Offer already accepted and house prices may fall. WWYD?

[heartsetonthisone]

(name changed for this). We had an offer accepted on a house we love at the end of Feb and were hoping to exchange end March. Then lockdown happened. We've been in touch with the vendor and they are happy to wait until lockdown is over as we can't apply for a mortgage atm. We were anticipating a very long completion (buyer's request), and that would have given us time to sell current house. However, now the value of current house may well have dropped. OH wants to ask for a 10% reduction from vendor. I'm worried they will let it fall through and go back on the market, and we are in it for the long term so it won't affect price of what we buy, but obviously impacts the mortgage if we sell current house for less than we thought. WWYD?

WWYD if you were the buyer (ie me)?
WWYD if you were the vendor and your buyer asks for reduction?

Thank you.

I think you also need to see what the house is valued at once you go through the mortgage process, it may be that surveyors will value differently once lockdown ends.
We are sellers stuck due to lockdown, our house was valued at the price it was agreed We would sell at, when our buyers mortgage survey was done.
So far we are all waiting, no change of price has been mentioned, I won’t be surprised if they do try and get the house for less money, but no way would we currently drop by 10%, mind you we aren’t in a chain and don’t have to sell, so we won’t have to take a silly offer.

Thank you - really helpful to hear different POV. I don't want to lose the house and just want to ride this out and save harder/spend less in the hope it is the short term, but OH is more minded to lower our offer.

I think you need to check in with your mortgage company or broker. Our Agreement in principle has dropped £50k in the past three weeks purely on covid and no change to our circumstances.

If the banks aren't lending as much you will need a reduction and don't rule out the mortgage valuation also...

I know friends who were due to exchange and mortgage was pulled last minute becuse of Covid... it's not as cut and dry as what the vendor wants.

I don't think you lower your offer without an offer on yours. You have no basis to do so. If you did get an offer on yours and it was 10% under your asking price, then go back to renegotiate.

Also, are you prepared to walk away if you don't get the discount? Because you need to be - they might not want to sell to you if you mess them about. And if they say no, are you still going to be paying full price? In which case, what is the point? You've just made yourself a difficult buyer and I would be minded to put my house back on the market.

I wouldn’t sell to you if you tried to pull a stunt like that. Other people will want it, especially in west london, and I would take my chances with someone who hadn’t tried to pull a fast one.

I received a letter from a local estate agents informing me that the right move stats are .. 1.8% of sales have fallen through. 80% of sellers have remained on the market.

The biggest mortgage lender (Lloyds) has predicted a 5% drop at most, though Nationwide says prices have actually gone up very slightly this past month. While no one cam say fir sure, there will be pent up demand once this is over and that may keep prices level, as many people may be reluctant to put their house on the market fearing they will get lower offers.
Overall sales will be down due to a quarter of a year with minimal completions. But I'm not so sure this means a price drop - interest rates are extremely low, and people may be anxious to get a move on after restrictions are lifted.

The general view on the economy is that we have set ourselves up for the biggest recession in history with huge unemployment, even if we can restart the economy very soon. The idea that the housing market will sail on through this with nothing but a small adjustment seems (politely) optimistic to me!

We were due to Exchange just before the lock down but didn’t due to some silly stuff... anyway our buyer is now concerned the market may drop up to 20%! They weren’t planning on selling their home for awhile and I think they were going to rent ours out, so now feel they’ll be very exposed with their current home (which is worth a lot more), so I’ve no idea what’s going to happen, it’s very annoying as I really want to get moving, feel we are in total limbo here, can’t start packing/throwing out stuff as we might be staying, not worth gardening/decorating as we maybe going 😩

@Pipandmum

Lloyd's have predicted a 5% drop as the most LIKELY scenario, not the worst case scenario!! Their worst case scenario prediction is a 30% drop!!

www.thisismoney.co.uk/money/mortgageshome/article-8276843/House-prices-unexpectedly-rose-April-220-000.html

There isn't a very accurate way for any financial body to predict what will happen to the market, as a lot of it depends on what happens in terms of advancements with controlling the outbreak. If by some scientific miracle the whole thing could be ended and everything could resume as normal tomorrow, there would likely be a fairly quick recovery. If we don't find a way to control this so that we can resume some semblance of normalcy in the near future and are forced to live under strict measures for a long time, or if the outbreak gets out of control and lots of people become very sick or die over an extended period, the effects on the overall economy and property market could be severe.

