Help, my buyers have reduced their offer!

[LemonadeFromLemons]

This week I negotiated a new asking price on my next house (I’d agreed the original price before lockdown and the market has changed quite a bit with the economic outlook).

The buyers of my house have today lowered their offer. I was kind of expecting this and would have thought they would be a bit silly not to! My issue is the amount they are asking for! They’re asking for a 12.5% reduction 😐). Obviously I’ll be negotiating them down from that! My question is by how much? I got a 8% reduction on my next house, I was hoping to keep some of that!

So
YABU - you should give them the same reduction as you’re getting

YANBU - this is a business transaction you should counter with a lower reduction, say 5%?

For context, they are first time buyers living with parents. I’m concerned they might pull out altogether.

Sodamncold

Laaalaaa is total correct In Scotland all negotiations are done between the solicitors!!

We already have agreed and buying and selling fee with the solicitor for his services, it’s his job to make the best deal for his client.

A lot of solicitors only deal with conveyancing. We don’t real have estate agents In Scotland .

inexperienced first time buyers being guided by parents and agents telling them the usual...its a buyers market, you're in a strong position with nothing to sell etc.. they usually try it on last minute in my vast experience.
speak with your agent, they should guide you but ultimately in these times they just want commission .. decide what reduction you can afford, ultimately decide will you risk them pulling out, its a case of balancing the books and factoring in legal costs/moving expenses etc
good luck !

House prices are likely to fall by considerably more than 8%.

Grab their 12.5% reduced offer with both hands and re-negotiate a larger reduction on the house you are buying.

Oh boy. You are the winner though. YOu got 8% off a more expensive house.

Do you think they should have over committed on a house that you're QUOTE ''not surprised'' they've offered less on!

Maybe I’m too upfront but I’d respond by telling them that you have managed to secure an 8% reduction on your onward purchase and can afford to offer them the same but can’t afford 12%.

I think they’re respect your being upfront and the worst they can say is no. They don’t know the value of your onward purchase so they might take it in which case you can keep the difference.

I do think it’s a bit shitty that you’re miffed you can’t profit from the economic downturn though. If you actually pass on your savings to your buyers you’re not better or worse off than you were before.

values havent dropped and agents have seen a lot of interest in this last 2 weeks

Yet we already know from this thread that at least one buyer and seller have lowered the value by 8% and another property by between 5% and 12.5% So I think there's quite a bit more evidence that prices have dropped.

If the property is a "starter home", then these are likely very over-valued, 12.5% doesn't seem a cheeky offer at all.

Well the value of larger houses is likely to fall by less than the value of smaller houses (as on the whole it'll be those in smaller houses that will be forced to sell while those in larger houses are more likely to have alternative ways to manage a reduction in income). As you won't be losing out financially I'd accept their reduction and push for a exchange date as soon as possible.

Everyone talking about depression and house prices falling through the floor are going to create a self fulfilling prophecy if we’re not careful, yes we’re technically going to be in recession but there’s as many experts predicting a v shaped dip as there are predicting a depression and the end of the world

That aside, my response to the buyers would depend on whether I could afford the 12.5% reduction or not? I’d ignore any guilt over the reduction you’ve got on your new house, you asked, your sellers accepted - it was their choice. You don’t have to pass the reduction on if you don’t want to, there’s nothing to feel guilty about.

I wouldn’t go back with an agreement in the first place - definitely counter offer at 5% - you can always negotiate more. I think it’s possible they’re struggling to get a mortgage with their current deposit so the 12.5% reduction brings their deposit in line with the mortgage providers new loan to value ratios.

I’d also do some market research - have houses similar to yours dropped value in recent weeks? If not then hold firm at 5% (if you want to offer any reduction at all)

How long did it take you to get this offer - is it the sort of house likely to sell quickly? Like PP have said, given the new deposit rules a “starter” home is going to hang around a while whereas a 3/4 bed that people generally upsize to stands more chance of selling as people have current equity to use as deposit.

What sort of position are your sellers in - would they hang around waiting for you to get a new buyer if this one fell through?

@sirfredfredgeorge individual people currently choosing to offer less doesnt matter much, based on the evidence of market interest right now, the sellers would be able to get their higher offers elsewhere if they pulled out of that particular sale. All major agents have reported an upsurge in interest so it isnt the time to suggest values are down.

