negotiating on a house that needs complete modernisation

[Wabbit1]

Hello everyone,

I'm new on here and this is my first post on one of these forum so sorry if I get things wrong, be gentle with me!

We had an offer accepted on a large Edwardian house in London which needs everything doing, wiring, plumbing, replace kitchen extension (the old one has damp and was built inadequately in the 70's and the damp has seeped up the brickwork from the foundations), the bathroom needs replacing and the bedrooms all have damp because the guttering has gone and all the water has seeped in. All rooms need replastering too and the floors are good but need carpets etc.

We had a budget of £70k but the bank has offered us less than was offered in principle leaving us short. The survey is due in this week but we've asked our builders to go in and have a look around. They think £70 is not enough to get everything done. They think the roof is leaking (the rain of Friday highlighting leaks in the roof which were dripping into the bathroom).

We offered £20 over guide price and want the house but don't know how to proceed with reducing our offer. The estate agents are quite honest for London! So I want to be honest with how we stand. Afraid we'll lose the house but we have 2 year old twins and can't live in a house that is mostly unlikeable!

Help!

I meant unhabitable! Predictive text!

The trouble is that some of the things that you mention are obvious and would have been 'included' in your offer of twenty grand over. However, issues such as the roof leaking might not have been, so you could perhaps try seeing if you can negotiate based n the things that weren't visible but became apparent in the survey?

Why did you offer so much over the guide price? And didn't you realise all that work would have to be done? How irritating for the people who are selling the house for you to now come back and say you don't want to pay that much after all.

If you can't afford to do all the work in one go then:

a) prioritise what is most important to make the house habitable and spend the money on that

or

b) find builders who will do it for your budget

Yes, we knew that the damp issues etc would, in the most part, be covered by our 70k which was why we thought we could offer over asking price. The reduction in the mortgage offer coupled with the roof issue eats into that a considerable amount. We are prepared to walk away which would be a shame but I think I have to reassess what we can achieve on the budget we now have...

We also thought that the extension wasn't as bad as it is. But having to virtually rebuild it will increase our costs even further...

BIWI,

As I said, we expected our offer in principle to go through to offer, this has reduced our £70k budget which we were sure would cover guttering, a new kitchen, rewiring and plumbing. We'd spoken to our builders who thought we could get the basics done. We didn't need it to be completely renovated. Just able to cook and bathe. And the roof issue was an unknown - guttering we knew about.

Was the house priced accordingly wrt to the amount of work needed. If it I priced much lower than similar houses on the road, then you may have little wriggle room.

House prices in our area have shot up in the last 6 months and there isn't much comparable to this one. The guide price was around the same price as a house in good order sold at 6 months ago.

The valuer said that it was difficult to get a value on houses in our area at this time as they seem to be rising quickly.

70k does not sound much for that sort of project. You will probably find there is more to be done than you first estimate. We have been renovating ours for nearly a year and it's a nightmare! I would be wary of buying it if your budget is tight.

I'd walk away.

If you need a new roof, rebuild the extension, retire, replaster then £70k is not enough.
Once they start stripped back they will uncover more problems.
The roof joists may have rotted with the rain too.

Living on a building site with 2 year olds will be grim. Though you may have alternative accommodation whilst the work is being done.

It will be very stressful until finished. I hope you have some one who can oversee the work. Personally I would wait for another house that needs less work.

Thanks everyone for your constructive responses. We'll sit down and have a good think. But looking like we might have to walk away. :(

As Fluffy says above, you need a qualified project manager who can query what the builder wants to do and check the work as it is done. That will add to the costs, but if you don't do it you risk ending up with an uninhabitable shell.

We are renovating a currently unhabitable house. Had every survey under the sun done & naturally issues arise as work is being done.

We have a 70k budget (NI) for renovating existing (inc installing OFCH), extension, kitchen, bathrooms, flooring, painting, landscaping, fencing & garage. It's not stretching that far, we are doing as much as we can ourselves & will need to go back to bank to release equity once we have ploughed In what we to finish it off (have spoken to them & In Theory there are no issues).

The reasons we can make this work are:

1. we are not living on site - have a DS
2. we live around the corner & I am part time
3. have family in the trade who are getting us deals etc
4. because it was vacant more than 2 years since 2008 we are eligible for 5% vat as opposed to 20% - Google this on Hmrc website if it applies to you
5. we will get it finished either through bank or worse case scenario my parents (early inheritance)

We put down a big deposit & know I wish we had put down less & kept more cash back.

Can you look into Another lender??

It sounds like it's really a professional builder/developer job.

If you paid £20,000 over the asking price then you must have been aware of a lot of competition?

In terms of negotiation, we got 10k knocked off our accepted offer due to asbestos - I got 2 quotes for removal in around 14k which I forwarded to estate agent. So if the roof state is not already inc you might be fortunate.

The fact that we were not in a chain & were a young family looking to create our permanent home swung it for sellers (was their family home but they couldn't afford to fix place up & we were preferable to builders looking to maje a quick £).

Thank you GreyBird, that's really helpful. We wouldn't be living on site either, but interesting to read how your money has been spent so far.

We did a spreadsheet with our estimated costs but with some of the new issues we haven't budgeted for.

Fluffy and Sallyforth, the building work would be done by the company my husband works for. They build homes as a side business so have offered to help us with buying materials at their prices etc and let us use their workforce to try and keep our costs down which helps.

Offer them what you can afford with enough retained to do the work. This may be a lot less than 'guide price'. If someone offers them more, they will tell you to offski, but if not, you get the house and can do the work.