EA asking for proof of funds

who_ru

Hi,

Thinking of bidding on a house. EA asking for proof of funds. I have 2 letters of approval in principle from two institutions. There are figures on these letters. The EA said they are not asking to see how much approval is for but want to know I can bid up to current top bid.

So can I forward both letters with the figures crossed out or should I get them to contact my broker who said he will verify I have sufficient approval to bid on the house at the current high bid which is in excess of asking price.

Thanks for any advice.

Butters1979

This sounds unusual. Do they "want to be sure you can bid up to the top bid" or do they want to know how much they could get out of you? I would not give anyone but the bank giving me the mortgage my financial details.

daheff

give the EA a copy of the letter, but redact the amount. When the agent asks for that amount tell them that you are not disclosing it as they are employed by the vendor and not you, and as such are not acting in your interests (and that telling them your budget means they will know exactly the max of how much you can pay). All they need to know is that you have approval from your financial institution for a mortgage.

if your bid is accepted tell them you can advise them the redacted figure (if they really push you) showing you have proof of the funds required.

I'm guessing the EA wants to milk you for every last penny. If they know how much you can borrow then I reckon you'll see some phantom bids occur pushing you towards your approved amount (plus deposit).

Sun in Capri

It is not unusual, I had the same request from EA and my solicitor told me it is common. The reason they do this is apparently due to many people offering on property but not having the funds to buy. In my case I gave my bank the name and email address of the person I was dealing with in the EA, and they emailed the EA with my permission to say I had sufficient funds for the particular property I had put an offer on.

Arbiter of Good Taste

daheff wrote: »

give the EA a copy of the letter, but redact the amount. When the agent asks for that amount tell them that you are not disclosing it as they are employed by the vendor and not you, and as such are not acting in your interests (and that telling them your budget means they will know exactly the max of how much you can pay). All they need to know is that you have approval from your financial institution for a mortgage.

if your bid is accepted tell them you can advise them the redacted figure (if they really push you) showing you have proof of the funds required.

I'm guessing the EA wants to milk you for every last penny. If they know how much you can borrow then I reckon you'll see some phantom bids occur pushing you towards your approved amount (plus deposit).

I presume the point is that the EA wants to know the OP has approval of a sufficient amount to bid on the property. If a house is selling for a million, having approval for €100k is pretty useless

Rew

Yeah not uncommon wth the high rate for sale agreeds falling though

L1011

Get your bank or solicitor to write a letter stating you are approved for the amount bit. Never show an EA your approval in principle / full approval documents; they will use this to get every last cent of it out of you.

Sam the Sham

As if potential buyers are the only "messers."

My response: I'll give you proof of financing when you give me proof that: 1) the house is as advertised in all of its particulars; 2) the house will definitely be sold and not pulled off the market after you've discovered what the market for it is.

gaius c

Sam the Sham wrote: »

As if potential buyers are the only "messers."

My response: I'll give you proof of financing when you give me proof that: 1) the house is as advertised in all of its particulars; 2) the house will definitely be sold and not pulled off the market after you've discovered what the market for it is.

Nah. Don't pick a fight with them. It sounds great in theory but it almost never works.

If they want proof of finance, give them a redacted letter or ask your solicitor/broker to confirm it.
It's not a completely unreasonable request.

Sunny Dayz

We were requested similar for our house purchase. It does make sense and weed out any time wasters. In our case it was a receivership purchase which we nabbed before it was actually put on the open market. We got a letter from our lender just saying that we were approved in principle to fund our offer price of €X. We were actually approved for more but no way in hell were we going to tell them that!!

The_Conductor

Any reputable estate agent these days is seeking proof of funds- before they will convey a bid to a seller. In some parts- up to 75% of sales are falling through- principally because prospective purchasers are unable to access the funds they imagine they have access to- when they place their bids.

A proof of funds- is becoming a normal part of the bidding process- and is normally a standard letter from the purchaser's solicitor stating that Mr. X has access to sufficient funds to support the bid (Y) that they have made on the property in question.

