Purchase Price Re-negotiations

[Lassa]

I'm sorry if this subject has been flogged to death. But I don't know what to do.

A. I'm in the process of purchasing a house in London recently inherited by some siblings (i.e. not purchased by them). I think it was probably marketed for about 3-4 weeks before my offer was accepted.

B. The intention is to put down a 25% deposit, for the interest rate we have spent the past 3 months applying for (not to mention the exorbitant arrangement fees)

C. We are currently 3 weeks from the proposed exchange date- everything appeared to be going well; until...

D. Following the bank's survey and valuation, they have said they are willing to lend £x amount of pounds, and I would require just over 10K to bridge the gap (to make up the 75% equity) in order for the sale to proceed at the originally the agreed price

E. However, I do not have 10K to do this bridging. I genuinely do not.

F. I have asked the vendors to please re-consider the agreed price in light of the bank's stipulations; and accept a slightly lower offer (which equates to 4% of the asking price)so the transaction can proceed...they have so far refused.

G. I have informed the seller through the agent (who I am aware does not have my best interest at heart) that the current ceiling price of this type of house on this street in this part of London is exactly what I am requesting the re-negotiated price is dropped to...the sellers still refused. They feel the house (despite needing internal refurbishment- complete paint job, 2 new bathrooms, a new kitchen, new garden fences etc) in its current state is worth, at the very least the original agreed price.

H. I am awaiting the result of a privately (expensive! ) commissioned survey, and intend to see how the report could possibly change the narrative going forward. But obviously being aware this may not affect anything whatsoever...should the sellers continue to refuse to negotiate.

My questions:

1. What should I do?

• I'm genuinely torn because as much as I like the house, and willing to put in hard graft to re-furbish it...the bank will only lend what they say the will lend. And unfortunately my money trees are not perennial.

1. How aggressively should I pursue re-negotiation dialogue?

• I've only asked the once, and intend to raise it again once the survey report is released. Whilst I want to be both transparent and firm about my position, I'm not looking for a fight. With anyone. Life is way too short for that sort of nonsense.

1. Is it unreasonable to think that, for the sake of saving a purchase (from a very genuine and keen buyer), the sellers would be open to dropping the price by ~4% (which equates to just over 15K)...given:

• the house needs a good amount of internal work

• a house a few doors down in much better internal condition completed just 2 months ago for the exact same price I am attempting to re-negotiate down to

• as it is inherited, they would stand to make around 150K profit each if the the re-negotiated purchase price completes successfully anyway...so it wouldn't be a catastrophic step-down

1. Would a seller, for the sake of 8.5K extra each risk the potential completion of a purchase, with no guarantee the valuation of the next person to some along (should that happen in the first place) would be more favourable?

1. Should I simply save myself further torture, suck up my financial losses and walk away? (survey, lender fees etc)

• I have already started looking at other local properties and preparing myself emotionally for the difficult decision to do just this.

I'm not into gaz-anything-ing. I feel this is unethical, so do not intend to play such cards. I do, however intend to be clear about my decision-making...and the next 3 weeks are absolutely crucial.

So any help would be much appreciated.

Thank you

Walk away now. If the bank has valued it so much lower than your offer it probably has good reason. Cosmetic work should have been taken into account in your original offer, you can't really use that as a basis of renegotiation now. You should have a copy of the surveyor's valuation report even if you only paid for a basic survey. The family may have sentimental attachment to the property . They may be being unrealistic but that is their choice and they don't have to sell to you or anyone else.

Just one point from me, if it's an inherited property they probably don't need the money urgently I.e. no one is relying on the money to proceed with the purchase of their dream home etc, so they may decide to stick at the agreed price or put it back on the market.

They may be emotionally invested in the house (think it's 'worth' a certain amount) whilst being in no hurry to sell.

Very frustrating for you.

So the sellers would have to drop 3.3k each and they don't want to? Greedy

Walk away. Greedy feckers. We purchased a place needing a lot of work and the greedy relatives (who were happy for their dying mother to live in a dump) would not budge. The agent and sellers were as uncompromising, manipulative and as grasping as each other. It left a bad taste in our mouth, and we resented every cent we had to spend on the place. We wished we'd walked away. It our circumstances had been different at the time we would have. They had us over a barrel.