Most of the models seem to assume a lockdown for a period of a certain number of weeks, with measures gradually lifted from June. But that's assuming that by June we will be able to return to some sort of normal economy. In order to be able to predict the effects on the market you'd need to be able to predict the course of the virus, and at the moment that's a huge uncertainty in itself.

@Karcheer I feel your pain, can’t pack properly, can’t take things to the dump, feeling very unenthusiastic about it all and still no idea when or even if, it will go ahead, it’s very depressing being stuck like this.
We are moving abroad for a few years, we’d already found a flat in the new country (which we are now also paying for as it sits empty). Thankfully my DH job is safe, he made it back to UK before lockdown and is WFH, but it isn’t the start we’d hoped for.

You said in your first post the long completion was at 'buyer's request' did you mean that? As in it's you requesting that? If I was selling, it's unlikely I'd accept a 10% hit straight off, with a long time to completion. If you introduced the idea of having to sell yours I'd definitely be unhappy, given you say they were happy you were chain free. What I'd do would depend really, if you'd offered a good price for it originally and I could persuade you to exchange asap so you were locked in I might consider it, or at least negotiate with you. Really hard to say.

I guess you have to weigh up the possibility of losing this one and what your views are on the likely impact of COVID on house prices.

Sorry, I meant that it was the vendor who wanted a long completion. They are moving abroad in 5 months and so wanted to complete when they leave. We were fine with that as it gave us time to sell our house or rent it and we weren't bothered which. Yes, totally, as you say @tentative3 they may not be so happy if we now become part of a chain. We did offer a good price for it. There are a few particular features it has that I think are quite unique and so I don't want to lose it. Trying to keep positive here :)

if they're looking to go abroad, it seems to me that they're unlikely to threaten to put it back on the market. Yes, you'll piss them off, but the economic climate today is very different to the one at the time you offered. Though I would say you shouldn't mess them about until you know for certain that offers on your own home are coming in lower than expected.

@heartsetonthisone Ignore the voices here that are kicking up a fuss saying they’d walk away and list their houses on the market if a buyer asked for a price reduction, you’d piss off the vendor etc:

1. If the vendor decides to walk away, let them. Experience is the greatest teacher and they’ll learn the state of the market first hand (and not via overly optimistic estate agents).

1. You have offered to buy the vendor’s house not marry their daughter so you you shouldn’t care about pissing them off if that means you’ll get a reduction in price that reflects the market today.

You need to make a logical decision on the most serious financial debt commitment you’ll make in your life and you need to make that decision on facts. The fact quite simply is that this will be a much deeper recession than 2008 and house prices will drop significantly in the next 12 - 18 months. Exactly what will that drop look like? No one can be certain but most median estimates have it in the range of 10-15% so your OH is right to want to ask for a 10% discount.

@Hiddentree122

How much percentage wise do you think?

Hi @heartsetonthisone

I'm in a similar position so have been reading everything in sight on this!

mol.im/a/8288951

There was an article in the Daily Mail online yesterday about exactly this (not my poet of choice) which I think gave very balanced advice - link above.

Essentially saying rather than drop your offer say to the vendor that you are goi g to watch the market for a few/6 months and see what happens.

I suspect that if they're planning a move abroad that that will be delayed also so this would give you an opportunity to maybe do this without having to guess market conditions or put their noses out of joint?

Good luck!