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...

[sestras]

I sold my house last year and the seller did this to me last minute. The house went straight back onto the market and sold 3 weeks later for.

Original buyer came back with full price after I pulled out but the trust was gone.

[Gutterton]

The bit that stinks is not a renegotiation after a survey, or even a lower offer post COVID - as external situations change all the time - it’s the waiting until exchange day - that’s what tells you it’s a strong arm tactic - up to the wire, brinkmanship.

Ours did that and we had decided in advance that we would walk - however if they had the manners to start a renegotiation at any point before that we would have talked.

[Fizzydrinks123]

Strong arm tactics could be a suspicion if we weren't in the current Covid world. All economies are going to struggle for the foreseeable future.

In current circumstances it is entirely sensible to have the conversation and to consider renegotiation.

The financial fallout is yet to come and when people are trying to return to "normal" will bring financial changes/job security into sharp focus.

People that are heavily invested in property will think it is outrageous to renegotiate, others will think it is the only sensible thing to do post-Covid. Think dispassionately about the subject at all times.

[WombatChocolate]

House buying takes several months in most cases and nothing is sealed until exchange. Given a lot can change and is changing in a short period of time, it is foolish for buyers not to at least re-assess any offer they made pre-Covid if they haven't yet completed.

If you completed pre-Covid at what was essentially the top of the market.....well no-one knew what was coming. You will probably find your property price drops, but unless you need to move within a shortish time frame you will probabbly re-coup the money, even if you don't see any actual growth of price for a very long time.

If youbhadboffered pre-Covid but not exchanged, then you know the market is falling. You don't have to buy at the peak when you know prices are heading down. It is inconvenient to start again and emotionally draining, but if you can save £15k or often even more, then why wouldn't you - that house has no intrinsic value at the price you originally offered at. It is another £15k that properties have to receiver before you break-even and it ever starts to inch up in value and can take years. When you come to remortgage in a few years your LTV maybe worse and you have worse mortgage offers available.

Adjusting an offer during an international crisis which is seriously impacting the property market is not rude or selfish. It is entirely rational. Those who expect to smoothly sail through to completion with pre-Covid offers are unrealistic if they think of the value of their home in pre-Covid terms.

Too many people let what they feel is an embarrassing conversation about reducing an offer put them off changing their offer and talk themselves into paying thousands more than the house is now worth. It's honestly like ordering a Christmas tree in early December and then finding the stock is delayed and being prepared to pay full price for it in January. The value has totally changed.

You don't have to be rude, you don't have to do it last minute, but you should seriously consider a lower offer. Know the EA will try to talk you out of it as their commission is based on sale price. They will tell you there are other buyers just waiting to pay the full price (yeah right....people are queuing up to make a pre-Covid price offer right now) and the seller will be offended and walk away. Know that your own heart/mind will be conflicted because it can create delays and you mig feel a bit bad......but hold onto rationality in one of the biggest spending decisions of your life.

If you offer lower and they refuse, you can always go back to the original offer if you really want......just do it and get over feeling a bit embarrassed....to be honest, why care......but actually Imwouldnt do that....I really would walk if they wouldn't accept a lower offer. Prices have fallen and are falling. I certainly don't have to buy an over-priced asset in an already falling market that has further to go and so I won't do it. A little bit of clear thinking can take you a long way.

[WombatChocolate]

When people talk about being gazundered last year or the year before.....it's not a comparable situation at all.

In a normal, stable housing market, of course it's considered a bad thing to do. If prices are stable and haven't changed since you offered, unless something serious comes up on survey, you stick with the price you offered. BUT this is not comparable. The market has changed and prices have dropped rapidly and all the indicators suggest significant further drops. Anyone who doesn't acknowledge that and adjust an offer seems to be putting their fingers in their ears and shouting 'nah, nah, nah'. This might not be the market you want to buy or sell in, but if you are already innit and can't countenance withdrawing for a while and need to go ahead, then at least make sure the prices are sensible and you aren't the loser in all this - the person who bought at the peak, especially if you find that anything you might be selling isn't also going at its peak price.