Good luck btw! I'm still bitter can you tell?!

I'd walk away. We recently had the bank value out flat at 10k below the offer price ( 15k below asking price) and we've had to accept a lower offer. Problem is that the banks are doing this a lot and unless a cash buyer or someone with loads of extra cash comes along then the same problem will happen every time a higher offer is received. In our case we need to sell our flat as it's costing us a fortune to keep it but I don't blame the buyer at all. If I was buying and the bank valued it lower than I'd offered, I wouldn't want to pay over that amount either.

My advice is to stop thinking about the sellers and their situation and motivation. That's their problem not yours. You can tie yourself in knots second guessing sellers and what they "should" agree to. You decide what you're able and prepared to do, and let them know. Be prepared to walk away if you need to.

What exactly does the discrepancy result from? Is it that your mortgage deal requires a 25% deposit and they've valued the house 10-20k less than the agreed purchase price? In that case would you consider applying for a different mortgage deal?

Or is it a bigger difference and they're concerned about the value of the property not covering the amount lent? In that case would you want to buy this property at the higher price anyway?

You're not doing anything frowned on, you've received additional information in the form of the valuation and acting on that.

As pp said they may not be in a hurry and want to hold on. That's entirely their choice and you cannot force them to the table. Walking away rather than throwing more money at it would seem sensible.
Talking about ceiling prices etc now is pointless. You offered that amount. They accepted your offer.

They may well regret their decision and come back to you. At which point you get to call the shots.

I completely disagree. Why are the vendors greedy when they are simply holding you to what you originally offered? How much they stand to make / give up / how the money is to be divided between siblings is, quite frankly, none of your business. Its quite simple really. I think saying now that a house down the road sold for what you're wanting to offer is immaterial - presunably that information was available before you made your original offer?

It depends how much you want the house - I suggest you find a way to pay the original offer (if necessary applying for a different mortgage) or you walk away.

I think the market is stalled so 10k is nothing. I am renting looking to buy and things being reduced all over the place Agent who sold ours says looking worrying so they may decide to take if their agent is honest which is rare I know

1. The executors have a legal duty to accept the best price or they can break the law so they may be less free to negotiate down than ordinary individuals.

1. It may b e they think prices have risen anyway so losing you is no big deal.

1. They may be in no hurry to sell. I was disappointed our parents' house sold so fast - we had hoped to have a few more holidays remembering old times although on balance it was good that it went fast-ish

They may be able to lend you the £10k extra by the way and then you pay that back over a year or two if they were really keen to make the sale although I doubt it.

Not really sure what you're asking. You have lowered your offer and you do not have the £10,000. They don't want to accept.

What else is there to say?

Thanks for the honest responses.

A few points:

LIZS: Cosmetic work was taken into account in my original offer, when I offered 9K less than the current ceiling price, and 15% below the asking price (the asking price seemed...lets just say unjustifiably stratospheric and dare I say it, a little opportunistic. The sellers refusal to accept anything that (and I quote) 'insultingly low' and my desire for the house to be taken off the market (to exclude other potential competitors) and for the whole process to be over was probably what led to my offer rise. Desperate and perhaps stupid move, I know. However the bank essentially being in agreement that it isn't quite worth the accepted offer has injected some objectivity into the situation.

HahaHarrie:You obviously didn't walk away and still feel negatively about yoru decision. However...now the deal has been done, and the house has been made your own (I assume)- has it made financial sense? Or are you essentially poorer for not walking away? I have no doubt I can do all that needs to be done on this house (in the event the survey doesn't identify any structural clangers); I just wasn't prepared for the idea of getting into further debt I hadn't previously accounted for (a 10K personal loan?? Ouch). But I agree it could go either way- I could spend the next 15-20 years regretting it, or it could all be water under the bridge by then as the decision didn't make me bankrupt (ha!).

Catkind: Its been about 3 months from offer acceptance till now- so applying for a different mortgage deal would take even longer. I know if I have no choice, this would be the way; but there's still no guarantee the valuation would be what I need it to be etc. It's a gamble.

BaffledSomeMore: My original offers were with the ceiling priced in mind. So it's not like, it's the first time I'm mentioning it. But I take your point.

