Cash buyer (me) £250K, First-timer w mortgage £255K - What's my move?

[parker1]

Seller needs to get moving. Not sure if first-timer has firm mortgage offer or not. Who is in stronger position here? Should I hold tight or match their offer? House was on market at OIRO £250K. Help!

[IFA]

You can't second guess what the vendor will decide to do in this situation. Some will take the extra £5k and hope that the first timer can carry it through, others will prefer the safer option and accept a loss.

As you don't know which type of vendor you're dealing with ask yourself one simple question.....

"If I stick to my guns at £250k and the first time buyer gets an offer accepted at £255k because I refused to match it would I always regret losing out on this house for the sake of £5k?"

Then you'll know the answer

[parker1]

Thx IFA, unfortunately if i've got my sums right the total increase in price would be £10,150 taking SD into account which is a considerable hike.

Btw, someone from the estate agent called to tell me there was a CASH offer of £255K on the table and perhaps if I offered £260k the vendor would take it off the market. When I queried the cash nature of the offer he backtracked and said "oh, sorry, you're the cash buyer, they need a mortgage".

I can't believe an agent would make a mistake like that, he evidently didn't know i was aware of the offer and I'm sure he was trying to push me higher. He also implied the vendor was into a 'sealed bid' war for the house they want to buy thus needing to get the maximum from their house. Another tactic? Anyone else experienced this kind of conversation?

[New Homes Expert]

Vendor will do what he wants. if you want the house then buy it.
cash beats mortgage anyday.

[New Homes Expert]

No one in their right mind would "offer" another £5k taking the total price just into the next Stamp duty bracket.

At £255,000 an extra £5,000 and an extra £5,150 more Stamp Duty too.

Dont pay a bean more than £249,950!

Only when a home is £280,000 or more does the extra Stamp Duty become worth considering.

[Jeannie D]

Originally Posted by parker1

I can't believe an agent would make a mistake like that, he evidently didn't know i was aware of the offer and I'm sure he was trying to push me higher. He also implied the vendor was into a 'sealed bid' war for the house they want to buy thus needing to get the maximum from their house. Another tactic? Anyone else experienced this kind of conversation?

Not personally but I know that a family member, currently househunting in the Home Counties, comes up against this tactic with depressing regularity.

Either the vendors really are keen to move quickly - in which case, New Homes Expert is right and cash is king - or speed is less important than securing the best price. It's a risky strategy when the house price is on the cusp of a stamp duty rise but if this is the case, I would have reservations about doing business with this vendor. After all, even if you did match the other offer, who's to say that several weeks along the line (after you've paid out for a survey, a solicitor, etc), the vendor doesn't try to make a last minute bid for more cash? Because this happens too, in some parts of the country, and again with depressing regularity.

House selling and house buying - stressful enough without people's greed getting in the way.

[New Homes Expert]

You would be mad to give in to gazumping!
or pay above the stamp duty threshold.

[IFA]

I agree with New Homes Expert and Jeannie D, but it really depends if you are buying with your head or your heart. Both of the other posters are talking about the common sense view rather than the emotional response to buying your "Dream Home" and therefore their advice may not apply in your situation as you might forever regret the decision if you lose your perfect home.

Agents rely on you buying with your heart which means that they may be able to manipulate you into paying a higher price, and yes they may try to talk you into doing so by using various underhand methods but if you're buying with your head and not getting emotional about the property then you can stick to your guns.

Again this comes back to my original post - if you are buying with your head then you shouldn't regret missing out if that happens, if you are buying with your heart then the answer may be different.

You have to ask youself if the property is one that you are emotionally attached to, is it unique, would it be difficult to find another just like it, is it well priced for what it is, do you care if it's good value or does it not matter so long as you have it, are you likely to live there for many years, is it relevant to you if you do or don't make a profit from it, are you buying as an investment or as a home, are you prepared to pay the extra £5k plus the extra stamp duty just to make it yours?

If you're not emotinally attached to it and you can happily walk away and look for something else that is better value then do so without regret, and you never know; maybe the First Time Buyer might mysteriously change his mind and the agent might call you to say that your offer has been accepted.

[New Homes Expert]

"I second that emotion" seriously you shouldnt be buying without using common sense. It will all end in tears!

[Dan S]

It's a real tricky one here. Make sure the estate agent doesn't end up playing both parties against each other!