were never going to accept our bids, why let us bid in the first place. I think there might s something dodgy going on somewhere

Other bidder, possibly offered a cash payment off the record

ted1

Lots of sales fall through. If the lower bidder can guarantee a sale. Then they are the safer option.

In 4 weeks you may be a cash buyer or you may not be.

Wildly Boaring

People selling can accept whatever offer they deem best. It's their house no rules on what they can and can't do.

Bank will get the house valued to approve mortgage but I wouldn't hold my breath as the valuer will probably just agree with what's being paid.

Seller may have been burnt in a chain before or received advice from one who has

super_furry

It's always preferable to go with someone who isn't in a chain, it just depends how much of a value the vendors put on that. €10k does seem to be high but they may well be in a chain themselves and are happy to let that go to be sure of getting what they're bidding for. In terms of the banks valuing the house, they'll almost always value it at the price agreed for it.

dubrov

The house is worth what someone is willing to pay which appears to be 50/60k above the asking.

If you are willing to pay 50k above asking, why do you think it is worth much less?
The asking price may have no relation to the value of the property at all.
Some EAs deliberately set the asking price low to get people interested.

The reason the vendor went for the underbidders is risk. Your sale may be expected to close in 4 weeks but that could easily turn into 3 months and end with the buyer withdrawing.

Personally, I would see both parties as having similar risk but I am not the vendor.

CeilingFly

When I sold a house in 2005, I took the second highest offer as they both came across as decent and were not dependent on a sale of their house.

I had committed to purchasing my new house and the 8k difference, whilst substantial, was worth it for peace of mind.

swingking

every single house in the estate has gone for 120k less (some as recent as a month ago) so I imagine the banks will have trouble lending for a house over value.

swingking

ted1 wrote: »

Lots of sales fall through. If the lower bidder can guarantee a sale. Then they are the safer option.

In 4 weeks you may be a cash buyer or you may not be.

Yes... and lots of mortgages fall through too

dubrov

swingking wrote:

every single house in the estate has gone for 120k less (some as recent as a month ago) so I imagine the banks will have trouble lending for a house over value.

So why are you willing to pay 120k more?

davo10

swingking wrote: »

every single house in the estate has gone for 120k less (some as recent as a month ago) so I imagine the banks will have trouble lending for a house over value.

Sounds like 2 bidders (one being you) got stuck in and drove the price upward, previous sellers just weren't as lucky. The next house of that type to come on the market may sell for more than the house you bid on.

irisheddie85

swingking wrote: »

every single house in the estate has gone for 120k less (some as recent as a month ago) so I imagine the banks will have trouble lending for a house over value.

You should be delighted they didn't accept your bid as it sounds you think you were going to be over paying for the house by 120k.

dr.fuzzenstein

Well, he's the fool paying €50k over asking. Some people just get the red mist and just want that house at any price.
You'll find something that's better value

Really Interested

swingking wrote: »

every single house in the estate has gone for 120k less (some as recent as a month ago) so I imagine the banks will have trouble lending for a house over value.

Do you know exactly how much the bank is lending the other buyer? Are you privy to how much they are borrowing?

swingking

Really Interested wrote: »

Do you know exactly how much the bank is lending the other buyer? Are you privy to how much they are borrowing?

Hardly. I'm speaking as someone who has gone through the mortgage process multiple times. I've no idea what loan to value ratio these particular people have.

swingking

dubrov wrote: »

So why are you willing to pay 120k more?

why is anyone willing to pay what they pay for a house?

wally79

Recently encountered a similar issue.

We are FTB and were highest bid but vendor went with lower cash offer. Estate agent basically shut down the bidding even though we had room to go higher.

Very frustrating.