Buying from Vendor in Negative Equity

Hi

Myself and my husband have had our offer accepted on a property and paid the holding depost and have since found out that the vendor is in negative equity.

As far as we know the vendor has their mortgage with BOI and the NE is not above 30K. The Estate Agent has assured us that the bank has given permission for the vendors to sell but Im not so sure I believe him. We asked when viewing the property if there was NE on it, as my sister went through this last year and wasted 6 months before having to pull out as the bank was never going to release the deeds on the house she was purchasing, but the EA told us there was not but now all of a sudden there is!

I have asked he EA for written confirmation from the bank to say the property can be sold but he has said i cannot get this. I have also requested my solicitor ask the vendors solicitor for this. I really want the property but I dont want to hold on for months for it all to fall through.

Does anyone have experience on this?

If you have serious doubts, continue looking at other houses.

This is particularly important if you are a first time buyer and want to complete by 31 December.

Ask your solicitor to make the contract subject to it being closed by a particular date.

Brendan

In my limited experience in property, both buying and selling, I have learned not to believe a word that estate agents tell me. If the vendors bank have agreed to allow him to sell the property, ask to see the paperwork to support this. And get your solicitor to double check it.

joeyd79 said:

I have asked he EA for written confirmation from the bank to say the property can be sold but he has said i cannot get this.

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The EA has answered the question for you. If he cannot get the paperwork stating that the property can be sold, then I am afraid you are on a mission to nowhere.

Are you certain the NE is not above 30k?

It may be that the bank will agree to a sale, despite the negative equity but will only 'write' it down once they know the sale price. To prevent sellers in NE getting up to tricks. We are in tough times, you've done the correct thing in asking your solicitor to find out the situation. If you're not in a rush and love the house then sit tight.

And Estate Agents only tell you what you want to hear.

I am also lookingto make an offer for a house that is in negative equity (the EA has been quite clear on this). However, I'm unclear as to how the process works. There is a realistic asking price on the property which I would be willing to match (more or less). Is this price set by the owner of the property or is it established in consultation with the bank in question? I ask because I don't want to get tied up making an offer only for the bank to come back informing that they are seeking a much higher figure to help offset some of the negative equity. Any adice greatly appreciated.

We had similar case we had offer accepted on house which was 35k below the asking price we offered our maximum mortgage approval. We were told the vendor was in NE but their bank were willing to settle for the money from our offer. The EA led us on for ages and took a booking deposit he said he was 99% certain all was ok. So we paid for valuation so we could get our formal mortgage approval our side which we did. Around 4 weeks later we were told the bank would not take our offer. We got our depsoit back but it wasted a lot of out time. I think the EA Vendor only chanced their arms at getting settlement if they had potential buyer on table with mortgage approval but all along they knew they might not be able to sell to us. Lesson learned!

For triplej I reckon that if the asking price online can be matched you should not have a problem. Usually the asking price would be enough to cover the person selling the house with banks and they add a bit more on as a factor of safety for bargaining! But don't take that as a guarantee