The local solicitor here- charges 50 Euro for the first such letter to clients- and 10 for subsequent letters (i.e. they will supply a chain of letters to a prospective purchaser after each bid- or for subsequent properties- if the first property they are bidding on gets too rich for their blood). The higher initial one- is because inevitably it involves at least one meeting and chasing paperwork- though 50 Euro is itself only a token gesture- and the subsequent 10 Euro per letter- is a formality.

Sam the Sham

Sunny Dayz wrote: »

We were requested similar for our house purchase. It does make sense and weed out any time wasters.

That's fine. Now how do we weed out time waster vendors?

The_Conductor wrote:

A proof of funds- is becoming a normal part of the bidding process- and is normally a standard letter from the purchaser's solicitor stating that Mr. X has access to sufficient funds to support the bid (Y) that they have made on the property in question.

It's the asymmetry of information that's galling from a buyer's perspective. Not only is the buyer an amateur negotiator going up against professionals, there is absolutely no sanction on the EA for lying, inventing phantom bidders, etc. Meanwhile the buyer has to put everything on the table.

We really ought to move to a U.S.-style system where buyers also have agents.

I also think that a letter directly to the vendor (assuming they still live in the house) saying "I was going to bid X on your house until your overzealous estate agent insisted that I reveal my limit to him. That cost you my bid" might help curtail this practice.

The_Conductor

Sam- a buyers pack- akin to what they have in the UK- with a proper survey and a comprehensive pack of information relating to the property is the way to go.

The issue at the moment- is firmly a problem with prospective buyers making bids (quite often legitimate bids- expecting they will have no issue accessing funds)- and not being able to follow through on the bids. In some parts of Dublin- we now have a 75% failure rate on sales- in some areas even higher........

Yes- there are time wasting sellers out there- with various motivations for putting their house on the market- however, they pale in number- in comparison with the number of sellers making bids they are not able to follow through on.........

Sam the Sham

The_Conductor wrote: »

Sam- a buyers pack- akin to what they have in the UK- with a proper survey and a comprehensive pack of information relating to the property is the way to go.

The issue at the moment- is firmly a problem with prospective buyers making bids (quite often legitimate bids- expecting they will have no issue accessing funds)- and not being able to follow through on the bids. In some parts of Dublin- we now have a 75% failure rate on sales- in some areas even higher........

Yes- there are time wasting sellers out there- with various motivations for putting their house on the market- however, they pale in number- in comparison with the number of sellers making bids they are not able to follow through on.........

I disagree. Consider how many estate agents routinely lie in their advertising of properties. It's so common that we don't even see it: basically, all of them do it. That is a form of time wasting. Add in the phantom bidders, the price-discoverers, those with unrealistic "anchor prices" from which they won't be budged and I'd say the problem of time-wasting vendors is just as large as that of time-wasting buyers.

The whole sector is crying for regulation. It will of course never happen for the same reason that price increases are always spun as a "good news" story while price decreases are some sort of tragedy.

gaius c

The_Conductor wrote: »

Any reputable estate agent these days is seeking proof of funds- before they will convey a bid to a seller. In some parts- up to 75% of sales are falling through- principally because prospective purchasers are unable to access the funds they imagine they have access to- when they place their bids.

A proof of funds- is becoming a normal part of the bidding process- and is normally a standard letter from the purchaser's solicitor stating that Mr. X has access to sufficient funds to support the bid (Y) that they have made on the property in question.

The local solicitor here- charges 50 Euro for the first such letter to clients- and 10 for subsequent letters (i.e. they will supply a chain of letters to a prospective purchaser after each bid- or for subsequent properties- if the first property they are bidding on gets too rich for their blood). The higher initial one- is because inevitably it involves at least one meeting and chasing paperwork- though 50 Euro is itself only a token gesture- and the subsequent 10 Euro per letter- is a formality.

I don't know if I really believe that principally because it's coming from the lips of EA's. We pulled out of a deal because of asbestos contamination but the EA told future viewers that it was our finance.

brownej

My Bank issued me with a generic letter sating that I had approval in principle for a mortgage but did not state the level. This letter was for the purpose of giving to estate agents while bidding if it was requested. It was separate from the banks mortgage approval in principle letter.
This was issued by the branch so may not be standard practice.

gaius c

Sam the Sham wrote: »

That's fine. Now how do we weed out time waster vendors?



