Some questions on a house purchase by a FTB

Couple of questions on buying a 2nd hand house that I've found, mindful that it's a buyers market. I'm a FTB.

1. The estate agent is pressuring me for a 10% deposit - my solicitor tells me that I'm under no obligation to furnish them with this, indeed is advising me that I shouldn't give them this much at the moment and all I need is a holding deposit, so I've sent them 5% with the remaining 5% payable subject to satisfactory examination of title by my solicitor etc. Is this the right approach?

2. There are some minor issues in the house that need addressing, should I use this as leverage to go back and renegotiate the price even though I'm the highest bidder in (an albeit minor) bidding war? (quite a surreal experience for the Estate agent in this climate apparently!)

3. I have in excess of 20% of the selling price available to put down, however am I better off getting a 90% mortgage and using the cash for any works and additional furnishings/decoration etc I need to do on the house and should I ring fence some of it for the rainy day in a "minimum of 4 months mortgage payments" saving fund?

Re: Some questions on a hse purchace by a FTB

1. Your solicitor is correct IME, €1k / €2k to the EA is more than sufficient as an initial, receipted, refundable, no-contract 'booking deposit'.

Your solicitor has a challenge with you as a client. I wouldn't countenance parting with big lumps of cash to an EA. Every piece of money after the initial 1k/2k 'booking deposit' goes to your solicitor in the first place to be disbursed from there. Any and all payments from now on are subject to the contract conditions you agree with your solicitor (full structural survey, finance, searches, title, vacant possession, closing dates, etc, etc.)

2. What 'bidding war'? One of the first things you agree with the EA having parted with the 1k/2k 'booking deposit' is that the house if off the market (no gazumping) at the price you have offered for it. Who else is bidding or what further negotiations on price do you foresee?

3. It sounds like you haven't thought the finances through. What will you need and what will your mortgage company give you?

Re: Some questions on a hse purchace by a FTB

mathepac said:

1. Your solicitor is correct IME, €1k / €2k to the EA is more than sufficient as an initial, receipted, refundable, no-contract 'booking deposit'.
It sounds like the EA has reservations about the OP and does not want to lose the underbidder if OP has change of heart. Strong deposit = strong intent, but the OP should only pay what they are comfortable with and c.5k should suffice. it's refundable anyway.

Your solicitor has a challenge with you as a client. I wouldn't countenance parting with big lumps of cash to an EA. Every piece of money after the initial 1k/2k 'booking deposit' goes to your solicitor in the first place to be disbursed from there. Any and all payments from now on are subject to the contract conditions you agree with your solicitor (full structural survey, finance, searches, title, vacant possession, closing dates, etc, etc.)

2. What 'bidding war'? One of the first things you agree with the EA having parted with the 1k/2k 'booking deposit' is that the house if off the market (no gazumping) at the price you have offered for it. Who else is bidding or what further negotiations on price do you foresee?
The EA cannot guarantee no gazumping as it is not illegal and is at the whim of the vendor not the EA, just like gazundering is at the whim of the OP and seems to be on their possible agenda.

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Re: Some questions on a hse purchace by a FTB

mathepac said:

2. What 'bidding war'? One of the first things you agree with the EA having parted with the 1k/2k 'booking deposit' is that the house if off the market (no gazumping) at the price you have offered for it. Who else is bidding or what further negotiations on price do you foresee?

I was thinking along the lines of trying to negotiate a discount on the agreed vendors price using any necessary minor repairs as leverage. The EA did seek the 10% deposit on the basis that there was another party expressing interest and they wanted to know if they needed to put a sale agreed on it and close it off to other parties.

3. It sounds like you haven't thought the finances through. What will you need and what will your mortgage company give you?

My mortgage company are offering me more than €100k over the asking price so that is not an issue. Essentially what I'm asking is is it better to put all my available cash against the selling price so as to minimise the LTV or am I better going for the maximum of 92% or 90% and keeping the rest of my cash for house furnishings/redecoration and any essential repairs, etc?

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Re: Some questions on a hse purchace by a FTB

"My mortgage company are offering me more than €100k over the asking price so that is not an issue. Essentially what I'm asking is is it better to put all my available cash against the selling price so as to minimise the LTV or am I better going for the maximum of 92% or 90% and keeping the rest of my cash for house furnishings/redecoration and any essential repairs, etc?"

Mortgage company will only lend you a maximum of 92% of the price /value of the property. They may be willing to lend you more money on a more expensive house.

If you can get a favourable rate, then take X amount of a mortgage, work out what your repairs/furnishings are likely to cost and decide then whether to borrow for them or use your cash for them. I'd take a 50/50 route with a few bob in an account for my rainy day fund.

mf