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!

Interesting first post Paige.

Instead of abusing you (as what you are doing is vile and the agent will probably end up taking the flak.)

Lets put the boot on the other foot, how would you feel if you are buying somewhere in a rising market and at the last minute the Vendor says I have a higher offer pay me another £10k or I walk.

Transactions do take 3-4 months to go through and the market condition have not changed in that time at all.

In the long term even IF the price has gone down slightly since you bought it, bricks and mortar always goes up eventually. Even the 20% loss off the market in 2008 only took 18 months to recover and has now gone far beyond those figures.

I would also like to say that agents generally do NOT talk to each other as they are admitting to competitors that a sale has fallen out of bed, however, your name will be mud with that agent.

So suck up any potential loss and enjoy your new home as you will do when you do the deal.

Also surveyors are very aware of the market so they would not have valued it at the price you paid if they felt it was too high.

Paige888
…make an informed offer and the sellers know that the buyers cannot renegotiate at a later date.

So, everybody will behave?

IPMSL…

So the mortgage company of the buyer won't be doing their own surveys?

This post was shared on a property related online platform. Honestly, I think your original post was probably badly worded. Well done to you for raising a very contentious question.......

I am an estate agent and the market IS falling, however the papers, estate agents or government want to dress it up or attempt to hide this fact. It IS happening. Prices are rising Midlands and North still, because simply, they are always behind the trend on price rises and falls, which emulate from London. Do you research guys, look at asking prices falling. Look at sold prices, much of stock in the home counties is now on the market or selling for less than prices in 2016, in some cases 2015! Its May, the prime time to be selling and properties are hanging around, being reduced. Competitively priced properties are selling.

I am also looking to buy, but decided not to buy as prices are dropping, I bought at the peak before and it was painful, never going through that again. No one wants to buy at the peak when the market is on the turn. With that in mind, I'm taking a back seat and watching how this pans out, one thing I can guarantee, unless the government does something outrageous like removing stamp duty for everyone, prices will continue to fall for the rest of the year and I suspect the falls will also start hitting Midlands and North.

Anyone who is buying a property right now and is nervous about whether to proceed or not, should do a lot of research on prices in that particular area. There is so much information you can access through sold prices and Rightmove/Zoopla and also download property bee, very useful. You can still find yourself a well priced property as there are sellers who are identifying the market is falling and pricing correctly. Price is key! Ive seen some very well priced houses hitting the market, not enough though!

Only you can answer the question on what you do, our house buying process needs totally overhauling as I think if you take the plunge there should be a tie in period on both sides, that said, the market has changed massively in 4 months! Our slow buying system has allowed you lots of time to identify with the falling market and enabled you to be in a position to pull out.

I went to a barbecue yesterday and ended up in a heated discussion with another guest over house prices, who seemed angry I was advising they are falling! I get the fact that no one wants to hear prices are falling, but simply, they are! How long this trend continues remains to be seen.....THAT is the million dollar question.

Good luck, talk to the agent about your concerns, if they are good, they will be able to try to find a solution for everyone, sometimes though, this isn't possible.

Prices are falling

New to market houses are selling quite quick as they are realistic prices - similar houses at old market value are hanging round

Lower prices are good for all those buying and selling

Only those who brought at her peak and have negative equity are the issue but long term they should be OK.

Are you seriously saying you will be dropping below market price to assist first time buyers? Nah – thought not. You’d be crazy to do that unless you’d just won Euromillions.

Indeed.

Just as a FTB would be crazy to pay the price they offered in a market which has plummeted and knowing that the house they offered on, is no longer worth the price they originally offered to them.

Not sure why the latter is considered a moral reprobate while the former is a fine upstanding citizen just doing what makes sense in the market we all find ourselves in.

But I think it's something to do with a sense of entitlement.

a market which has plummeted

Come on now, get real...

As for the estate agent's preaching above - you need the word of professionals, not an estate agent.

Swimlyn. I'm not sure how you mistook someone who has been involved in the business 30 years offering a little bit of friendly advise, as 'preaching'.