In these cases it’s always the first time buyers that is taking the most risk. I bought after a recession but too many friends where screwed who had bought at the peak through falling prices and rising interest rates. If I was in their position I would probably be after what they are asking if not more.

I don't understand why you should be quids in on this given you've negotiated a reduced price. It's not very moral imo.

However given you're in this situation I would tell your buyers that you will ask your those you're buying from and then come back and agree an 8% reduction, and consider yourself very lucky if they agree!

That’s what I was thinking to start negotiations at 5% but I don’t want them just to turn around and say no and pull out.

It was two weeks from my house going on Rightmove to accepting their offer, I had one offer before theirs but it was too low (or so I thought 😕).

I don’t know about the market at the moment. My agent says that he does have other sellers that have accepted reductions but some have completed at the price agreed before covid.

I don’t think my sellers will hang around, no. They are moving away from the area to be with family.

I don't understand why you wouldn't see it as negotiation process. Be hard nosed and counter offer them the 5% or whatever. You'll end up somewhere in the middle

@choosesoap I think the renegotiation on actual sales shows a lot more about the market sentiment that estate agents saying there's interest, indeed that interest could be specifically because of a belief that people are willing to take significantly less than a few months ago.

Assuming the house you are buying was 400000 and the house you are selling is 200000, even giving them the 12.5 percent they are asking for, you are still better off than 2 weeks ago by 7000 quid. Honestly get the agent to do their job and find out where their limit actually is. I think you'd be silly to lose them.

My DD is buying a house from a professional landlord who owns multiple properties. He delayed pre lockdown and so it hadn't gone through, he had refused any offers and they were paying the full asking price.

It is still going ahead and due to complete next week but he contacted them out of the blue 3 weeks ago and offered a reduction to go ahead.

They are first time buyers, mortgage all greed, 20% deposit. I think he realised that if it fell through anyone with a smaller deposit might struggle to get a mortgage.

Choose to give both sides the least pain rather than one side the most gain.

RICS have already issued guidance to valuers for an immediate 5-10% drop.in addition the amoiunt of time to get good value has been extended from 6 months to 12 months. A fire sale value woould normally be estimated at 3 months but that has now been extended to 6 months. There is going to be MASSIVE unemployment. HSBC and others have reduced their offers to buiyers.. If you NEED to sell you are going to have to take a big hit. Good time to pick up probate properties. Everyone in the business is putting on a brave face outwardly but to each otherwe all know it's GRIM.

Only you will know what your property is likely to achieve - what was the interest in it before this? If you didn't have much interest then you probably want to try to hold on to these buyers and suggest maybe 8% or 10% . It also depends how much you want to move...if you're not desperate sit on it a while - but to be honest it could be a few years before things are normal again. I have a feeling myself things will only get worse in the next few months when furlough period ends and the real ramifications hit home. If you really want the place you have lined up do what you can to get it!

Not sure what industry you work in to suggest that, but the major agents, developers and Homes England data on closed sales across all regions in dont show a drop yet so those renegotiations seem to be limited to a the odd nervous or first time buyers who are more forced by LTV ratio changes, but not currently representative of the wider market.
It might further down the line but if I was selling right now I'd be holding pretty firm unless I needed these first time buyers to purchase rather than wait for someone with a better deposit. If the OP knows their deposit then it will give a better idea of why they think they should get a reduction.

From what the OP has said, her buyers have asked for that percentage because they know that it adds up to the same monetary amount that she's got off the property she is buying.

So, OP, you could offer them the same percentage as you negotiated. You could decline to reduce the price at all, as I usually say that a change in the price of one house in the chain shouldn't really affect any of the others. But I do think you've been hit by karma here! I hope you can sort it out and everything goes through smoothly.

So, you want to benefit and make some money with an 8% reduction, but you don't want your buyers to have any benefit/fairness. Okaaaay then..good luck with that.

I wonder if they realise they stand a chance of not getting a mortgage if this one is withdrawn.

OP
I'm surprised that you esate agent did'n't have the "We'll try this, but hope to get that" conversation"
You've negotiated 8% off your proposed move, why be a twunt about someone else negotiating on the property you are selling? It might not be their final offer.

It’s okay for you to offer a lower amount but not them?