So I viewed a house. The estate agent that they are also the owner. They are not a regular property sales auctioneer but have a licence. I bid and they asked for proof of funds from me. Is there a conflict of interest here with regards negotiation etc?
Also, a similar house in the same estate went up for sale at a much higher price.
I thought this house was reaching closure but bids started to come in fast after the second house went up and I was outbid after a few bids but the highest bid has yet to be verified. No word in almost a week now. Am I entitled to ask for proof of bidding? I am essentially walking away from this but am suspicious! What do you think?
The estate agent is supposed to act in the best interests of their client so there's no real conflict of interest.
One interesting thing is that as the owner, they will know all the dodgy things about the house, which anecdotally estate agents don't want to hear about so they can claim plausible deniability. They can't reasonably say "not that I know of" if you ask them about issues with the house.
As far as proof of funds, I wouldn't go beyond redacted AIP that doesn't show the full amount or a letter from your solicitor confirming you have funds to back up your latest bid. The EA is always on the buyer's side. In this case there's a stronger reason to get a better sale price since they're on a 100% commission. There's more incentive for shill bidding I guess but the market is genuinely hot so there might be no reason for them to engage in those tactics.
It used to be more common that owners sold their own property without using an EA. Is there an issue that this seller happens to be an auctioneer? Maybe the property services regulator could advise on that.
If he is not acting in a professional capacity with all the regulations that entails then you are giving financial information to a private individual. Could your solicitor send the proof of funds to his solicitor?
@javaboy the owner/auctioneer specifically wanted proof of funds to show I could back up the bid and would need bank statements etc if I was to bid over my mortgage approval. So I was told but I didn’t go over my mortgage approval amount
as it is their on house they are selling and they have no client do they have the same obligations as an estate agent selling on behalf of a client?
It's up to you how much of this you want to reveal. You're basically giving away your whole negotiating position if they know both your AIP amount and your bank balances. It's a sellers market so they can tell you to get lost if you won't show your funds I guess.
The EA wanted un-redacted AIP from me when buying but I got my solicitor to write a letter saying I had funds & AIP to back up the sale agreed price.
There is absolutely nothing stopping them from trying to squeeze more out of you until contracts are signed and by giving them all that info, they know exactly what your limit is.
There have been news articles in the last few months about the fact this goes against GDPR.
Only give redacted AIP or a solicitor/broker letter confirming you have sufficient funds.
"The EA is always on the buyer's side." Just to clarify, is this a typo?
Ha yes 😕
If you have a mortgage approval for the sum or close to value of the house, you shouldn't require proof of funds.
Clearly you have the funds. The bank checked that. EA will always be asking for too much documentation and you can (rather than walk away) just say you're not providing that. I had the exact same issue and said no, they still went ahead with my bid. If you're asked late enough in the process that you already have your solicitor on the case, they can help you out too in easing the pressure a little.
If it is a condition of the bid, and the sellers has other bidders, failure to provide POF’s just means you are out of the bidding. I think consideration of all bids should be contingent on the bidder being able to show they actually have the funds to support it. This also prevents other bidders having to pay more as a result of time wasters pushing the price up by bidding more than they can pay.
Actually at the moment they will take the bid and tell the next bidder your bid, even if you dont have proof of funds. Just using your bid to push up the price even though the EA dont consider it a bid because you havent given proof of funds for.
All I'm saying is you can stand up to the estate agent if they're being unreasonable and asking for your accounts is just that, it might mean they will reject your bid but it doesn't have to. You don't have to be out of the bidding in fact make it clear that your bid is still on offer and if they throw 'conditions' reiterate it still - it is a bid, forward it to your client and let them decide. And make sure to email your bid to the general inbox of the estate agent so their colleagues have it too. The EA has to let the seller know of any bids and it will make them look extremelly bad to say 'there is a bid 5k higher, but I elected to say no to that and cost you that money because I didn't get documents off the bidder'.
Idk, if I was the seller I'd consider that EA incompetent, were their soft skills lacking or are they not bothered to push the bidder? Surely they do this because it's my money and not his being tossed. EAs know this and they know how easy it is for the client to just go next door and find someone that can close the sale.
Exactly that, both broker and solicitor told me any bank statements or letters of POF are just prying and it's NOT normal for EA to get these.
As a seller, why would you accept a bid from someone who told the EA to piss off when asked for proof that they have funds to support their bid?
Personally, I think the EA would not be doing their job if they weren’t checking that the bids were genuine and the bidder had the funds for whatever amount they were bidding.
Well both your broker and solicitor are talking balls. I have bid on 5 houses this year with 4 different estate agents and in every case, I was was asked for proof of funds before the bid was fully accepted. So, wheather we like it or not, it has become normal for EA's to ask for it.
I can completely see why they do it as they want to cut out time wasters and dreamers. On the other hand though, I can see how it can be misused by the EA.
If possible, you want to just give them proof of what you are bidding and not tell them the total amount you have access to.
I have bid on many houses this year (roughly 15) and none asked for bank statements or anything like that. All asked for some proof of funds, but a redacted mortgage approval in principle sufficed in all cases. Only reason I could see for requesting statements would be if you were buying in cash.
Op has stated the seller only wanted statements to show POF if bidding ABOVE the amount for which he/she was mortgage approved.
But if you are giving a redacted mortgage approval letter, they wouldn't know the split. I agree it's normal to request some kind of proof of funds, just that asking for actual bank statements is further than normal.
Read the 2nd post from the OP...
