To pull out of house purchase so close to exchange or gazunder?

[TitaniumBev]

Have just posted over in AIBU but thought good to post here too for traffic

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!

Can you afford to buy what you want in the area you want for the price you want? Or is pulling out going to leave you in a position of not being able to buy something you like? House prices are falling in areas. Not all of london. I know my borough is one of the areas that isn't falling (apparently) due to the fact it was one of the cheapest to start with. I can't imagine someone accepting a £13k reduction at this stage. Certainly I'd feel like you were taking the piss (regardless of your reasoning).

You could certainly ask but I would be prepared for them to say no - you need to consider what you would do then.

I would ask due to the market at the moment if you can afford for them to pull out and you to start looking again...

I was gazundered - a request for £5k off a more than 700k purchase.

I refused and the cheeky fuckery of it really got my back up. I was tempted to put it back onto the market. Any small request after this one was dealt with very suspiciously and impatiently by me because I was so hacked off.

The buyers sucked it up and carried on (the sale fell through later anyway in part because any subsequent request from them felt like procrastination - all trust was gone and I thought any request was an attempt to take me for a ride).

All I'm saying is that fair enough, there's nothing legally to compel you to honour your original offer.

But sellers can react VERY badly. I posted on MN because I was so furious about it and most messages were supportive agreeing that it was morally unforgivable.

I'm not judging you and I understand your situation but all I'm saying is be prepared to lose the property by simply asking the question.

Thanks for the responses. Slightly more measured than in other section I posted But this is really the type of info I needed as I think reducing price so close is bad bad behaviour & would prefer to walk. We're not planning on selling for 4 years but we would have to at that point due to working abroad so have to avoid negative equity at all costs! Don't care about profit, but don't want to be stuck.

I know walking so close is shitty too BTW but less shitty than a gazunder .

I'm just unclear of what the solution is though? Would you continue renting? Do you think the market is going to fall massively?

If you can afford to buy then just buy it. There's never a "good" time - prices have risen so you're too late, or they're falling so you should wait, or interest rates are too high etc. Just take the rough with the smooth, get on the ladder, be happy that you're not paying someone else's mortgage, and move on.

When we were FTB we held out for over a year trying to buy the house we loved. We were convinced it was overpriced but the vendor wouldn't budge. We did love the house but it was short term for us (a 2 bed) and we didn't want to be stuck there when we outgrew it. The vendor was in no rush to sell, and in the end we paid her what she was asking for it. We felt we paid over the odds at the time and were annoyed doing so, but in the end we were more annoyed that we wasted a year messing around with lower offers for the sake of £1k here and there, when we could have just paid the asking price at the start and have been enjoying living there.

When we sold it 4 years later we made £170k on it.

House prices go up and down. I wouldn't personally worry about 4 months impact. You're going to be there for years and you don't know what's going to happen.

When you factor in the lost money through continued renting, solicitors, surveys etc, is £13k that important to you? And can you genuinely buy the same house for £13k less than you're paying now without someone else snapping it up before you?

You’ll be paying a lot more than £14k in rent over four years, which is money down the drain.

We recently bought in Croydon (completed in February). One thing I would take into account is that although things are dropping generally, so long as everything goes to plan (fingers crossed) with the Westfields this area will rise in value, and at the moment the lack of investment in the town centre whilst waiting for Westfields is probably lowering things even more.

Could you go and do another viewing before pulling out?

You’ve worked hard for this and you need to be sure whatever your next step is that it’s the right one. There’s also more to a chain than price - if you start over again you risk finding things on the survey of the new place, difficult sellers, being gazumped, it might elongate the process significantly.

If we walk we wouldn't look to buy again until spring 2019 (earliest) see what market does. Price fluctuations mean our previous preferred area is now affordable. Yes, we do seriously think market might crash hard. Purchase has cost only £400 so far for survey as legal side family freebie.

I'm responding the same as on your other thread Titanium

'I wouldn't walk away in your situation, nor would I lower my offer. You may well find that the market dips but it will rise again. I've bought in London (family home) at top of the market and lost value immediately afterwards but within three years the value has climbed back again.

As a PP said you will lose £13,000 in renting instead of going ahead with buying this property and you are causing untold grief to everyone else in the chain.'

If you are planning to stay 4 years things will no doubt have improved and you may well find your home has appreciated in value. Sounds like you no longer love the house?

The government does everything it can to prop the housing market up. 1-6% is really nothing in the grand scheme of things and you're buying in Croydon not the middle of nowhere. It's a bit of stagnation, that's all. I would press on personally.

If you can afford the £440k then pay it and get your foot on the ladder now. How much rent do you pay? Say £1100 pm, then over the next 12m you will have paid the extra £13k anyway! Plus add cost of surveyors fees, and other disbursements. The main advantage of buying is the security. No one can chuck you out on a whim.

I have to say I think you're mad! There may be a temporary blip in the market, but I would bet it will quickly recover. I think you're far more likely to make money than lose money in 4-5 years. Whatever happens in Brexit/Russia... the jobs/money are in London. People want and need to live in London. There aren't enough houses in London.

How much will renting cost you over 4 years? 100 k? Are you worried you'd lose more than 100 k by buying. But you also have the possibility of gaining 100k.

This is what happened to prices after the credit crunch BTW

(I have nothing invested in the London market-wish I did! this is just what I'd be thinking)

I think reducing price so close is bad bad behaviour & would prefer to walk.

Can you explain why you think walking away is morally superior to asking for a reduction in price? It isn’t.

I know walking so close is shitty too BTW but less shitty than a gazunder .

How do you figure that?

I think the actual issue is that you no longer want the house now you know that you can afford something in your preferred area.
I think it’s a crappy thing to do (essentially you’ve changed your mind about the house and think you can get something better) but it’s your choice 🤷🏻‍♀️.

What's your preferred area that you'd now be able to afford?

I think walking away is a pretty terrible idea. It’s not better than gazundering. You will cause the entire chain to collapse, screwing up the plans of just not your vendors but everyone else in the chain.

It’s one thing when it’s unavoidable but when the real reason is that you now think you can buy in an area that was too expensive before (which it is), it’s a really horrible thing to do to everyone involved in the chain.

And EAs do talk to each other. They’re likely to advise other vendors whose houses you try to buy that you are not a reliable buyer. Because they don’t want chains to collapse either.

Walking away is worse, at least if you’re gazundering you’re giving them a chance to salvage the chain if they choose to.
You need to take the emotions out and not worry about the morality of the purchase. It’s such a big investment you need to make sure you’ve considered and pursued all options and do what is ultimately right for you.
Fwiw I think you’re wrong, the Croydon housing market is not crashing anytime soon and you are risking ending up with getting worse for your money in the long run.

You risk the vendors saying no and putting the property back on the market.

Even if you pull out you need to factor in cost of renting. I knew someone who was always waiting for the market to bottom out and buy. They were still renting over 10 years later as it just never happened because as soon as they say property is dropping it changes. Plus mortgages, affordability and competition varies all the time with different markets.

Another good point from biteysgark. If the market drops you will be able to borrow less. If you like the property buy it. If you don’t why did you offer?!

You're being ridiculous tbh over a relatively small amount of money. It's worth it to avoid all the uncertainty of starting again. If you're adamant not to pay what you agreed then at least give them the option of a slightly reduced price.It seems like your 13k is slightly plucked out of the air - you don't know the circumstances around other houses being on for lower or taking longer to sell. I'd get your EA to give you their opinion on the market before screwing up a chain.