Proof of funds- estate agents

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DeeKie

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We are in the market for a new house. We are being asked for proof of funds as a condition of viewing properties. I understand that it could be explained by being a policy to avoid time wasters in Covid times. However telling estate agents, who are incentivised to maximise sale price, your budget seems incredibly anti-competitive and anti consumer.

What do others do to deal with this? I’m considering complaining to the CCPC, but wanted to sense check my views here with you good people.
 
I've never looked it up but have heard of it in the past so I presume it is within the law and their professional code.

I've heard in the past it's just best to get a letter from your solicitor to say "My client has the funds in place to credibly bid for this property" and this is usually enough for an estate agent.
 
Sherry Fitz among others require this for their online bidding portal. An email from our solicitor along the lines of "I can confirm that my client has funding up to amount X" was enough. I had to send him a combination of our AIP and savings evidence.

I just told him to set amount X to the asking price, not our max.

I think the opposite is incredibly anti competitive. Tyre kickers and dreamers not able to complete a sale driving up the price.

How would you feel on the other side as a winning bidder, who ends up paying 30k over asking because the other party went to their limit+30k.
The above doesn't completely prevent it, but it does help to streamline the process.
 
odyssey06 said:
If you have AIP from bank submit it with amount blacked out
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I've usually done this in the past and it worked fine, though recently an estate agent wouldn't accept it and I had to get my solicitor to write a letter stating I had the funds & mortgage in place to bid on the property (though the letter didn't state an amount we could bid up to, I wouldn't be giving that info the estate agent).
 
No one should be giving estate agents specific details of their financials.

The solicitors letter confirming that adequate funds are in place is the better option, although I could see multiple letters being requested, if its a bidding war, which could also prove frustrating, for the various parties.

Perhaps an independent service to validate all bids, is the answer.
 
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stovesoot said:
Sherry Fitz among others require this for their online bidding portal. An email from our solicitor along the lines of "I can confirm that my client has funding up to amount X" was enough. I had to send him a combination of our AIP and savings evidence.

I just told him to set amount X to the asking price, not our max.

I think the opposite is incredibly anti competitive. Tyre kickers and dreamers not able to complete a sale driving up the price.

How would you feel on the other side as a winning bidder, who ends up paying 30k over asking because the other party went to their limit+30k.
The above doesn't completely prevent it, but it does help to streamline the process.
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There’s no evidence to suggest bidders bid outside their budget.
 
The lack of transparency is really the problem, there....its only the winning bid, that is ever verified... assuming the transaction completes.
 
The issue can be bidders don't have the funds yet, which is most likely to occur when they are selling their own home to partly fund the new one. If they bid on a new place but have to sell their own first, it will delay the process by months. The vendor may need those funds themselves to buy their new home. It clogs up the whole system.
 
DeeKie said:
I’m not arguing for this new condition, requiring purchasers to jump through new hoops placed in front of them by estate agents. You are.
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I didn't argue for it or against it. You asserted that "There’s no evidence to suggest bidders bid outside their budget". I just asked what kind of evidence you would want.
 
Early Riser said:
I didn't argue for it or against it. You asserted that "There’s no evidence to suggest bidders bid outside their budget". I just asked what kind of evidence you would want.
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This is a straw man argument. Im not looking for evidence. You are missing my point. This new rule introduces a barrier to operating in a market and so should be justified with hard facts to be introduced. You can be damn sure that some people are handling information on their budgets to estate agents. None of the agents are suggesting that the methods above are acceptable.
 
Steven Barrett said:
The issue can be bidders don't have the funds yet, which is most likely to occur when they are selling their own home to partly fund the new one. If they bid on a new place but have to sell their own first, it will delay the process by months. The vendor may need those funds themselves to buy their new home. It clogs up the whole system.
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Are you saying that people who want to trade-up should be expected to have sold their property before they even start bidding on another property?
 
DeeKie said:
This is a straw man argument. Im not looking for evidence
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I don't think it is a strawman argument as you explicitly said "There’s no evidence to suggest bidders bid outside their budget." I am wondering what sort of evidence you are expecting to be available. There have been plenty of anecdotal accounts of people bidding when not having funding in place, or sufficient funding, but I am assuming you do not regard that evidence as admissable? Complaints about this arise from other bidders (whether correct in their assumptions or not) and from sellers when a sale falls through.

Anyway, moving on from that, I accept that it is an added inconvenience to produce proof of funding but I consider it an added protection for the genuine bidder who has the funds available and ready to go. That particularly favours the cash buyer but also favours the first time buyer over those who are at some stage of selling there existing property. The latter can be at any stage of the process between getting ready to put their house on the market, to "sale agreed", to contracts signed and closing date agreed. This is surely of reasonable and legitimate interest to a seller and to the EA acting on their behalf. "Proof of funding" will differ in all of these circumstances.

Have you checked with the EAs as to what type of proof they deem acceptable? I accept that some people probably are giving specifics of their budgets to EAs but plenty are not and I really do not think that it is a primary purpose of the condition. Some EAs have been doing this for years but it is becoming much more common recently. I expect most sellers are asking their EA about the bidders circumstances.

And I would have thought that a party bidding beyond their means would have manna from heaven for the truly unscrupulous EA as it would more likely push the price up quickly.
 
PolkaDot said:
Are you saying that people who want to trade-up should be expected to have sold their property before they even start bidding on another property?
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No I am not. But a vendor shouldn't have to wait on a buyer selling their own property before the sale of their own home goes through. It is a very difficult thing for people to time. Where are they going to live if the sale of their own home goes through first? There's not that many short term rentals available.
 
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