What is the current practice for bidders to show that they can afford to buy?

In that case the agent seeking proof of funds would eliminate that issue?
 
I agree fully.

In a seller's market, buyers should market themselves as the most likely to complete the sale. Show that you can comfortably afford it.

And from the estate agent's point of view, he should refuse bids from people who are quoting GDPR and showing redacted AIPs.

However, the estate agent may be complicit in allowing the person to bid up the price.
 
The extra amount the estate agent by bidding up the price per sale is miniscule but the impact / reputation the seller will pass onto others indicating that the estate agent gets a good price.
 
presidenttttt said:
I really do not understand why this is a never ending problem. Surely the agent should take people at face value unless given a reason not to do so.
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The problem is that neither potential buyers nor vendors can be taken at face value.

ClubMan said:
In that case the agent seeking proof of funds would eliminate that issue?
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Reduce perhaps, but not eliminate. My anecdote of the Sherry Fitz agent in South Dublin who had multiple sales fall through at the last minute despite having solicitors letters confirming funds were in place suggests it's not fool-proof. It's also easy to fake financial documents and the agents have no means of verifying them.

In reality though, I suspect some element of those pulling out of sales at the last minute is down to a change of mind due to cold feet, finding somewhere better, or realising they got caught up in a bidding war and offered more than they should. With most purchasers' solicitors insisting on the 'subject to finance' clause, it's the logical card to pull if you want to exit for any reason. It's highly unlikely that a vendor would seek to prove you actually had the funds and so should not be able to rely on that clause.

Perhaps a non-refundable deposit on going sale-agreed would focus people's minds.
 
Leo said:
Perhaps a non-refundable deposit on going sale-agreed would focus people's minds.
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Very unlikely to be acceptable - unless a survey and legal requirements had been satisfied first.

Having recently gone through the sale process - the Estate Agent used an online bidding platform, where all bids were shown (bidders name anonymised). In order to get registered for the platform, proof of funds had to be shown.
I found this reassuring as I knew that it was likely the bids were serious and were capable of being followed through.
 
Leo said:
Perhaps a non-refundable deposit on going sale-agreed would focus people's minds.
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As someone who used to do a lot of conveyancing I'd laugh at an estate agent who asked for a non-refundable deposit before contracts being signed.
 
euroDilbert said:
I found this reassuring as I knew that it was likely the bids were serious and were capable of being followed through.
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The agent I heard complaining about multiple sales falling through also used an app where proof of funds was required in order to register a bid too.

I agree a non-refundable deposit system would require significant changes, some of which have been discussed in government for a number of years, the LRSA have been proposing pre-contract investigation of title for year now, along with a requirement for the vendor to satisfy planning compliance and condition checks with the vendor having to stand over them post sale. Hard to see that happening any time soon but would certainly speed things up and offer far better purchaser protection.
 
Leo said:
Perhaps a non-refundable deposit on going sale-agreed would focus people's minds.
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This is the system in some parts of Europe.

Buyers make commitment to close the deal by a certain date and, if they don’t, they have to pay the vendor 10% of the value.

Of course it helps to have courts that rigorously enforce this kind of thing and I think the Irish legal system is too gentle for it to work.
 
Reactions: Leo
Leo said:
the LRSA have been proposing pre-contract investigation of title for year now, along with a requirement for the vendor to satisfy planning compliance and condition checks with the vendor having to stand over them post sale.
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I think this is an excellent idea. The BER system was brought in a little over a decade or so and really works well - potential tenants and buyers don’t have to guess what energy consumption is like and BER assessors measure floorspace more reliably that estate agents

A big problem at the moment seems to be very poor service from Tailte Éireann, previously the Land Registry.
 
Leo said:
The agent I heard complaining about multiple sales falling through also used an app where proof of funds was required in order to register a bid too.
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Obviously it's up to the agent how rigorous they are in checking "proof of funds". I suspect some are less thorough than others, and it's also possible to be misled by potential purchasers.
 
euroDilbert said:
Obviously it's up to the agent how rigorous they are in checking "proof of funds". I suspect some are less thorough than others,
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In reality, there's very little they can do. They will never get access to actually verify.
 
I think having to show proof will act as a filter rather than a dam. Those who are genuine about their source of funds and limit will provide documents. Those that don't have them and will never be able to complete won't go to the effort of faking documents.
 
Nobody should ever provide proof of funds by reference to the actual number that comprises your max budget.

It's completely illogical to show an estate agent your max bid before having to make that max bid. Particularly given the estate agents job is to wring as much money as possible from a purchaser and is incentivised to do so.

Unless they request more detail, provide a mortgage approval in principal letter with figures Redacted. If they are not happy with that, a solicitors letter confirming you can cover the current bid would be as far as I would go, personally.
 
misemoi said:
Those that don't have them and will never be able to complete won't go to the effort of faking documents.
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It's 5 minutes effort! Significantly less time than you'd invest in viewing a property.
 
Dazzler123 said:
It's completely illogical to show an estate agent your max bid
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Unless of course, you are serious about buying the property in a competitive market and want the advantage of showing that you can afford it.

But, of course, if you want to cede that advantage to another bidder, just refuse to prove that you afford it.
 
Brendan Burgess said:
But, of course, if you want to cede that advantage to another bidder, just refuse to prove that you afford it.
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I have said I would provide proof, just not proof that reveals a number. If you think that gives an advantage to another bidder, maybe you are correct but I have never lost a bidding war on that basis. I have only ever lost a bidding war based on who said the biggest number.

For the record, I have lost many many bidding wars and have succeded in 3, in very competitive markets and in less competitive markets.
 
Leo said:
In reality, there's very little they can do. They will never get access to actually verify.
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While that's true - it does provide an initial check.
In order to go "sale agreed" a more detailed check of the funds is required - when they will request full verification.

When I was selling, the agent discussed the type of the various "proof of funds" for the bidders.
For some it was an AIP from the bank, from others all cash in the bank.
If a potential purchaser was found to be faking their proof of funds, the the agent would hold that against them in any future dealings and also warn future vendors.
It can also used to facilitate a quicker sale, where a cash purchaser, with a lower bid, may be preferred over a higher bidder where the mortgage process has to be commenced.
 
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