ESTATE AGENTS and how they advertise house prices
So you are looking for your dream house and your budget is £250,000 and you spot it in the Estate Agents window or see it advertised on line – the price is easy to know isn’t it – it must be the price advertised.
That’s not the case as Estate Agents have different ways of advertising the price –
Fixed Price £250,000 – this means that the price is not negotiable and the seller wants £250,000 – however this is rarely seen.
Offers in the region of £250,000 – this means that the seller will consider offers lower than £250,000 but still expects to achieve near this price
Offers over £250,000 – becoming more the norm for advertising properties where Estate Agents expect high interest – purchasers are invited to offer above the asking price and interested parties then get into a bidding war with the purchase price rising well above £250,000.
Points to note –
If you are a cash purchaser you can pay whatever you want for a property as it is your funds you are using.
However, it must be borne in mind if you require a mortgage your lender will send a valuer / surveyor to assess the property and review the agreed purchase price and if they do not agree with the inflated purchase price will place a lower value on the property ( known as a down valuation ).
Lenders lend in loan to values therefore if you only have a small deposit and the lender down values the property the loan to value will be calculated from the valuer’s valuation not the agreed purchase price.
For example – the advertised purchase price is £250,000 and you end up in a bidding war and your offer of £270,000 is accepted and you only have a 10% deposit available.
Your lender agrees a 90% mortgage of £243,000 based on the purchase price of £270,000 and you have the 10% deposit needed which is £27,000
Your lender’s valuer only values the property at £250,000 therefore the mortgage available is only 90% of £250,000 which is £225,000
You would of course advise Estate Agent that property has only been valued at £250,000 and you would reduce your offer to £250,000 – however, if the seller refused and still wanted £270,000 and you still wished to purchase the property at £270,000 you would need a deposit of £45,000.
At this point the sale would break down.
With over 70 years of mortgage experience Manchester Mortgages can guide you through the minefield of buying and selling houses, re-mortgages, debt consolidation and buy to let mortgages no matter what the price is.
I am currently looking to buy my first property around the Wythenshawe,
Chorlton, Didsbury or Withington area of South Manchester and I keep coming across the same problem.
When looking at properties estate agents are not putting the price of the houses at a set figure ie £250,000 but state the price is ‘offers over £250,000 ‘
How does this work – and what is the real selling price of the house – do you offer £250,500 or £255,000, even higher say £ 260,000 plus or beyond.
I was interested in a property advertised by the estate agent at offers over £250,000 and put in an offer of £251,000 only to be advised by the estate agent this would not be accepted as a higher offer had already been put forward.
The estate agent would not tell me what the higher offer was so I offered £255,000 only to be told again this was not acceptable.
Eventually after a bit of cat and mouse with the estate agents I increased my offer to £ 265,000 which was accepted.
This left me in the position of not knowing if I had offered too much for the property and if any higher offers were received from other interested buyers my offer would then be overtaken and I would then lose the property.
My view on this form of advertising by estate agents as ‘ offers over ‘ is LAZY ESTATE AGENCY – the agents are really saying we do not really know what the price of the property is and this leads to potential purchasers offering more than they wished or being outbid by ‘other potential purchasers’ who may or may not exist – a least if you were at a property auction you have the opportunity to see who is bidding against you.
I spoke to my independent mortgage broker in Wythenshawe who made the point that just because I had offered £265,000 for the property my chosen mortgage lender would send a valuer to value the property and if the valuer did not value the property at £265,000 the lender only lends on the purchase price or valuation WHICHEVER IS LOWER meaning I may have to pay more as a deposit.
As it turned out I never got to valuation as I received a phone call from the estate agent to advise me that a higher offer had been received and accepted – at this point I told the estate agent I was not prepared to play the game anymore and looked for other properties for sale through different estate agents who clearly advertised what the price of the property was.
I avoided any property being sold by local estate agents such as Julian Wadden, Jordan Fishwick, Philip James, Gascoigne Halman which were advertised as ‘offers over or offers in excess – sellers beware !
I am still looking.