It's the asymmetry of information that's galling from a buyer's perspective. Not only is the buyer an amateur negotiator going up against professionals, there is absolutely no sanction on the EA for lying, inventing phantom bidders, etc. Meanwhile the buyer has to put everything on the table.

We really ought to move to a U.S.-style system where buyers also have agents.

I also think that a letter directly to the vendor (assuming they still live in the house) saying "I was going to bid X on your house until your overzealous estate agent insisted that I reveal my limit to him. That cost you my bid" might help curtail this practice.

You're not putting everything on the table. Do you really want to be bidding against "real" buyers who haven't even bothered getting proper mortgage approval? You could have approval for €50 but just redact it and the EA won't know the difference.

We've been there and luckily we didn't get it because they bid us up by tens of thousands of euro and then held up the sale for 7 months until a relation of theirs kindly departed this mortal coil to dig them out of the fix they were in. They simply went onto an online calculator and worked out their budget from that!!!

Clearlier

The_Conductor wrote: »

Sam- a buyers pack- akin to what they have in the UK- with a proper survey and a comprehensive pack of information relating to the property is the way to go.

The Home Information Pack was never fully implemented in England and Wales (different legislation in Scotland, don't know what the story was in NI).

One of the very first things that the Conservatives did after coming to power was to get rid of the buyers pack (Home Information Pack). The only thing that they left as a requirement was an Energy Performance Certificate.

It does seem like a sensible thing to have although I think that the surveyor should be liable for any errors/omissions via some kind of insurance which they would be required to have which I think would help with professionalism.

As for proving that you can buy the house, we'd be in a better place if buyers could only bid on a house when they could afford to buy it. Not sure quite how you get there though!

Sam the Sham

gaius c wrote: »

You're not putting everything on the table. Do you really want to be bidding against "real" buyers who haven't even bothered getting proper mortgage approval?

That's a good point. Obviously, I'd like more transparency all around.

But part of the problem is that the only professional involved in the selling/purchase is a single estate agent who works for the vendor. So to have that same person adjudicating the finances of various bidders is a clear conflict of interest.

I have no problem with having a broker/bank issue a statement saying that I have access to the amount I bid. I think that should be standard procedure. But I've had estate agents who were not satisfied with that and refused to proceed unless I sent them my AIP with all amounts revealed. I refused.

davo10

Sam the Sham wrote: »

That's fine. Now how do we weed out time waster vendors?



It's the asymmetry of information that's galling from a buyer's perspective. Not only is the buyer an amateur negotiator going up against professionals, there is absolutely no sanction on the EA for lying, inventing phantom bidders, etc. Meanwhile the buyer has to put everything on the table.

We really ought to move to a U.S.-style system where buyers also have agents.

I also think that a letter directly to the vendor (assuming they still live in the house) saying "I was going to bid X on your house until your overzealous estate agent insisted that I reveal my limit to him. That cost you my bid" might help curtail this practice.

It is just as frustrating for the vendor when a sale falls through due to lack of funds. As a buyer, you should recognise that the final price you pay may have been pushed up in part by other buyers who bid even though they may not be in a position to actually buy.

I think a proof of funds linked to the actual amount you bid is a great idea, eg "I wish to make a bid of €200k and here is a letter from my lender confirming that the bid is back by available funds".

Writing to the vendor is a no no, they won't take any heed and you will be marked as a time waster by the EA for future bids.

Incidentally, you have to pay the agents acting for you in the U.S. I thinks it's 3-4%, This adds to the cost of buying your property

Sam the Sham

davo10 wrote: »

It is just as frustrating for the vendor when a sale falls through due to lack of funds. As a buyer, you should recognise that the final price you pay may have been pushed up in part by other buyers who bid even though they may not be in a position to actually buy.

