Help, gazundered!

[RachQ86]

We put our flat up for sale last year and just into the new year we accepted an offer from a young couple for £5k below our asking price which was £450k. Everything was progressing and we were due to exchange just before lockdown happened and everything went on hold until this week.

We have now heard from our agent that our buyers have now sent a revised offer for £390k as they claim they need to add more to their deposit from the mortgage. I don’t understand, how does bringing the price down increase their deposit?

We bought the property for £410 a few years back so there’s not a chance they are getting it for less that that, how should we approach this as we don’t want to lose them as a buyer as it took long enough to get the offer in the first place, but we’re furious they would offer a price and then change it!

Presumably they mean their incomes have been reduced due to Covid and they can’t get as big a mortgage as before? It’s up to you to decide what price you’ll accept obviously but realistically prices are likely to decrease due to Covid compared with January ... maybe even below what you bought it...

How urgent is your move?

Unfortunately I think this is going to happen quite a lot now. It would be interesting to know what your estate agent would market it for today. Mind you he will be desperate for any commission he can get at the moment so he may urge you to accept the offer. You could state the absolute minimum you would accept is say, £410, 000...

@RachQ86 if you read some of these threads I think you'll probably find that it's not that surprising that your buyers have reduced their offer. Think about how much you want/need to move? Do you have enough equity to move on with?

It sounds like their deposit will go a bit further if they reduce the purchase price - e.g. it's a larger percentage of the price.

That's a very big reduction. What do you want to do? Counter offer? Work through what you're comfortable with to keep the sale. You may need to go back onto the market - would you do that if they won't negotiate?

Although property prices may well go down, an instant 12.5percent after a price had been agreed, and 6.5percent less than current owners bought, seems like trying to take advantage at this point. If the buyers situation has changed dramatically to reduce their position, then it might be better to look for another buyer.

It decreases their LTV, as many LTV's are capped now at 60%. You're going to have to accept if you want to sell your flat you will need to sell it for less than you bought it..this is what happens in a house price crash

Lots of people will be experiencing this :( It sucks but perfectly 'OK' in the english system of purchasing.
Obviously only you can decide - reject outright and lose the sale or negotiate it. If the 390 is their absolute top then decision made.

If I didn't have to move in the next few months/year, I would seriously put it on hold for 6months to a year, unless you can negotiate satisfactorily with your 'buyer'. The situation at present is too volatile/unknown.

They will be getting less LTV therefore the deposit they have will need to increase in percentages terms.

Your flat is only worth what someone will pay for it, and when something so dramatic happens it is not at all surprising that people are prepared to pay less for something that was previously worth £450k to them/to their mortgage provider.

Its no one's fault and honestly in this climate I can't see they're doing anything wrong. They'd probably have to pull out otherwise.

Either you are prepared to accept the lower offer, or you try and negotiate it up a bit, or you walk away.

If the offer took so long was it slightly overpriced ? Seems it's being going on some time.
Bloody annoying though. Would you lose your next property ?
As others have said , I think Covid is going to affect the housing market for a while.

I'd counter offer, you need to decide what the lowest you'll accept and stick to your guns. They could just be chancing it.

that's a really unreasonable offer. I'd understand them maybe revising the offer to £10k less but £60k less than the original asking price?! Has anything come up in the survey?

It's unfortunate, but the market is now very different to it was when they made the offer and nothing is confirmed until exchange. Mi would be reducing any offer I had made before Covid if I was mid-purchase now.

There is no right or wrong price to offer or accept. You can say no and you might find someone else will offer closer to the original price, or you might find other later offers are lower still as prices probably drop across the board. You can withdraw and not sell until the market recovers if you want.

I'd expect most sellers to experience gazumderimg at this point. For buyers with high LTV and big mortgages, they seriously risk negative equity if they lay the prices they offered pre Covid. In my view, putting yourself innthatbposition would be daft.

If you are buying elsewhere, you should be considering revising your offer downwards too.

Have they given any evidence to support their reduction or are they just chancers?

If they had a valuation which gives £390k then you are likely to come up with the issue with any future purchasers and you need to carefully consider how to proceed.

If they have just plucked the figure out of thin air then that's different.

What's the minimum you feel you can sell it for?

Where are you moving to? You could think about re -negotiating likewise if you are buying. It's a sign of the times.
Was reading yesterday that lenders have a legal right (in their contract) that they can even withdraw their mortgage offer after a buyer has exchanged for a variety of reasons including the property suddenly decreasing in value

I think it is inevitable that market prices will fall a bit - if you are also buying then you would likely "pass" on the fall in value up the chain you are in with each party readjusting their prices.

In a time of falling prices the winners will be those entering the market for the first time and the losers will be those that are at the end of the chain and leaving the market. Those in the middle would re-adjust.

I think you will need to re-market the property in order to assess if you want to accept their offer. At the end of the day it is only "worth" what someone else is prepared to pay.

Well you either accept it and move quickly or reject it and possibly have to accept an even lower price in the future.

They want a £55k reduction??

Time to get used to this, there's going to be a lot of it about for quite a while.

Make a counter-offer. Ask your estate agent for advice on the best approach - that's what you're paying them for.

I really don't think there's any need to be 'furious' with them OP. It would I think be more strange if they just went ahead with the original price, in these very specific and unusual circumstances.

If you have a 'bottom line' of £410k that you won't sell for less than, tell them that, and they can either come up to that or not, and if they won't/can't, that's that. You can then either go with the new offer, or wait it out on the basis the market will pick up at some point. Depends how much you want/need to move.

Why would they go ahead with the original agreed price if the bottom is falling out of the market? We are about to have a global recession. We as the U.K. are already in recession. I guess they either offer you what they can afford or pull out and it's up to you what you decide. Shit happens.

Bite their hands off as it will probably be worth less tomorrow.

This might sound cruel but I think the market is long overdue a correction and this particular health crisis is of such a magnitude that it will reduce the price of many things, this includes property.

Do you need to move? I’d stay put and tell them to go whistle if possible.

Yes no point feeling furious with them. It's the circumstances that have changed things. You can accept, declime or negotiate as you choose.

If you really need to move now you will probably have to accept less - the question will be how much less. It will be a question of if you can agree on a price as it always is. The difficulty is you are holding onto the idea of values from 3 months ago and they are considering what value will be in 3 or 6 months time and the 2 are not quite in sync. You will either find a way to sync or the sale will fall through.

Look forward not back though. Past prices are irrelevant. If you need to sell now look to prices in 3 or 6 months and what they might be. If you don't need t sell now, look to prices in a couple of years or 5 years and consider if they will have recovered. No-one knows for sure how far or for how long prices will fall, but some kind of down seems pretty inevitable in at least the short-term. Predicting the exact amount and length is hard and will make it tricky for buyers and sellers to find prices they both accept at the moment with all the uncertainty. A wise investor (who doesn't need the house to live in) might sell now and hold the money for a few months or longer now and watch prices drop further and then try to buy at the bottom.