".....the owner/auctioneer specifically wanted proof of funds to show I could back up the bid and would need bank statements etc if I was to bid over my mortgage approval..... "
They need proof of funds...... Not partial proof of funds. If you have mortgage approval for €400k and you are bidding €450k then your Mortgage approval letter is obviously not enough. They will need something else to show that you have access to the extra €50k required
I did read it. The point is that it is unusual for them to know how much your mortgage approval is worth at all in the first place. If you give proof of AIP with the value redacted (which is normal), they don't know how much your mortgage is approved for, and they don't know if you're bidding over this amount at all, never mind how much over it you are bidding. Demanding an unredacted approval in principle, in additition to bank statements showing the balance is going above and beyond what the vast majority of agents and sellers require to go sale agreed.
Does a redacted mortgage approval prove you have funds to support a bid?
Lets say you are selling a house and trading up.
You will use the proceeds of your house plus savings, plus a mortgage (you got approved for up to €250k which you would not need to use all of it depending what you got for your own house) to buy the newer house.
What would you do for proof of funds given that you are not sure yet of how much mortgage you will need?
How do you show them proof of funds without telling them how much you have and who does it come from? Your bank, the EA selling your house or your mortgage provider. All different entities.
Just curious how its all done without tipping your hand to the EA you are buying from.
A lot of EAs/sellers will not accept bids from people who need to sell a property to finance the purchase for that very reason, along with the delay selling can cause.
Nope, but standard practice is to accept it anyway. Presumably because in practice, people tend not to go bidding up huge numbers they can't actually afford to pay very often, and far more people would be very hesitant to reveal confidential financial information to strangers who very well may not accept the offer anyway, especially to someone who is on the opposite side of a negotiation to them.
Unredacted and bank statements also do not really "prove" anything most of the time. Digital versions are very easy to manipulate if you want to.
RE how they would deal with the existing house that you are selling and how you would use that for proof of funds, I honestly don't know.
RE giving proof of funds without showing your hand when you actually have more available than you are bidding, then it is just a matter of putting some kind of buffer between you and your estate agent rather than just giving the Estate Agent access to raw documents/facts. So, for example, you go to your solicitor and give them your proof of funds (bank statements/mortgage approval/whatever) and they write out a quick letter saying, "To whom it concerns, I can confirm that BnA has has funds available up to €xxxk to support a bit on a house" where €xxxk is the amount you are bidding as opposed to the total amount you have available. (I am sure they would write it a lot better than I would).
Obviously, the disadvantage here is that you will have to go and get a new letter every time you increase your bid (and possibly have to pay for it).
In my case, I was getting funds from 2 different places. I gave the EA the full amount of one and I got a letter from the bank confirming that I had access to the remaining amount required without actually saying what the total amount I had in savings was. In my case (because I'm lazy) I actually got a letter to cover €10k more than my bid so I wouldn't have to go back to the bank for every single bid.
RE it being standard practice to just accept mortgage approval on it's own without a number as proof of funds. I'm not going to argue with you as I'm not an experienced buyer/seller. It does sound daft to me that they would accept it thought (even though I accept that they did). I can see how it can be used as "proof of seriousness" or something like that to weed out complete time wasters, but it would be a stretch to call it proof of funds.
RE manipulating digital documents........ Jeez.... you're going down a murky path there. Of course it is very easy to do but you are opening yourself up to a world of sh1t. You could say the same for any documents.... Proof of address for the bank etc etc
When I first started, I didn't think they would accept it redacted either, as you can theoretically have approval for a way smaller amount and they wouldn't know, but from experience, they don't care. I think all they want is some show of seriousness. If you've gone to the effort of getting mortgage approval then you're probably at least seriously trying to buy and are not just a complete tyre kicker. If you have approval for €200k though, there just isn't much reason to waste your own time putting in bids at €400k on a house, so they presumably don't see that very often. In our case, the agent did ask for detailed proof of funds to go to sale agreed, but that was after accepting the offer and negotiatons were done.
I'm not advocating manipulating documents by any means, but in this case, the documents you'd be theoretically manipulating to show to an agent are not legally binding in any way, so if someone was determined to just waste time with phoney bids, it would still be easy to do without really getting in trouble. They aren't like documents you give to the bank to drawdown the mortgage, if you manipulated those you'd be committing fraud. They're something you show in good faith, the same as it's expected that the bids you make are good faith amounts you could actually follow through with. A lot of the whole process is taken on trust. Even after going sale agreed, you can generally just change your mind and back out. You send a deposit, but it's refundable, because like a redacted AIP document, it's just there to indicate that you are serious about the purchase.
But in this case the seller is being clear on what is required for a bid to be considered, proof of funds.
Personally I think everyone benefits from this approach, the seller knows the bidder can afford any bid made (in the op’s case there is no mention of proof of the maximum the op can afford), the bidder op knows that they are bidding against only those who can support their bids, and the EA (I do appreciate the seller is selling direct in the op’s case) knows that all bidders are genuine and can afford the property.
If you don’t want to show proof to the seller, a redacted approval letter isn’t it, then in this property sale you have no reason to bid as it won’t be considered and should move on.
If you are showing both your mortgage approval, and your savings account, how are they not seeing the maximum you can afford? As far as I can see, this approach really only benefits the seller/EA, by giving them more information. I don't think there's any reason at all to believe that other timewasting bidders with no means to pay are pushing up the price just for the fun of it on this or any other property (and as I had stated before, they could really still do this if they for some reason wanted to), so the far bigger concern for the buyer is revealing exactly how much you're able to go up to to a seller.
I'm going to assume they are legally allowed to use this as a condition for even considering an offer, but the point I originally made still absolutely stands that it is an unorthodox way of selling, and I'd hope it doesn't become a trend. Savilles got into some hot water in the press over the summer for doing basically this before agreeing to viewings of their new properties, because it was seen as a step too far for selling property: https://www.irishtimes.com/business/media-and-marketing/estate-agent-seeks-proof-of-how-much-buyers-can-afford-before-viewings-1.4593311