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!

Exactly, all the risk to equity/debt should lie with the owner/mortgage debt holder, that is the risk they took when timing their entry to the market and price level, although no one could have predicted with any great accuracy the events we are seeing now (plenty are saying governments/businesses should have been better prepared because something like this is always a possibility) it is still not the buyers responsibility to pick up someone else`s risk.

@deadhousebounce best username ever! hopefully not signalling things to come with our home purchase

@snowspider

I was lucky to go sale agreed over asking In Feb but buyer reduced his offer in April just before exchange from 275k to 185k. I turned him down.

Not surprised. That is taking the piss. What a joke.

@orangeDutch

We are in the flipside of this situation - we are the buyers. The comments here are spot on. If we went forward with the offer that we made in January, then WE would be taking all the risk of the falling market prices, instead of the owner.

What did you do out of interest?

Surely OrangeDutch whenever you buy a house, you are taking the risk of a falling market? It doesn't matter if you a FTB, or several years down the track, that risk is inherent if you have a mortgage.

Depends how much you paid for it I suppose.

Surely OrangeDutch whenever you buy a house, you are taking the risk of a falling market? It doesn't matter if you a FTB, or several years down the track, that risk is inherent if you have a mortgage.

This is true, but the risk is rather more acute when you've just commenced the precipitous drop into the worst recession in modern history!

They would have needed to sort out their mortgage etc and this would have been verified by the agents previously.

They are trying it on if they now say they can't afford it. Don't be furious be sensible. The market situation is unknown and they are chancing it.

There is no rush to reply is there? How invested are they? Have they paid for a survey or has the mortgage provider paid for it? Have you had a copy of it?

Hi @thegcatsmother. Completely agree - any house purchase and/or mortgage has inherent risks of losing money over time. (I have lived that very scenario!) The difference being discussed here is the risk of losing money before you have even completed. While that risk has always been possible, it hasnt really been a significant one until now where prices are set to drop quickly in a short period of time. In the past, I cant remember a time when the span of just 1-2 months between exchange and completion could represent a drop as deep as the recent articles suggest. Certainly, it would be fiscally irresponsible to agree to a mortgage or purchase where you knowingly lose value immediately.

@Smallgoon stay tuned ... we have just started the discussion with the vendor. we still want the house and they still want to sell so we are trying to approach it respectfully on both sides. we'll definitely move forward if the price is more reflective of the current market -- and the vendor hopefully will agree based on other offers she might or might not be able to get. we are willing to give her time to do more showings if she needs to re-test the market. at the end of the day, it a lot of money and it has to be value for the money spent. I dont want to be sitting here a year from now frustrated with myself that i bought at the highest possible level.

@orangeDutch are you willing to disclose the reduction you're hoping to achieve? I'm being nosey but just generally keen to know what sellers should expect in this market

They are trying it on if they now say they can't afford it.

Perhaps one has lost a job or fears they might or fears future tax hikes.

I'm a homeowner but if I was buying I would certainly offer under asking price. Of course we don't have a crystal ball but it's likely we are in for many years of price stagnation.

Tbh a drop would help me move up the ladder.

Perhaps one has lost a job or fears they might or fears future tax hikes.

@mapsie I wouldn't be trying to purchase property if this was the case. Seems nonsensical and negligent to me.

Sounds like their lender has now reduced the amount they are prepared to lend them. I read this was happening a lot. Still it's quite a big drop and up to you whether or not you accept it.

@Smallgoon It doesn't have to make sense to you however it may be one reason why they offered less.

Plus there are very people who won't be looking at potential wage stagnation, pay freezes, tax hikes etc so no one should be buying then?

and that's for the ones who keep their jobs

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

This sounds like it isn’t about the value of the property but more to do with they can’t afford it.

It doesn’t matter

@mapsie

Plus there are very people who won't be looking at potential wage stagnation, pay freezes, tax hikes etc so no one should be buying then?

Big difference between losing your job, and dealing with a pay freeze. Even if my salary remained the same for next 3 years, I know I'd be fine, on my 5 yr fixed term, as I'll know what my expected outgoings will be. Would be a different issue if I lost my job altogether. And I certainly wouldn't be going through with a flat purchase if I'd suddenly lost my job. But then again, I've always been risk averse.

I didn't say anything to the contrary @Smallgoon hence why I put the below.
Perhaps one has lost a job or fears they might or fears future tax hikes.
My point was there are a number of potential reasons for why they offered less. It's not necessarily because they are chancers, given the current climate.

Plus everyone has different circumstances, in my household we would financially be better off if I lost my job but dh got his bonus as opposed to me keeping my job but DH not getting a bonus.

Orange It depends if you believe the articles or not. I can remember a time when it was bad in the 90s and there was lots of negative equity. We may have been in negative equity then but we didn't intend to sell, so what the market did just after we bought didn't affect us. We were in no danger of being unable to pay the mortgage, so there wasn't an issue.

In the long run, and you have to take a long view, the property market does win. Our house is now worth a lot more than we paid for it, 400% more at the lower end of the Zoopla guesstimate.

I don't see it as losing money before you've completed; I see it as securing the property you want to be in. People don't mind losing money when they buy a new car and it depreciates the minute it is driven off the forecourt, and will never regain the value, but a house will make the money back, and then some.

sellers not accepting offers on the assumption the price will drop in the future as the buyer won't offer based what will achieve in the future.
speculation is waste of time.

In the long run, and you have to take a long view, the property market does win. Our house is now worth a lot more than we paid for it, 400% more at the lower end of the Zoopla guesstimate.

Hi @thegcatsmother, wow! Lucky you thats an enviable position! All valid points. The maths do not work out the same way if you are not purchasing your forever (or long term) home. If you need to make a purchase on a shorter time horizon - say 5-7 years - based on family, career, financial, health, etc considerations, then a buyer would not have the luxury of waiting it out for 25 years for the market to turn. A shorter term buyer today would look to weight the costs of rent over 5-7 years and keeping deposit invested v. mortgage + stamp duty + home improvements + maybe appreciation in the home value. So in that scenario, a sharp drop in value immediately makes the purchase less palatable at a premium. It doesnt make it unacceptable but it does change the calculations and cause buyers to rethink a higher offer made earlier in the year.

As I hope I have conveyed in other posts, it is 100% up to the seller whether they want to accept any lowered offer. The buyer can make any revision they want to the offer but that doesnt mean they will get to purchase the home at that amount. The seller is in control of accepting or declining the offer.

@thegcatsmother "I don't see it as losing money before you've completed; I see it as securing the property you want to be in. People don't mind losing money when they buy a new car and it depreciates the minute it is driven off the forecourt, and will never regain the value, but a house will make the money back, and then some."

True. :)

This is such flawed logic! "please buy at the top end of the market that is about to drop precipitously because, in the future, you will definitely make a profit"

@RachQ86 If I were you, I'd sell now as every month you delay will cost you money.