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!

Karma will hopefully bite you on the arse.

Something is only worth what someone else will pay for it including property. Make your offer

So here you are, still trying to get the answers that YOU want! You have no conscience at all - accepting that both of your proposed courses of action are shitty, just fiddling around with the semantics of which is slightly less morally reprehensible .

^^ As mydogmylife says...

OP clearly said they were posting here for traffic & made both posts at the same time so hardly a conspiracy.

This thread slightly more constructive although not sure OP is looking for help?

My input. London market scary, we just bought SW17 as prices dropped, previously would have bought in East Croydon. We expect prices to go down but we're long term, you're not long term enough. Drop out tomorrow. Apologise & live your life! Your long-term financial security is more important than a strangers tbh.

We had to buy in an area we didn't really fancy (or know that well) because we were being outbid everywhere and I think we would have only pulled out if we had found somewhere we could afford in an area we liked and had an offer accepted. It would've been too risky to restart the entire process again. Particularly with our mortgage offer. And we did seriously consider not buying as the Brexit vote happened mid-sale.

A second thread doesn't make your intended actions any less disgusting or scummy.

@SilverySurfer use your eyes & brain. OP posted twice for traffic at the same time

quite right that it is too big a purchase just to be nice. but i think you will regret it if you pull out or get told to sling your hook, the likely outcome of this trick.

i had tenants waiting for the south east price drop. they will still be waiting.

If the op is told to get lost, then so be it. She’s then free to find somewhere else. Unfortunately people do this all the time. I don’t think prices will fall that much. It’s a good commuter location, but probably being over-developed. Every house has its price and just because houses are listed, you may find sellers are not very interested in selling. They can be half hearted about it.

I feel sorry for your vendors, but I would ask about a price reducation and see what happens.

I wonder if you would be so keen to renegotiate the price if the market had risen in that time?

How would you be feeling if the vendor suddenly asked you for the 6% price increase at this late stage? I bet you wouldn't feel as comfortable with it as asking for a drop in price now.

You clearly want randoms on the internet to justify your pulling out. If you are going to do it then do it fast. People will have removals booked, have childcare in place and will possibly have started packing.

Personally I have never viewed a house purchase as a financial investment to get a return on. I wanted a home because renting had proved so uncertain with landlords increasing rents (rising market) house inspections, ridiculous admin fees for contract renewals, then deciding to sell.

But then again we bought our first home almost 20 years ago so have lived though ridiculous price rises and drops.

Kamma89
@SilverySurfer use your eyes & brain. OP posted twice for traffic at the same time

I suggest you use yours, the thread on AIBU has over 330 replies, the vast majority of whom agree that what the OP is going to do is despicable - how many more does she need?

If the op is told to get lost, then so be it. She’s then free to find somewhere else. Unfortunately people do this all the time. I don’t think prices will fall that much. It’s a good commuter location, but probably being over-developed. Every house has its price and just because houses are listed, you may find sellers are not very interested in selling. They can be half hearted about it.

I feel sorry for your vendors, but I would ask about a price reducation and see what happens.

Do not over offer OP.

Similarly, ignore anyone that suggests you not doing so is some sort of reflection on your character.

The market has dropped and is continuing to do so daily. This is not your fault, and the fact remains, if the house came onto the market today you wouldn't offer what you have.

I would offer lower (i.e what you think the house is worth) based on these conditions and get the agents to articulate this. It is better than walking away altogether.

The market has dropped in Croydon (or London generally) and this is no secret to anyone currently in the market.

Agents will know this and it is their job to articulate this to the vendors. The vendors won't get a lucky like this again. Moreover, there is also a good chance they won't get another offer whatsoever.

This is reflected in the 1300+ houses on the market at that price point. Two years ago there would have been around 300. without getting into a crash talk which we cant be sure of (I'm a strong believer that there is one on the way as the market looks scarily similar to the last) the only thing you need to consider is whether you're going to hand someone over £13k+ because you don't want to upset them!

