To pull out of house purchase so close to exchange or gazunder?

[TitaniumBev]

Totally miserable - any advice/views/abuse welcome!

We're FTB's, both 30, scrimped for years to get deposit together. We both grew up dirt poor & wanted to have a bit of security before children so are keen to get going now and sick of private renting.

Offer accepted on house end of Jan, the asking price was kite flying given location (Croydon). They wanted 460k we settled on 440k, only now due to exchange next week after delays (both sides, minor errors).

Since then though all the news around the economy & housing especially around London has been terrible. Monthly drops of around 1 - 3.6%. Terrible rics reports & rightmove data etc. Similar properties in the area are coming on for less but there is not a lot coming on so hard to judge. Properties hanging around for a long time.

I now feel the agreed price is too high, a lot has changed in 4 months and I think it's best to walk away. I know this will screw over the vendors & the chain but don't like DH's suggestion of asking for a reduction so close to exchange. He thinks we should at least give them the chance. (How lucky!!!) Prices seem to be down around 6% he reckons split and ask for 3% off. (£13,000 ish)

Its such a big transaction, the market looks soooo bad and its not dream house or anything. Should I walk or offer lower? I'm not going to over pay for a house just to be nice/honorable unfortunately.

URGH!

How awful are you!

You don't get in this deep and fuck everyone over because of £13k, it's not even a very high %.

If I was a relative you'd used for legal work I'd be pissed off too.

Surely you lose money (£1000 pcm +) every month that you pay rent? If you pull out of this you could easily rack up the £13000 you think you're down in searches, fees and rent whilst you search for another one and start again. And that's before you even start to consider the morality of the situation.

Just suck it up and buy the house...

You should have never offered on a house you didn't completely love.

Surely that's very unrealistic? Three years after buying it I'm glad we bought our house, but I wouldn't say I love it, or the area it's in. However, we, like lots of people, couldn't afford what I would have loved. I think deciding to stay renting because we liked but didn't love the nicest house we could afford would have been pretty foolish, especially since now, a mere three years on, we'd have been completely priced out of the same area - I had a look on rightmove the other day and our same budget in the same area would now only buy a flat, not a house.

no one will deal with her - EAs are actually quite choosy and vet time wasters
This must be a London thing then- it certainly doesn't happen in most areas of the country.

Your name will be mud with all the EAs in the area though, they do all tip each other off.
I'm even more skeptical that this will make a substantial difference. There are hundreds of EAs in London.

I have to say I am very impressed at the morals of all of you who would risk taking a big hit & ending up in negative equity.
Buying a house is a business transaction and should be treated as such- some people are overly emotional (for obvious and valid reasons) about it. While you are entitled to put your own interests first, you should also conduct yourself with integrity in business. Pulling out at the last minute causes huge upset and inconvenience to a number of people and should only be done if absolutely necessary.

If you really have over offered by so much that you would be in negative equity, then by all means pull out. That is not going to be just because the market has dipped a little recently. It is likely to pick up more over summer.

If you are thinking of keeping the house for a long time the average increase is very likely to dwarf current instability. If you want to sell in 4 years then I agree it is very uncertain whether prices will rise or fall. If you are sure this is not the house for you then do not go ahead, but consider what your real reasoning is first- the idea of losing money seems tenuous to most posters.

Sounds as though a lot of posters here have only ever seen a rising property market OP.
Unless the thread is filled with ghosts who died in 2005, that seems unlikely.

If I was a relative you'd used for legal work I'd be pissed off too.

This is a good point, actually - are you expecting them to do the whole thing again, also for free? Because if they don't want to (and who could blame them?) that's going to cost you a lot more, too.

Why bloody ask then?

People are being emotional in their responses. Understandably.

But you have to do what is right for you and if you genuinely think the price you offered is too high you should walk away.

It's not great for the sellers but the alternative is you're out of pocket to be polite.

It's bullshit that most other estate agents won't work with you in the future, estate agents, like sellers, can't afford to be fussy in this market.

American
Fill her boots- she is about to hand over 440 for a home that the owner will have paid so much less for- if anyone is filling their boots it will be the seller rubbing their hands they can get almost half a million for an ordinary home.
You have absolutely no way of knowing that. You realise that's a standard priced house right? They aren't gloating millionaires trying to pull one over on anyone? They're probably normal,bog standard, hard working people who are now potentially going to lose out on the house they were meant to be buying and the thousands that theyve now spent on it already getting to this point. Because unlike the OP they were serious and didn't get freebies along the way.

MargaretCavendish

But you bought the house. Had the prices in the area dropped, would you have pulled out?

