Is it normal for auctioneer to ask for mortgage approval documents?

Dav010

snowcat wrote: »

And bring it on but 'times are not a changing'. I would welcome a law that an EA could not accept a bid without an official letter of mortgage approval from a bank or confirmation from a solicitor the funds were there. But but but then everything would be transparent and EA's would have to do a lot of work..and charge more. Then all the spurious unfounded bids would disappear. At the moment a 12 year old can bid 800k on a house and it is accepted as a bid over the phone. Ridiculous

Again, EAs don’t accept bids, they note them and pass them on to the vendor, who decides whether to accept them or not. As a supposed experienced seller, you must understand that at times those unsupported bids have benefitted you in pushing up the prices of your properties. I don’t see how having supporting documentation would increase the amount of work an EA does, nor push up the price they charge. If a vendor wants to accept bids without it, their choice, personally I’d like to know if the buyer has the necessary funds before I accept a bid, but that’s just me, I’d tell an EA to make it a condition of the bid, it saves time later.

Like everyone, I’m not that keen on dealing with EAs when I’m buying, but equally, I’m not keen on dealing direct with buyers when I’m selling and certainly wouldn’t have the time to drive around to properties to let people in to viewings. Also, EAs tend to know the local market, they may know which bidders have sold recently, or are in the process of selling and are asking too much, therefore slowing my sale. They also may have experience of tyre kickers, I know that on a few occasions they have said to me that so-and-so is just being nosey, or has an experience of him/her messing with sellers, I wouldn’t know that.

You don’t like them, that is obvious, but if you are what you say you are, you should be able to understand how they can benefit a seller. In the ops case, the EA is doing exactly what you want, checking that finance is in place before passing on bid to the owner, I would have thought you would be supporting that diligence.

Claw Hammer

snowcat wrote: »

Ah come on. Are you an EA? A EA should nor discriminate between sellers, You said yourself an EA wants to get max value for a property so he gets kudus with other vendors. So its fine to accept a low offer from a receiver sale to get a sale but not from a private seller? What about the value you have now put on other properties in the area because you and the receiver agreed you wanted a quick sale. What a joke the profession is

Receiver properties are not mortgage-able i the vast majority of case. An EA is perfectly entitled to refuse a bid from a greenhorn who knows nothing about the difference between a receiver property and a standard property. In receiver sales the bank usually does not want to have the property hanging around unsold for long. There is a commercial reality to taking a lower price for a receiver sale.
The implications for other properties in the area are minimal as the offering is not the same.

Dav010

Claw Hammer wrote: »

Receiver properties are not mortgage-able i the vast majority of case. An EA is perfectly entitled to refuse a bid from a greenhorn who knows nothing about the difference between a receiver property and a standard property.

Why would properties being sold by a Receiver not be “mortgage-able”? I have never come accross that as a condition of sale.

guyfawkes5

Dav010 wrote: »

Why would properties being sold by a Receiver not be “mortgage-able”?

The bank would require a lot of conditions to be fulfilled to provide a mortgage on a property, a lot of which are very commonly contradicted by properties in receivership.

For example - vacant possession, clean surveyor's report, all tax and fees paid on a property, and so on.

Dav010

guyfawkes5 wrote: »

The bank would require a lot of conditions to be fulfilled to provide a mortgage on a property, a lot of which are very commonly contradicted by properties in receivership.

For example - vacant possession, clean surveyor's report, all tax and fees paid on a property, and so on.

Those conditions apply equally to all property sales where the buyer applies for a mortgage. One of the few conditions that do not apply to Receiver sales is the requirement for the Receiver to confirm that the property is compliant with planning permission and building regulations, but that by no means makes them not “mortgage-able”, it just means the buyer/applicant has to confirm compliance themselves.

guyfawkes5

To be fair, the original poster said 'in the majority of cases'. I don't know how to quantify or prove that, but it would seem logical to me and not totally out of left field. My experience of seeing receivership ads on Bid-X1, etc, were very usually the property having a tenant in situ and/or access to the property being minimal.

frw5

Directly on topic, seems to me if this was done in any other business it would be hugely illegal and cause all sorts of issues that would lead to arrests in the end. Can't believe they would have the right to see those papers.

Dav010

frw5 wrote: »

Directly on topic, seems to me if this was done in any other business it would be hugely illegal and cause all sorts of issues that would lead to arrests in the end. Can't believe they would have the right to see those papers.

I don’t think being asked to show proof of funds is a criminal offence, also, the op can decline the request, however his/her bid won’t then be considered. The Vendor/EA doesn’t have a right to see the documents, but they are also not required to entertain bids where the bidder refuses to show proof of funds.