In short: vendors love "buyers" who don't have the funds when they push up the price for others who do have the funds. However, they don't love them quite as much when they actually prevail in the bidding war. They'd like to stop the latter but there's no sign that they'd also like to stop the former.

As a buyer I have been used in just that way by an EA: they had two cash buyers and knew I would require a mortgage. They left me in the process just long enough to push the other two. When one of them dropped out, they informed me that the vendor would be selling to the remaining cash buyer no matter what I bid. Do you think that that behaviour qualifies as "time wasting"?

Meanwhile, bidders are often bidding on a property that they know nothing about beyond the fact that the estate agent has declared it to be "stunning" and "in excellent condition throughout." EAs are not required to back up even the latter claim. And when the sale falls through as a result of a bad survey (for which the now-former buyer will be out €400-500), the EA can continue to make the claim when they re-advertise the property (and lie to all and sundry about why the previous sale fell through: "the buyer had trouble raising the money"). But that, see, isn't considered a problem in this country apparently. No, the only problem is people bidding without the resources to back up their bids.

Again, I have no problem with supplying a letter saying I can pay what I've bid. I have a problem with divulging the exact amount to my adversary in this endeavour.

Writing to the vendor is a no no, they won't take any heed and you will be marked as a time waster by the EA for future bids.

I'm not so sure. If I were selling and I learned that my overzealous EA was scaring away legitimate bidders in the name of getting rid of "time wasters", I'd probably get a new EA.

Incidentally, you have to pay the agents acting for you in the U.S. I thinks it's 3-4%, This adds to the cost of buying your property

How much do you think the total lack of regulation of EAs here adds to the cost of buying a property?

In the US, they have lemon laws where there is legal sanction for a seller who lies about a known defect in a car. Here, EAs can lie endlessly about houses with impunity.

davo10

Sam the Sham wrote: »

In short: vendors love "buyers" who don't have the funds when they push up the price for others who do have the funds. However, they don't love them quite as much when they actually prevail in the bidding war. They'd like to stop the latter but there's no sign that they'd also like to stop the former.

As a buyer I have been used in just that way by an EA: they had two cash buyers and knew I would require a mortgage. They left me in the process just long enough to push the other two. When one of them dropped out, they informed me that the vendor would be selling to the remaining cash buyer no matter what I bid. Do you think that that behaviour qualifies as "time wasting"?

Meanwhile, bidders are often bidding on a property that they know nothing about beyond the fact that the estate agent has declared it to be "stunning" and "in excellent condition throughout." EAs are not required to back up even the latter claim. And when the sale falls through as a result of a bad survey (for which the now-former buyer will be out €400-500), the EA can continue to make the claim when they re-advertise the property (and lie to all and sundry about why the previous sale fell through: "the buyer had trouble raising the money"). But that, see, isn't considered a problem in this country apparently. No, the only problem is people bidding without the resources to back up their bids.

Again, I have no problem with supplying a letter saying I can pay what I've bid. I have a problem with divulging the exact amount to my adversary in this endeavour.



I'm not so sure. If I were selling and I learned that my overzealous EA was scaring away legitimate bidders in the name of getting rid of "time wasters", I'd probably get a new EA.



How much do you think the total lack of regulation of EAs here adds to the cost of buying a property?

In the US, they have lemon laws where there is legal sanction for a seller who lies about a known defect in a car. Here, EAs can lie endlessly about houses with impunity.

Welcome to the real world.

Do you know why house purchases are not covered by the Sale of Goods and Services Act? It's because as a buyer, you are recommended to carry out your own survey and analysis of the building before you buy. So irrespective of what condition the vendor claims the property is in, you have the opportunity to check for yourself.

Vendors do not like time wasters any more than buyers do.

Sam the Sham

davo10 wrote: »

Do you know why house purchases are not covered by the Sale of Goods and Services Act? It's because as a buyer, you are recommended to carry out your own survey and analysis of the building before you buy. So irrespective of what condition the vendor claims the property is in, you have the opportunity to check for yourself.

