Reducing our offer...

[Patienceisvirtuous]

Seeking advice.

Pre-lockdown we had an offer accepted on a house. Had mortgage approved, surveys done etc then lockdown happened.

Things are back to moving along now... And we’re wondering whether to reduce our offer slightly.

Mainly because we offered approx 6.5% above asking price (in a sealed bid situation) coupled with expected fall in house prices this year.

We were thinking of reducing our offer slightly, so we’re still above asking price, but 3% above rather than 6.5% above.

Does that seem fair or like a nasty gazunder? :/

Torn - don’t want to be a mug but don’t want to be unfair at this stage either...

Im at the late stages of selling my house and if you tried to do this to me I would pull out of the sale and go back to market, its a shitty thing to do.

Some will say yes, some will say no. Do whatever helps you sleep at night. Personally I'd sleep fine offering less. Nobody has fits of conscience about trying to get as much as they possibly can for their house (what I like to call cheeky asking prices).

You can try but your seller may choose to pull out completely.

Given it went to sealed bids is there a possibility that the other party might still be interested and be given the opportunity to counteroffer if you reduce your bid?

As long as you are prepared to lose the sale altogether. I’d pull out altogether if my buyer did it to me right now.

Being honest is not being a mug. They are under no obligation to sell to you at a reduced price, would you feel ok about starting to house hunt again if it came to that?

Depends how much you want the house

Personally I think that would be unwise, especially if you particularly want the house. Banks are suggesting that there may be a short term drop, I don't think it will last long. Also, I imagine you have already got some money invested in the move - survey etc so would you be happy to potentially lose that?

How much do you want the house? I would be really annoyed at this game playing late into the process and would have instructed the property back onto the market. If it went to sealed bids then the property must have been popular, so its really up to you if you want to risk having to start again?

one of the sealed bids could have been for +4%?

No it isn't the right thing to do. It isn't fair to do that really because they may be relying on that 3% extra to stretch to another house. If you agreed a price you should stick to it in my opinion

Depending on what mortgage you need be careful - the LTV rate on a lot of products has gone up so if you were putting down 10% or less you might struggle to get a new mortgage offer at the moment.

We really want the house.

Buyers aren’t counting on the money for their next house - they’re downsizing and already own the next property (not that it has anything to do with us - they told us that :))

I think the consensus is pretty much to honour agreed price. That’s helpful, thank you for your opinions.

OP I can see why it's tempting but if it went to sealed bids (are you in Scotland?) then it is a popular and easy to sell property, so I wouldn't risk it.

It seems very fair in the current unprecedented situation but you need to be prepared to lose the house if the seller wants to put it back on the market/ offer to the next potential buyer.

We’re not in Scotland. We’re in the NE in a popular coastal area - houses move pretty quickly here...

You'd be mad not to revise your offer. The previous offer was made based on the market conditions at the beginning of the year. That's out the window now. The government has shut down the economy for months and the Bank of England are predicting 16% house price falls. You are well within your rights to say you are reconsidering. This isn't about being nice or nasty, this is a transaction, and both parties deserve a fair deal.

I don't think they'll go for it as they know you want the house unfortunately, the agents know they've got you by the short and curlies. That's the impression I came away with when negotiating/making offers to buy our house last year (FTBs in a fast moving area)

If you did want to reduce your offer you'd have to really mean it, ie you'd walk away at the current price, otherwise it doesn't work in my opinion

We are in the middle of selling our late mothers house. Accepted an offer pre lockdown and heard very little from the buyer since.
I am fully expecting for them to either pull out or renegotiate a lower price. That’s what I would do if I were in their position.
If you love the house and intend to live there for 20 years, then go for it. Otherwise, I would offer lower.

I don't think you need to honour the original offer at all. Under normal circumstances I would say it is a shitty thing to do and that you abdolutely shouldn't but now is completely different. I think you would be crazy not to lower the offer personally. They sound very well set up and wouldn't be in a position of not being able to afford their next property. However, you do have to be prepared to risk losing the house.

We are intending to live there for the next twenty years. Would hate to lose it so...

You’ve got your answer then.
Congrats on your new home.

It’s always about supply and demand at the local level even if there are broader factors happening elsewhere.

If it was one of the millions of new build flats mostly sold to foreign investors in London - then I would say fill your boots.

Popular coastal location and sealed bids - no way. The others will be waiting in the wings - and people buy these types of properties for the long term, forever homes, dream locations etc.

There is an argument that they might get even more post COVID - lots of people now considering moves from big cities to rural / coastal locations with the opportunity to work remotely. Maybe look at it that way - you could have MADE money ie the house increased in value since lockdown.

Also 3% can’t be much in £££ in that location? Is it life changing? Would losing the house alongside the lost costs to date and paying more rent until you find another (or losing a buyer) be worth it?

You might also find that any mortgage you secure post COVID will be on much less favourable terms.

Lucky you to have a house by the sea.

I think the only time it’s reasonable to discuss reducing the amount is if the survey comes back showing something significant or if as a result of this pandemic the bank says it’s not worth as much and won’t offer a mortgage for the amount you need. However, both of those scenarios generally mean that the sale wouldn’t be able to go ahead without asking because you couldn’t afford it.

The fact you say houses move quickly where you are and it’s the sort of place you want to be in for a couple of decades, means it not the sort of property to be as impacted by an drop in the market and will bounce back quickly if it has dropped. If I was the seller I would refuse, pull out of the sale and remarket at a later date - as you say, they don’t have to move and they are just choosing to downsize.