Jammyd

They can request proof of funds or mortgage approval, I purchased an apt in 2017 that was in receivership and had to evidence this, with receiver sales the EA has to liaise with the credit control team who pull together a pack of current offers along with a recommendation to the local bank official /credit team who needs to consent to the sale, weeding out time wasters and evidencing a genuine offer that will move fast doesn't seem out of the ordinary I would think.

Graham

Jammyd wrote: »

weeding out time wasters and evidencing a genuine offer that will move fast doesn't seem out of the ordinary I would think.

+1

Being asked for proof of funds is quite normal, although I can understand why some would prefer to provide this without showing approval limits.

I would have thought most buyers would rather they were only bidding against genuine offers.

Cuddlesworth

snowcat wrote: »

And bring it on but 'times are not a changing'. I would welcome a law that an EA could not accept a bid without an official letter of mortgage approval from a bank or confirmation from a solicitor the funds were there. But but but then everything would be transparent and EA's would have to do a lot of work..and charge more. Then all the spurious unfounded bids would disappear. At the moment a 12 year old can bid 800k on a house and it is accepted as a bid over the phone. Ridiculous

How can you be buying and selling houses but be completely unaware of the vast changes in the bidding process since the 2008 recession and the introduction of the Central Bank lending limits?

guyfawkes5

Graham wrote: »

+1

Being asked for proof of funds is quite normal, although I can understand why some would prefer to provide this without showing approval limits.

I would have thought most buyers would rather they were only bidding against genuine offers.

I have had this a few times and in every case I would send on a AIP with the amount blanked out, or - if there specific concerns about the amount - offer for the EA to email my bank advisor to advise if I could meet the given bid. The EAs have had no problem with this.

Claw Hammer

Dav010 wrote: »

Why would properties being sold by a Receiver not be “mortgage-able”? I have never come accross that as a condition of sale.

The Receivers always include a section in the special Conditions headed "Limited Knowledge of vendor."
The receiver will say any he doesn't know if the family home declaration act has been complied with, whether there is any litigation concerning the property, whether there is and boundary dispute whether the property is properly identified, whther there is compliance with planning permission etc.
Any solicitor for a purchaser who is getting a mortgage will have to certify the title to his clients bank. With all those restrictions the solicitor will be most unlikely to be able to do so. The banks might in some circumstances accept a qualified title but mostly won't.
A contract won't say in black and white that it can't be mortgaged but the effect of the special conditions in it will be that it can't be.

Claw Hammer

Dav010 wrote: »

Those conditions apply equally to all property sales where the buyer applies for a mortgage. One of the few conditions that do not apply to Receiver sales is the requirement for the Receiver to confirm that the property is compliant with planning permission and building regulations, but that by no means makes them not “mortgage-able”, it just means the buyer/applicant has to confirm compliance themselves.

What about the family home declaration, property identity, pending litigation? You have clearly never read a contract issued by a receiver.

Dav010

Claw Hammer wrote: »

What about the family home declaration, property identity, pending litigation? You have clearly never read a contract issued by a receiver.

Is this going to be another one of those threads where you make dubious legal statements?

A Reciever doesn’t have to comply with Condition 36 of the Law Society Standard Contract of sale, so does not have to prove that property complied with planning acts and with building regulations. But a buyer can show the mortgage lender that the property complied by engaging an architect or engineer. Apart from that, the issues you list above can apply to all sales, not just properties being sold by Receivers.

Claw Hammer

Dav010 wrote: »

Is this going to be another one of those threads where you make dubious legal statements?

A Reciever doesn’t have to comply with Condition 36 of the Law Society Standard Contract of sale, so does not have to prove that property complied with planning acts and with building regulations. But a buyer can show the mortgage lender that the property complied by engaging an architect or engineer. Apart from that, the issues you list above can apply to all sales, not just properties being sold by Receivers.

Is this going to be another thread where you show ignorance of the basic issues in conveyancing?

They apply to all sales but in the case of an owner occupier the owner can certify the boundary and can say whether or not there is litigation pending in respect of the property and can offer evidence of compliance with the family Home Protection Act. In a normal sale it is highly likely there won't be a qualified certificate of title. In a receiver sale it is inevitable.

Graham

Mod Note

is this going to be another thread where cards are issued?

brisan

sweet_trip wrote: »

Question: Would it be good to up my bid but also offer a large sum of cash in hand ie. 20% of the sale.

Would that ever trump another bidder?

When you say cash in hand do you mean actual 50 euro notes in a brown bag ?
I can imagine the questions asked when the seller of the property walks into hs bank with 60,000 in used notes ?
There is a reason even garages will not take cash any more

snowcat

Cuddlesworth wrote: »

How can you be buying and selling houses but be completely unaware of the vast changes in the bidding process since the 2008 recession and the introduction of the Central Bank lending limits?