The thing is the 'professionals' didn't predict the last crash did they.......?

advice! apologies

I still haven't seen any evidence to suggest prices locally in Croydon are dropping. I would differentiate between overly ambitious initial asking prices dropping and actual sold prices dropping.

In any case, as others have mentioned, as long as you're left with enough for a deposit on a different house, home owners looking to go up in the housing market actually benefit from dropping prices.

Swimlyn, which professional's words would you esteem as being more worth listening to than the people on the ground who are actually selling the property?

I don't disagree that you're going to get anecdata rather than reliable data if you only listen to random practitioners, but in this case, who are the people you would trust on this issue and do you know what they are saying?

So the mortgage company of the buyer won't be doing their own surveys?

As would have been the case if the govt hadn't abolished home reports. We still have them in Scotland.

This cityam article states latest figures for Croydon as 0.2% monthly fall, 0.3% annual increase. Basically, no major change.

You soundnasty op. Quite frankly if you did this no one would touch you and quite frankly I don't blame them!

I can empathise with the OP. The idea of negative equity is very scary - no one wants their lifetime's hard savings to disappear in a poor due to the dodgy housing market, especially if they then want to move. Apparently in the Barbican area prices have dropped 30%. That is seriously scary if you just bought and need to move on soon.

My question to the OP is: do you still think the market in Croydon is dropping? If so, do you have any concrete evidence for this? If you don't, you might want to consider buying after all, if not this property. A year's rent at circa £14k versus paying off an addition £8k off your mortgage means you have a cushion of £22k before a market drop makes any difference at all to you.

@incy it's still a drop and shows direction of travel. Croydon is further out and less desirable than London proper so will be less impacted. My area dropped 1.9% yearly according to that article. We just bought securing 15% off previous sold price on that road. About 22% off asking price.

Only people in extreme denial couId pretend the london housing news/data is pointing anywhere but down. Imagine OP even securer in her decision today.

I think it depends where you are. ATM there is so few properties for sale in my area. Currently nothing. (Very, very small area) So when anything does come to market you have to be quick.

I really can't understand how a minor monthly drop combined with a minor annual increase can mean anything if significant or concern Am I missing something??

Given the significant increases and decreases in other parts of London, the only thing I can conclude is that the London housing market is complex and you can't really draw conclusions for one borough based on what is happening more centrally or in other boroughs.

*of significance

@olivers We know where OP was thinking of buying & it's not a small area & has loads of supply. When we looked at Croydon & Lambeth (before settling on wandsworth) the trend was multiple reductions on crazy asking prices and a lot of "sold" properties coming back on the market a few months down the line. Sale fall through is high across London right now.

@incy Are you looking to buy something as a FTB? The headline figures may seem small but they show where the market is heading and anyone sensible wouldn't take a punt right now unless in it for the long term. You only have to look on rightmove to see reduction after reduction and loads of SSTC properties coming back on. I've witnessed this as recently bought. If I wasn't expecting first DC I would have postponed purchase.

I am north London borders.

As I said it all depends where you are.

It also depends on what people initially put there house on at.

I know of one house (not my area but not too far away) that went up for £1.8 million.

Similar houses were at the time going for about £850,000. Cue newspaper (wish I could find the article but know I have linked it on MN before) which also mentioned flat in Clerkenwell that had its asking price slashed from £8million to £4million stating that prices were tumbling and people were slashing millions off their asking prices.
FWIW £4million was probably nearer the mark for the Clerkenwell flat.

I think prices stalled after Brexit. A lot of those slashing prices are on properties that have been valued as though property were still increasing.
I think there is some adjustment going on and there will be a little reduction but as soon as the uncertainty with leaving the EU is sorted I think things will start sorting themselves. ATM it is the unknown.

I have bought and sold many houses all over the country and to me it is reminiscent of 1997 in some areas where there is nothing for sale.

…and anyone sensible wouldn't take a punt right now unless in it for the long term.
Heck, and I thought short-term was the way to go with property.

Sometimes you just have to get on with life, and buying somewhere to live is part of that. In no way is it a consistent way to make money. Swings and roundabouts…