Yes, except it costs €400-500 to avail oneself of that "opportunity." Meanwhile, the seller has to provide a BER cert despite the fact that I also have the "opportunity" to check that for myself. But buyers are on their own when it comes to surveys. Having recently sprung for two of them on houses that were not anywhere close to the advertised condition (although artfully concealed), I think this is unfair. I just spent the guts of €1,000 for knowledge that the seller should simply be obliged to provide me. Not only that but:

1) the EA can continue to lie about the property even though he knows (having seen the survey) that it is a lie;
2) the next buyer will also have to pay €400-500 to take advantage of the "opportunity."

The only people whose interests this "system" serves are the Estate Agents and the Surveyors.

Anyway, I wonder how much it cost the IAVI to get TDs to write in that exemption?

Vendors do not like time wasters any more than buyers do.

Indeed. Precisely my point. But let's not pretend that buyers are the only time wasters.

davo10

Sam the Sham wrote: »

Yes, except it costs €400-500 to avail oneself of that "opportunity." Meanwhile, the seller has to provide a BER cert despite the fact that I also have the "opportunity" to check that for myself. But buyers are on their own when it comes to surveys. Having recently sprung for two of them on houses that were not anywhere close to the advertised condition (although artfully concealed), I think this is unfair. I just spent the guts of €1,000 for knowledge that the seller should simply be obliged to provide me. Not only that but:

1) the EA can continue to lie about the property even though he knows (having seen the survey) that it is a lie;
2) the next buyer will also have to pay €400-500 to take advantage of the "opportunity."

The only people whose interests this "system" serves are the Estate Agents and the Surveyors.

Anyway, I wonder how much it cost the IAVI to get TDs to write in that exemption?



Indeed. Precisely my point. But let's not pretend that buyers are the only time wasters.

Are you saying that the vendor should pay for the survey? What buyer in their right mind would accept a survey done by someone acting on the seller's behalf.

Vendors sell property "as seen", of course EAs advertise it in the best possible light, like all sellers.

Sam the Sham

davo10 wrote: »

Are you saying that the vendor should pay for the survey? What buyer in their right mind would accept a survey done by someone acting on the seller's behalf.

Why do we accept the BER?

Look, there are ways of making sure that they don't monkey with the survey (e.g., legal consequences if the survey turns out to have false information), but they require regulation, which is what I'm calling for.

davo10

Sam the Sham wrote: »

Why do we accept the BER?

Look, there are ways of making sure that they don't monkey with the survey (e.g., legal consequences if the survey turns out to have false information), but they require regulation, which is what I'm calling for.

Because BER testing has defined parameters, the condition of a house can be subjective and two surveyors can give very different opinions. Simples.

Sam the Sham

davo10 wrote: »

Because BER testing has defined parameters, the condition of a house can be subjective and two surveyors can give very different opinions. Simples.

You can't be serious. I've seen BERs of C1 that, when I paid for my own BER on the property, turned out to be G.

Anything can be faked. But if there are legal consequences for fakery, that tends to make it less likely.

Victor

daheff wrote: »

give the EA a copy of the letter, but redact the amount.

And any account numbers, etc.

daheff

Sam the Sham wrote: »

1) the EA can continue to lie about the property even though he knows (having seen the survey) that it is a lie;

Well should you have paid for a survey that contradicts what they are advertising, I'd suggest you contact the ASAI and advise them that the ad is not telling the truth. Also I'd contact the website where the advert is placed and let them also know.

Victor wrote: »

And any account numbers, etc.

Nope...would not provide account numbers to vendors. They dont need it and it provides no value to them.

Rew

daheff wrote: »

Nope...would not provide account numbers to vendors. They dont need it and it provides no value to them.

Thats what he was Victor saying:

"give the EA a copy of the letter, but redact the amount." "And any account numbers, etc."

Butters1979

The EA works for the vendor and has interest in getting the most possible for the house. Revealing exactly how much you can go up to in this situation is insane. Both the buyer and the vendor risk time wasters and it's the nature of the business, they have to just live with it.

Also I'd love to see the source that says 75% of sale agreed situations are falling through because of bidders without enough funds for what they bid. It sounds made up.