FTB with offer accepted - pull out or reduce offer?

[ks999]

We are FTB and had an offer accepted on a house in east London for £750k right before the lock-down began. We are getting a full building survey done tomorrow and our mortgage provider only needs to conduct the lender's valuation. The sellers are downsizing to another property in the area. They bought the house for just over £200k in the mid-2000s.

We're very concerned about the possible decrease in house prices due to Covid-19 and were thinking about reducing our offer to £700k (potentially less if the building survey comes back with major issues) - this seems fair to us as most forecasts are predicting a house price decrease of between 5% to 20%! However, this is a big reduction and may be unlikely to be accepted - so we are wondering if it would be better to simply pull out at this stage.

Don't take this the wrong way but I have found that FTB are a pain in the butt. They have little understanding of chains, stress of all involved, and their expectations are out of whack with reality.
I was the same so please try not to take offence to that - make the offer by all means, if they reject it then you can still pull out. Nothing lost there. But ask if you love the house? It might be ages before finding another and that's assuming the chain holds together anyway.

House price predictions are usually guff. I think the last time there was a dip it was predicted to be dire and the market barely suffered a hiccup. Certainly in my area any way.

What the PP said. Do you actually want the house? If you’re not fussed then by all means stick in a lower offer. Be prepared for it to be rejected and them to put the house back on the market/ refuse to sell to you. East London is unlikely to get hit hard by a price drop so your vendors may rightly be fairly confident about finding other sellers.

Obviously if the building survey reveals issues then that’s a different matter. But renegotiation is about how much any repairs might cost, not just because you fancy paying less than you offered.

How much they paid for the house isn’t relevant.

I mean finding other buyers, of course!

Just bear in mind that if you do this your estate agent may refuse to show you other properties as you won’t be considered serious buyers.

No one can tell you what you should do.

The fact thay house prices may go down, in future is always possibility.

If you would be happy for them to dump you as buyers, make an offer if reduction.

Personally, as a seller, if you tried this now I would tell you to piss off and pull out completely.

Trying to reduce the prices further down the line, is pita and I would not trust you to not do it it again later.

I am selling my DM's house after she died.

The market has been a bit slow for a while. However, I accepted a lower offer as the purchaser was not in a chain and only needed a very small
mortgage and dependant upon completion by the end of March. We were in a position to exchange before the lockdown but she has been dithering and finally offered a lower amount.

I told my solicitor to tell her to fuck off and if we hadn't completed by mid-April I would put it back on the market.

She has quickly back tracked and we are exchanging and completing on the same day next week.

Be prepared to be told the same.

FFS, I can't believe the pp replies.

£750k is a LOT of money, how secure is your job?

Definitely renegotiate, and if you're not happy walk away. You don't owe the chain anything, remember that.

There will be a recession, but only time will tell if this will be a global depression.

I’d pull out. All bets are off right now and you don’t want to make life changing decisions in the middle of a global crisis like this that will change all our lives for the foreseeable future.

I've said this many many times on mumsnet.

In the long term house prices always increase.

In the short term, they might increase. Or they might decrease.

Thanks, this is useful feedback. We're actually mainly concerned about the estate agent's reaction as most of the decent properties in the area are from that agent.

We are prepared to lose the house if necessary as we're pretty confident that we could find similar houses for a similar price and there is no immediate urgency on our side to move. We like the area but the house itself requires a lot of modernisation - so it's not a dream house yet but could be later down the line.

I think some of the responses are a bit harsh on OP, we are in an unprecedented situation which is bound to knock confidence in the market.

@DroppedBoxxedRuth - My line of work actually deals with companies in financial difficulties, so if anything my job security improves if there is a recession. If we had concerns about job security we'd definitely just pull out of the process.

@ks999 I think 6 months down the line that house would be £500k so I would personally renogaiate now or walk away.

I suspect that in the current situation the surveyor and the mortgage provider will have a view of the effect of the current situation on the worth of the house and will value it accordingly. The mortgage provider will also have a view on your future ability to pay and, depending on your occupations may review your mortgage offer.

We’ve never been in a situation like this before, but one thing that is guaranteed is job losses and restrictions in credit which will lead to prices dipping, by what amount is anyone’s guess at this stage.

I would wait for the survey to come back then base any lower offer on that information

You could use info from it to pull out if you feel you need to do you don't burn your bridges with the agent

Agree with PP comments about waiting to see the results of the survey before lowering your offer. If you just lower it without any rationale I suspect your vendors will walk away - or at least I would in their shoes. I don’t believe the market is going to crash - there was so much demand in east London at the start of the year (I am mid-purchase myself) and I really don’t think that’s going to all dissipate. It will affect some buyers, but not all.

As an aside, how is your survey going ahead this week? Mine was supposed to be 3 weeks ago..surveyor can’t do it until the lockdown ends.

Agreed on waiting until the results of the survey come back. We wanted to do this so that we could also assure the sellers that we will not seek to negotiate any further if we can reach a revised price which takes into account the survey.

I also thought that surveys could not go ahead this week, but have been able to find surveyors who are willing to do this provided that the sellers take safety precautions (presumably just social distancing while inside the property). Our mortgage provider isn't able to do surveys.

@Ypsilanti some surveys are being done remotely. Don't really know how effective or pointless that is but there you go

@ks999 Negotiate. Hard. Ignore the sellers on the thread. They’re speaking to you based on emotions and not logic. As a FTB, you are in a much better position than all other buyers as you do not have an asset (depreciating in the current market?) to offload to fund your purchase.

Don’t make this decision emotional. There will always be another house. Don’t let a seller bully you into paying an amount that doesn’t reflect good value for you.

PS. Look at all of the economic indicators, people can say whatever they like but, the consensus from the financial services community and economists is that there’s a major recession coming.

I agree, this is a business decision you need to be level headed. You are in a very strong position to negotiate because you are willing to walk.

With regards to estate agents not thinking you are serious, they will be desperate for business soon enough so suspect that they won't be too loyal to the seller and will do future business with you.

I personally would pull out and wait till next year. Suspect the house will in the 600k region by then.

Dont be a dick

Can I plead ignorance and ask what a FTB is? Is it first time buyer?
If so that's me too, and I've hopefully bought a house on my own. Mortgage is ready, exchange etc was meant to be on May 1st. I'm panicking from the other side...I'd hate for the sellers to pull out thinking they'd make more if they sold it later, after the lockdown has ended
I have the estate agents correspondence that they've agreed to sell to me, but nothing official from either solicitors.

OK, you're NOT in a superior position than the seller. That's a fantasy. You have agreed a price that you offered and was accepted so presumably were happy a the time and see that as a fair price to be paid. As no-one knows what is happening to the market I find it outrageous to suddenly ask for a reduction based on 'maybe something will happen'.
A house is an enormous decision - and it is an emotional one. There will always be other houses but you feel the right house when you find it. If this isn't it then yeah fine, walk away.
@pinkrocker yes FTB is a first time buyer. Again, if you really want the house then get on with the process. House prices only go up in the long term.

Loofah no one said superior. She is definitely in a stronger position to negotiate. The world has changed significantly since she made the offer, she would be daft not to reconsider based on new information. There are no ifs about the future, a recession is coming which impacts house prices.

Appreciate this is a highly emotive subject but the OP shouldn't be left carrying the burden of a significant drop in house prices, she does have a choice. All businesses are reassessing their positions right now, this is no different.