Again, thanks for the responses.

I think the overwhelming response from the thread is, should the sellers not be happy to accept the lowered offer (which, I know they have no obligation to irrespective of their reasons for anything), I should walk away.

The survey happens tomorrow. And the report comes back on Friday or next Monday. Unless some sort of middle-ground miracle happens, and although it means I've wasted the past 3 months and about 1.5K in fees, I'll have no choice but to do just that. Thanks.

You said in the original post that the siblings would lose 8.5k each as a result of the re-negotiation so, on the basis that there are 2, you are looking for a reduction of 17k? Is that right?

If I were the vendor I wouldnt place any reliance on a survey a would-be purchaser has commissioned, certainly not when a bank has already had a valuation. Anything that your (paid for by you) valuer flags up which wasn't on the bank's survey I'd just discount. I dont know why you're throwing more money at it when the vendors obviously dont feel the need to negotiate. I expect they may well just put it back on the market.

So you previously upped your offer against your better judgement and to a level you can't really afford. tbh it sounds as if you have overreached yourself and the bank is doing you a favour by reining you in . Even if the new survey values it higher the bank won't lend you any more and vendor can ignore so am not sure what you are hoping to achieve.

You can no longer afford the property, the vendors won't drop the price so you need to cut your losses and walk away.

It's an absolute waste of energy trying to second guess their motives or circumstances. That way madness and bitterness lies.

Hi Lassa - I think the negativity comes from how it was handled, the nature of the property market and the pressurised situation.

We were chain free, in a good position, able to move quickly (which they wanted), purchasing a house for the asking price of just under £1 million and felt like we were scum to them. We had started at a negotiating point of £25k off supported by a comprehensive list of repairs and quotes as to how we came to that amount (which was just for three items on the list - not all). It was a case of take it or leave from the sellers, or we'll put it back on the market for more as we have 'purchasers lining up'. They might have had other people interested but they had no idea how much they would have offered, if anything at all. We didn't pursue the negotiations as at the same time my mother had gone into hospital and was very ill. I was juggling a lot of other stress so I didn't have the energy to fight it at the time. Would they have got more? I don't know as it was already priced at least £40k more than similar houses in much better condition on the same street. Family houses in our price bracket come on the market fairly infrequently and the ones that do come on go instantly. We had lost out on every other property we'd gone for in sealed bids and had been looking for 1.5 years. We finally had an offer accepted on a house. So it was a case of a bird in the hand. We were worried we'd paid too much at the ambitious asking price! The house itself isn't our dream house, although the area is great the location is less so iykwim. It was definitely a compromise. It was just what we could afford as the market had gone stratospheric. The house when we took ownership was also left in a complete mess, so dirty. It had been cleaned and the garden neat when we viewed the property but then the family obviously stayed in the house as they cleared it out and left it in a horrible state. They obviously had zero respect for us. That's more an issue of my personal standards. When we left our place, it was immaculate, we were happy to negotiate with the purchasers as they were accommodating to us and about to give us a lot of money.

Time will only tell if we will be poorer. A couple of months on, I know if we'd bought the house now we would have got it for less as the the market has slowed down now. Hindsight is a great thing....

I'm sure once we finish the renovations and finished paying for them, we'll forget all about it!

Your decision might depend on the property supply where you are too? If there are a high turn over of properties, another (even better) property might come up very soon.

I recently managed to re-negotiate a sale agreed price following various surveys which stated ridiculous amounts of asbestos. I think they re-negotiate because:
A) we were not in a chain
B) solicitors & original purchase price mortgage where through
C) paying for surveys etc showed we were genuine purchasers
And importantly
D)once informed of the asbestos they had a legal obligation to inform Any potential purchasers so if they had not re-negotiated with any potential sellers would either not have made an offer or wouldn't go any higher than our re-negotiated price ie they were back to square one

Also an inherited house in serious need of rennovation.

So can you find any loophole / bartering aspect similar to c) ?
FYI - I am in NI so appreciate things may be different here.

If they had not renegotiated I don't think we could have went through given we needed lots of £ to make it livable. I feel for you, it was a very stressful week waiting on their answer!