WWYD re: house purchase

[ftb30]

Posted for traffic as I really need to make a decision today and my heart is ruling my head.

Property was advertised at £352k, offered £340k and this was accepted. Property is a 3 bed end of terrace in Essex and this seems a fair price looking at other properties on the market. It is ex-LA but has been privately owned for over 30 years and improved/extended. The next door property is privately owned but there are still some LA owned properties in the road.

Mortgage valuation has just come back at £315k. Reason for lower valuation was the mixed social housing and fact the property is ex-LA. Our mortgage provider not willing to re-evaluate and estate agent has told us that there are few mortgage providers that will lend on ex-council (I had mo idea about this!).

We can just afford the extra £25k but it will move our mortgage into the 90% LTV bracket and eat into funds we'd hoped to use for improvements. We also benefit from stamp duty freeze at the moment which I think will be withdrawn if we start again. We've paid for survey and incurred legal fees already.

We would stay in house at least 6/7 years. We are TTC and getting married (hopefully - postponed!) and the house is large enough to grow our family by two kids before we'd need to consider a move!

Seller will not lower price according to Estate Agent.

AIBU to ask WWYD?

1. Reduce offer to closer to £315k and pull out if seller won't accept
2. Reduce offer to closer to £315k but continue with higher LTV if seller won't accept
3. Continue with higher LTV
4. Just walk away now

TIA. 

Was the £315k valuation a drive by or did a surveyor actually look at the physical house? That would affect my view.

I have also not heard of mortgage lenders not lending on ex council properties. How would that even work? How long after it stops being a council property would they start to lend? We've previously bought ex-council (1920s semi) that was better constructed that the privately built house next door.

Our most recent house (completed in August) was down-valued by the mortgage lender. The vendor initially said they wouldn't budge. We sent proof of the down-valuation and they took the weekend to think about it before accepting our lower offer. We couldn't afford to pay the difference and were very clear with the EA that that was the case.

Prices feel too high at the moment, it feels like it did when we bought ours in 2002 although it took a while for it to drop.

In the current climate you would be crazy to offer over the valuation price. Walk away.

I would say 1 and then 4. Good luck!

Sorry op, no advice I’m just staggered to hear that many lenders don’t lend on ex LA, is this a SE thing? Never heard of it before. In our area (SW) ex LA/HA houses are really really sought after. Large gardens and loads more space than the new builds. We just bought one in the summer and had to fight off about 12 other buyers, and offered waaaaay over the asking price, was approved by mortgage who valued it at the purchase price.

reduced offer but back it up with paperwork and proof of valuation or they will just think u are taking the piss.

@Bouledeneige

I agree with Ffsffsffsffsffs - why did you offer £15K over asking price in the first place? I'd go back at valuation or valuation plus £5K.

I had a similar situation. I lost my buyer and then got a lower offer. My vendors of the place I wanted to buy wouldn't reduce. They went back on the market and then finally, when I managed to get more out of my buyer, accepted a lower offer. They had to get real.

Be prepared to walk away. Its not a good investment to pay way over valuation.

SHE OFFERED UNDER ASKING!!!!

If they turn down your offer I would tell them the revised offer still stands and will do until X date, unless you find another property sooner. X date being the point at which your mortgage offer is still valid and it can still all be completed before the end of March. That way if they return to market and don’t get what they hope then there’s a chance it may come back to you.

@DanielRicciardosSmile

I'd go with 1 myself.

I've also never heard of mortgage providers refusing to lend on ex-council stock. There aren't many who do "right-to-buy" I believe, but this isn't the case here.

I had a mortgage in principle sorted which was withdrawn because the house was ex LA. So it's not unusual in my experience.

Sorry, I misread that op had offered £340k on an asking price of £325k, sorry!

Still go for 1 - you don't want to get stuck in negative equity for god knows how long, plus, if you're giving thousands of pounds away for no good reason, can I have some please?

Get a mortgage broker. How did you choose mortgage provider?

Brokers can advise on ex council properties and mortgage providers ...
Do you feel they got it wrong!

1 is the only sane option. I am old enough to remember how awful negative equity was last time around and wouldn't ever want to return there.

Definitely 1. We are going into recession and it will affect house prices.

Absolutely option 1. You can’t pay an extra £25k for a house that isn’t worth it. It just doesn’t make financial sense. Good luck op.

Ask yourself what you think house prices will do in the short/ medium term?
I think they will drop. I might be wrong.
But if you over spend and prices drop, that could take you years to recover from.

I would contact venders estate agent and tell them your mortgage lender has valued property at lower price and so you are reducing offer as mortgage company won't lend you more than house is worth. See what happens. It would be a pity to lose the house but far worse if you ended up in negative equity. Mortgage rates are low now but it won't last forever. If economy starts to boom in a couple of years time the mortgage rates will shoot up too. Don't get caught out. If 90 percent LTV very little wiggle room and many lenders won't accept 90 percent LTV.

I feel like I tried hard to read all OP's posts, and can't figure this part out:

How much do YOU need to move? Or move into this area? I'd stay at £330k offer if you very much need to move.

Estate agents always imply their sellers are being unreasonable, btw, and most of the buyers too. It benefits EAs more to sell fast or to seem sympathetic to whichever party they are talking to in the moment.

@lljkk

I feel like I tried hard to read all OP's posts, and can't figure this part out:

How much do YOU need to move? Or move into this area? I'd stay at £330k offer if you very much need to move.

Estate agents always imply their sellers are being unreasonable, btw, and most of the buyers too. It benefits EAs more to sell fast or to seem sympathetic to whichever party they are talking to in the moment.

Doesn’t make sense If they imply the buyer is unreasonable then that is not going to speed up a sale, is it?

I'd be asking:

• how is the asking price Vs non-ex LA houses in the immediate (1mile) area

I would reduce my offer by 25k, with a view to meeting them half way.

EA tells the seller or buyer what they want to hear, to keep them each sweet.

1

You dont even plan to be in more than 6 years so unlikely to recoup the additional £25k AND you need to spend money on renovations?

I'd happily walk away if she does not accept £315, which is pretty unlikey as you bizarrely dangled £340 in front of her.

Unless you need to move urgently I would have the estate agent go back to the buyer and say it's been valued at the lower price so you need to lower your offer to £320k (a little over the valuation to show good willing, they can counter offer if they want

Seller has rejected offer and said they will not go lower than £330k. They have asked EA to put it back on the market tomorrow.

Oh no Op that’s stressful. Take some time today to think about it. In reality it’s £9k more which you said you can afford. It’s £10k less than you were originally prepared to pay. In reality is this a home you will stay in for many years or a stop gap? If it’s the first maybe consider if that extra money is worth it to secure the property if you really love it & it will fit your needs.

Pull out. Sorry, it must be heartbreaking but the house is clearly overpriced.

Sounds as if they've made your decision for you really - their choice to make of course, but good luck selling it in the current situation