The mind boggles. Could you elaborate on those vast changes? I have not seen any change in 20 years. A phone call to an EA is usually enough for a bid. I have put a few dodgy ones in myself

snowcat

brisan wrote: »

When you say cash in hand do you mean actual 50 euro notes in a brown bag ?
I can imagine the questions asked when the seller of the property walks into hs bank with 60,000 in used notes ?
There is a reason even garages will not take cash any more

I have done that. It can be explained with a receipt that the 60k is for "contents"

Dav010

snowcat wrote: »

The mind boggles. Could you elaborate on those vast changes? I have not seen any change in 20 years. A phone call to an EA is usually enough for a bid. I have put a few dodgy ones in myself

Wow, can you see the irony in that statement, given what you posted before? The mind boggles indeed.

snowcat wrote: »

And bring it on but 'times are not a changing'. I would welcome a law that an EA could not accept a bid without an official letter of mortgage approval from a bank or confirmation from a solicitor the funds were there. ...................Then all the spurious unfounded bids would disappear. At the moment a 12 year old can bid 800k on a house and it is accepted as a bid over the phone. Ridiculous

brisan

snowcat wrote: »

I have done that. It can be explained with a receipt that the 60k is for "contents"

Nah don't believe it for a minute
No banking institution will take that amount in CASH without asking questions and informing the relevant authorities

awec

Not sure if the laws have changed but paying a big chunk of the house in cash and trying to claim it's for "contents" is likely to be seen as tax evasion.

Dav010

awec wrote: »

Not sure if the laws have changed but paying a big chunk of the house in cash and trying to claim it's for "contents" is likely to be seen as tax evasion.

It wouldn't be to prudent if you walk into a bank and deposit €60k for “contents”, knowing that the bank may be obligated to inform Revenue under Money Laundering and Terrorism Financing Act.

Cuddlesworth

snowcat wrote: »

The mind boggles. Could you elaborate on those vast changes? I have not seen any change in 20 years.

The removal of unlimited credit led to a large number of people being surprised by the banks doing basic checks and rejecting them for mortgages later in the purchase process.

mariaalice

Cuddlesworth wrote: »

The removal of unlimited credit led to a large number of people being surprised by the banks doing basic checks and rejecting them for mortgages later in the purchase process.

Nobody gets any were near the legal purchase process unless they have mortgage approval not approval in principle. The is nothing to stop anyone making a fantasy bid with nothing to back it up, that is why the EA wants proof of the seriousness of the bit, not the actual amount of the person or couple is approved for just proof that they are approved.

While there are chances the world is not full of them, the vast majority conduct their business in a polite professional manor.

Claw Hammer

snowcat wrote: »

I have done that. It can be explained with a receipt that the 60k is for "contents"

No it can't. Stamp duty has to be paid on it, contents or not. Sorry Walter but the game is up.

Cuddlesworth

mariaalice wrote: »

Nobody gets any were near the legal purchase process unless they have mortgage approval not approval in principle. The is nothing to stop anyone making a fantasy bid with nothing to back it up, that is why the EA wants proof of the seriousness of the bit, not the actual amount of the person or couple is approved for just proof that they are approved.

While there are chances the world is not full of them, the vast majority conduct their business in a polite professional manor.

But the legal purchase process is the end part of a long process.

If snowcat isn't a troll, he is a good example of why the EA's check for funds now. And why banks actually check peoples mortgage applications.

spaceHopper

I would have a set you can show them which does not give any figures.

This also can be worked in your favour, if you hang around on this site enough you'll see dreamers who haven't talked the back have no clue how much they can borrow but bid away anyway the eventually pull out but not before they've driven up the price for the next guy.

Whenever you make an offer back it up with mortgage approval, if there is a counter bid ask the EA have they confirmed the status the other bidders. If you think you should go up the do it once but tell the EA you won't bid against dreamers they need to check they have mortgage approval. EA's are sales men and women they live for the sale and they hate to lose it. Make them believe you will walk. There are plenty of other house out there. Make a point of asking them what else they have, let me know if something like.... crops up...

brisan

spaceHopper wrote: »

I would have a set you can show them which does not give any figures.

This also can be worked in your favour, if you hang around on this site enough you'll see dreamers who haven't talked the back have no clue how much they can borrow but bid away anyway the eventually pull out but not before they've driven up the price for the next guy.

Whenever you make an offer back it up with mortgage approval, if there is a counter bid ask the EA have they confirmed the status the other bidders. If you think you should go up the do it once but tell the EA you won't bid against dreamers they need to check they have mortgage approval. EA's are sales men and women they live for the sale and they hate to lose it. Make them believe you will walk. There are plenty of other house out there. Make a point of asking them what else they have, let me know if something like.... crops up...

Thats the key point