I don't understand why them asking you to overpay is better than you asking not to!

Don't put your financial future on the line with advice from those that don't know what they're talking about and seem emotionally invested in their replies for whatever reason.

Yes, it’s a crappy thing to do. Be prepared for the vendors to refuse to sell you the place and put it back on the market if you ask for a price reduction. However, if you really don’t love the place this probably won’t bother you!

If you don’t want to make this place your future home just pull out and wait. No one knows if there is another crash coming soon. They certainly aren’t building enough houses to keep up with demand (especially in London), so I can’t see huge falls in the next couple of years. Your circumstances may well change. If you don’t want the commitment then continue renting!

I work in Croydon but I wouldn't want to spend that sort of money to live there.

I'd walk tbh

@SilverySurfer

I have read the thread on aibu & don't think the OP was expecting a different response. They clearly know it's crap either way & obviously aren't going to base a major financial decision on a response in a forum...

As someone who has bought and sold a few times I can't help relating to those who are horrified at what you're proposing to do because of the heartache and expense it will cost lots of people. BUT I recognise that you will do what you feel is best for you rather than total strangers.

I'd make the point that you need to think about how easy it will be to get a mortgage in the future if you put off buying. If you're moving abroad in four years, is it a permanent move? If not, then hanging on to your house while you're away might make sense. We've reluctantly decided we need to put our London house on the market (area we love, house we like and couldn't easily afford to rebuy) because of a move but every single person we've gone to for financial advice on this has been adamant that long term London is a safe investment. And we know some very well-placed and cautious people rather than wot-I-reckon types.

Once you have children then your mortgage affordability assessment (in the U.K.) will include the costs of your childcare. Since I went back to work after having my first child the costs of my childcare have never been less than 1k per month. They are currently 2k. That massively reduces the mortgage we would be offered as new entrants today. Our current mortgage is well within the traditional multiples of income but there is no way we would be offered that ever again until our circumstances change.

I'd run a mile. How long did it take you to save the £26k you think the value has dropped since you offered? How many more months of similar drops would it take to be in negative equity? Just how much would it fuck up your lives to be in negative equity when you need to sell? Don't ruin your lives just because some people on the internet say it's the right thing to do.

How unimpressed would you be if this was the other way round? If the market rose between offer and exchange, and right before exchange the vendors wanted an extra £13k?

The market fluctuates and I think it's just a chance you take.

8Finally* you make a very good point about cost of childcare affecting future borrowing.

If OP was my daughter I would be encouraging her to buy this house and get on with living.

A lot of the house drops in London are due to small flats or the multimillionaire properties. Generally family homes hold their value pretty well even throughout crashes.
When you move overseas you'll have the option of selling or renting the house. If you pull out you won't guarantee getting a house in your dream area, will lose the money you have already invested and will be paying rent for another 6 months potentially.
If it's not right for you, you can pull out obviously, but make a spreadsheet detailing costs of paying extra rent and other costs and look at some of the houses for sale in preferred area first.

Generally family homes hold their value pretty well even throughout crashes. THIS

I have lived in family houses as well as flats and this is a fact - the houses I bought for my family home retained value and bounced back very quickly after a downturn (south London). The 2 bed flat I now live in struggles to keep any added value thanks to the zillion new builds in the area.

People are bonkers if they don't think London will crash - hard within the next 5-10 years.

Its cyclical you get 10 years of boom followed by stagnation and a big drop and so it continues. Infinite growth is not possible.

I would walk. I don't think £13k reduction is enough in the current market. Bear in mind most of the negative comments on AIBU come from people who "know" the market because just like the people you are buying from they are sitting on £150k equity from growth over the last 5 years. As they are already in the market they can afford to "lose" this money and pass it up the chain to people who will be sitting on even more unearned wealth. Only FTB are exposed to negative equity. (plus next time you buy you also have to factor in stamp duty). Croydon is one of the areas where people move out to having made money on a City flat. Tower Hamlets has already had a 10% price drop - I don't see how that cannot have a negative impact further out.