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...

[BernadetteRostankowskiWolowitz]

Your time to renegotiate was at the survey stage, which is quite common.

It's a shitty thing to do, doing it now.

[Clymene]

I would absolutely refuse to sell my house to you if you did this to me.

[Gutterton]

I agree that the sellers situation looks v comfortable so they would not seem likely to be under any pressure to take less in order to proceed with the sale.

[Gutterton]

Also in sealed bids sales the “asking price” can often be artificially low to attract more interest and more bidders. The true value is what someone wants to pay for it.

[GrumpyHoonMain]

Now is the time for people who need mortgages to buy. If lenders stop lending (which they may if rates decrease) then they may restrict the best rates on the lowest loan-to-value ratios.

[vjg13]

I think you will lose the house if you reduce your offer.

[R2519]

OP, if you plan on being there for 15 / 20 years+ then i would say wait and see what the survey brings and take it from there. You will not lose out long term.

[R2519]

On a side issue, i dont necessarily agree with some of the posters on here who say 'if you did that to me i would pull out'. Those that pull our without asking questions are daft and are acting in spite, although understandably to some extent.

It has been well documented that the housing market is unstable at the moment. Mortgage companies are reviewing offers and i know of 2 people though who have had their LTV reviewed and their mortgage amount adjusted. This is because mortgage companies do NOT want people going into negative equity if the property market crashes or drops by 10%.

Whilst it would be a bitter pill to swallow, people are a little deluded if they think 'Nothing has changed' in the property market over the past few months......a Hell of a lot has changed and people should expect prices to fall. Depending on the area you live by a little or a lot.

Personally, i would not be looking to pay full market value at the moment. Knock 5-10% off would be a fair reflection of where things are at currently. This time next year we may bounce back or if we do go into a deep recession expect that house prices to drop further.....20-30% perhaps.

[EventRider1]

Sorry OP, I am another one who would refuse to sell to you if you pulled this stunt.
If you really want the house and are planning to stay there a long time, keep the offer as is.

[pilates]

You are then relying on your seller having to ask for a price reduction on their related purchase and so on. Your chain could collapse. I personally wouldn’t.

[copycopypaste]

You thought the house was worth the price when you put your offer in, to start haggling now is poor form. If I was your seller and I could afford to I'd pull out of the sale altogether. Their financial situation and them downsizing or not needing the money has no bearing on this at all and none of your business tbh

[wonkylegs]

If it's the popular NE coastal area I'm thinking of, it's popular with lots of healthcare professionals whose income has income has not been hit by the slowdown. So your negotiating position may not be that strong.
In the last recession the market when we were in a popular street in Gosforth made no difference to sales.
This recession is going to be a weird one with some sectors affected more than others . If it's somewhere you really want, you are planning long term and can afford it, I'd stick with where you are if you want to keep it. At least mortgage rates should be staying low for a bit.

[pilates]

Sorry I missed your second post but I still wouldn’t do it.

[Viviennemary]

Of course it isn't poor form to ask for a reduction post cv it's common sense. But you take the risk of losing the house. Like it or not the financial future is uncertain.

[QueenOfCatan]

I'm selling at the moment and we would tell our buyer to get fucked if they tried this at this point and we'd refuse to sell to them tbh!

[Shinesweetfreedom]

As long as you have enough equity that when the value drops you are still able to get another mortgage when your current one ends,that is you have to have a certain amount of equity or you have to move onto the svr.
Values are pricing down compared to pre Covid.
As you say as long as you are going to stay for over 20 years,and not in danger of losing jobs,the money you are over paying won’t matter so much if it is a low value property to start with

[HavenDilemma]

So basically you're considering taking advantage of the virus pandemic in order to bag yourselves a bargain?!

That's up there with stockpiling in my opinion

[Patienceisvirtuous]

Oh piss off Haven.

[memberof5]

You'll always get lots of people telling you they would never do this, that it is the most awful thing in the world and if someone did this to them they would walk. And I totally agree that would be a normal reaction in a normal financial market. It's not a normal market right now and most economists agree (and our own chancellor is saying) a deep recession is imminent.

Now, if it's the house of your dreams you might be happy overpaying significantly. Personally I wouldn't be.

In 2008 we bought just as the financial crash was happening. We reduced our offer just prior to exchange (that just happened to be the timing with Northern Rock). The vendor got in a huff and said she wouldn't sell. For about 5 minutes. Then the estate agent got involved and presumably explained to her that the country was in financial crisis. The saving was passed on the whole way through the chain so actually the only people that lost out where the ones at the very top of the chain who were very sensible about the whole thing.

We sold again in 2011 for about what we had paid. We would have been in negative equity if we had paid the original price. We've nearly doubled our money on the house we bought in 2011 without any substantial expenditure and would probably be at the top / near the top of any chain now and frankly could afford to swallow some loss on what has been for us a great tax free and therefore efficient investment. What a shame for us we didn't sell at the top of the market. My neighbours are moving this week. They are going into rented. They can't believe their buyer didn't chip them and now think they will grab a bargain shortly. Their purchase fell over but they are ploughing ahead. Who knows??!

I find it incredulous that people can say you should just pay what you agreed presumably months ago. We are in the midst of a global catastrophe. Redundancies are being announced daily. Frankly the sellers that get their pre pandemic price must be rubbing their hands with glee. All that said you do of course risk losing the property so it's not risk free - but at the very least I personally would be seeking to delay things.

[pilates]

Op, I’m not sure why you are telling Haven to piss off, she’s only saying what other people are thinking.

[DeeplyMovingExperience]

We agreed a price pre-covid (January) for the house we want and we just exchanged at that same price. Having bought and sold a few times, I wouldn't have contemplated reducing the offer regardless of market conditions. Somebody did that to me once and it really screwed me over.

[knowingmenotyou]

Would @HavenDilemma or anyone else mind explaining how what the OP is considering doing is remotely similar to stockpiling and how buying a house in a market which is roundly predicted to fall significantly in the near future is 'bagging a bargain'.

[Patienceisvirtuous]

I am definitely not hoping or trying to take advantage of a pandemic.

We’re living within our means, wondering if we’d be mad to pay a price agreed months ago that now may not stand in a completely changed market.

It’s not personal. Was asking for advice - not accusations.

[BernadetteRostankowskiWolowitz]

If you saw the house today, for the first time, what would you have offered as a sealed bid?

[Patienceisvirtuous]

Also re a bargain, we agreed above asking price, still willing to pay that but considering a slight drop as I said, given the economic circumstances.

Hardly a ruthless move.