For the sake of 13k, OP is wanting to pull out and is happy to continue renting. For me, that would be she really isn't fussed at all by the house and therefore shouldn't have put an offer in. It's all about making a profit to OP it seems.

user 467- I think they are entitled to think of their own interests to be honest. Do you honestly think all sellers and buyers should be thinking in a selfless way when they buy a property? Their job is to think of their own interests. This is their hard earned deposit-no inheritance or bank of mummy and daddy gift, unlike so many people in London rely on. Why on earth should they be concerned with 'poor' people in the chain who have already had their chance to buy a property at a much lower price so they can now buy their dream homes? A chain is a chain until it is not a chain. This is the reason it is seen as an advantage if you are a first time buyer and not in a chain yourself. The OP has had a change of hear based on changes that she has observed and since the deal is not done she has every right to look out for her own interests, no matter how inconvenient that may be for others in the chain , who should be fully aware that chains can and do collapse when buyers have a change of heart or circumstances. The issue is that London is relying on first time buyers to keep the whole pack of cards from toppling and as a home owner I am ok with it toppling because I think it is just unsustainable that average homes are now costing almost half a million pounds.

Estate agents near me (Midlands) would no longer be touch you with a barge pole for a long long time.

Why arent you looking long term you wally?

£13k is a piss in the ocean.

Complete on the property as planned. It will be back up to value within 18 months.

Are you grown up enough to buy a house, really? You don't sound it.

If you're that fussed about FTBers and how unfair it all is, americanlife, you could always give your property away for less than it's worth

The outrage on this thread is hilarious.

No-one is morally obliged to go through with a bad deal. I’ve got huge sympathy for first time buyers in London right now. Much more so than for the OP’s seller and the rest of the chain, who will all have benefited from price rises.

The £13k can be absorbed by the chain if everyone else wants to keep it going. Or they can tell the OP to get stuffed. But either way they’re in a much better position than the OP because the market right now is very difficult to call.

I don’t see how the market can continue as it was, you need a constant stream of FTBs to continue the cycle.

a basic understanding of economics points to the conclusion that the bubble will pop

I have heard this now for 15 years, at a conservative estimate. Prices have always merely corrected a little or stagnated, then risen again. No ‘bubble bursting’ no matter how much people wish for it.

Well your question was whether to walk away or gazunder. I suppose in the circumstances gazundering would be marginally less shitty than pulling out.

I don’t want to derail the thread but if you had made an offer then had a valuation done and realised you were paying too much for the property would it be okay to pull out x

Estate agents near me (Midlands) would no longer be touch you with a barge pole for a long long time.

They have a legal duty to pass all offers on, so all they could do is make a vendor aware of the OPs previous behaviour.

It seems a little unlikely that they would waste their time passing OP's details on to all other EAs in the area- the housing market is pretty fast moving, that would be a very onerous task each time someone pulls out.

OP posted in the other thread for traffic & said so! Posted almost at the same time so calm down

OP, as I said on other thread, pull out tomorrow, apologise & move on. You can't risk your financial security long-term for strangers. I think the other posters who are saying different are liars or not in the London market.

We've just bought, we kind of know prices will fall but are here long term. You're not. Rent & run when you can!

In a buyers market this will happen more and more just like gazumping does in a sellers market (doesn't make it any nicer but is more understandable).

Also, presumably your vendors have quite a lot of equity in their property as will the rest of the chain? They're housing market winners already. Worry about yourself. The UK process needs complete overhaul!

I do know the London market. We are landlords of a place in a suburb and honestly I hope the market changes because it is disgusting that a young coupe in their 30's are being lambasted for having doubts about buying an ordinary home in an ordinary commuter town outside London. Many people who are home owners in London are stuck in a smug little bubble and a basic understanding of economics points to the conclusion that the bubble will pop

If you did know the London market you’d know that Croydon is in London (London Borough of Croydon), and that we’ve all been waiting for the bubble to pop since 1975.

NoSquirrels

I do agree in principle but then I think something has to give. Everywhere in London has gentrified in terms of prices now & lending is so much tighter. The gov are desperately trying to prop it up with help to buy & keeping interest rates low. Looking at my own circle & my neighbours many of them are stuck on the ladder as they can’t take the next step due to stamp duty & this is with thousands of pounds of equity. Then I know 3 families who have left London for other cities as they actually want more than a terrace for 1milion or don’t want a huge mortgage.

pyramidbutterflyfish
yes, it's hilarious to screw people over. There's hasn't been a market crash, if the chain collapses, people will be put in a shit position.

It's totally unnecessary, if it was such a bad deal, the OP should have made her mind up much earlier in the process. Her posts show that it was a FB not really into the buying process.

The OP is not morally or legally obliged to do anything. Horrible attitude though.

Americanlife I wasn't debating with you whether it was the right or wrong decision for them. Just your argument that it wasn't selfish. Something can be the right thing to do for you but still be selfish. This is selfish.

I'm saying it's a legal but shitty thing to do. I've been a homeowner in the Croydon area since 1984 and have been in negative equity twice, once for about 10 years.. Even allowing for that and the various crashes and recessions I have never sold at a loss and have gone from paying £24000 for a one bedroom flat to currently living in a property worth over a million. Buying property to live in (as opposed to speculation) is a long term game. My mortgage on the current property is about 10% of what my neighbours are paying to rent a similar house.