[orangeDutch]

@wombatchocolate ... PREACH! agree with every bit of your message.

[frazzledasarock]

We had this as our house sale was agreed pre-brexit and then brexit vote happened. We took the house off the market then re-marketed it six months later and sold for a lot more than the original price.

A lot depends on location and area and if the house was a sealed bid one there’s no way they’re going to accept a lowered offer.

Houses where my parents live are in very high demand, they all go straight to sealed bids and I doubt even the current situation will affect prices there. The houses come up for sale few and far between and demand far exceeds supply.

[Zenithbear]

My is comparible because it was at the time of the Brexit vote. People said then that the housing market would crash. It didn't. We had a full asking price offer two days later.

[onceuponatimer]

Agree with @WombatChocolate. Given that we are in a 'severe recession which we haven't seen the likes of before' according to the Chancellor renegotiation seems the only sensible course of action.
This is really not the same as pre and post the Brexit vote.
However, we still do have to go through Brexit next year on top of the Corona situation.

I would absolutely not suggest this usually (unless post survey issues have been revealed).
@Gutterton is right in saying that the day before exchange is far too late to start a negotiation.

[Fizzydrinks123]

Brexit causing price falls was used more as a scare tactic at the time for people to vote remain, which clearly didn't work. The EU deal/no deal is still up in the air and negotiations on-going - the Brexit effect is yet to be tested properly on the housing market and is coinciding with Covid.

My eldest is looking to move out and rent and I can't believe the amount of empty rentals DC has to choose from - I've advised to go in with low offers and see who is willing to accept as would be daft to pay over the odds.

The current predictions regarding economy and housing market are based on real-time global events affecting all economies. It will take a while to work through and see outcomes; it's a risky time to imagine prices only ever go up.

All financial advice comes with the disclaimer that investments may go down as well as up (previous trends should never be relied on for future returns) etc

[Gutterton]

I agree that these things are always v local market specific. Some areas in the UK have not reached their pre 2008 values - where as others have rocketed (and dipped again).

As I said to the OP a highly desirable coastal property in v short supply might have increased in demand during COVID - whereas a city centre new build flat might drop.

We were happy to not blink because the property we were selling would suit a post COVID world - rare freehold small house with garden in a quiet close in the centre of an upmarket town in the Home Counties - which would suit any down-sizers or divorcees. It would even work for a family living locally who wanted a property for their elderly parents to avoid care homes.

However I totally agree that it is always appropriate to continue to assess the situation but that your personal and emotional needs could also be a consideration.

My point is that forecasts and predictions are an average and don’t impact different property types and locations equally. Also people can choose to make personal and emotional decisions if they are fully informed it is their judgement on what it means to them. If the OP had been waiting for years for a house in specific area due to schools/family/work/QoL etc to come up and had then to chose to walk away over £3K and continue to rent a grim flat with no garden and a couple of pre schoolers for another year or two and who had to then go to a worse school then then they would be made to pull out. Or equally if someone wants a suitable property for their elderly relative - then they don’t have the luxury of time to wait out the market.

I am all for renegotiation - at the right time - but also being aware that some sellers might then pull out - it’s a risk - maybe a small one - that’s exactly what happened on a thread here last week - they wouldn’t even deal or sell to with the buyer back at the agreed price - and they were gutted to lose the house. So you need to be well informed of your local area, be prepared to walk and be prepared to be dropped.

[Zenithbear]

Unstable market = Brexit vote, actual Brexit, Covid, anything that scares nervous buyers etc.
However you want to argue it, the point is that my actual buyer has been living in my old house for 4 years. They were renting with cash in the bank they could have stayed and waited for a crash which didn't happen, in which case they would be paying approx another £80k for a similar property. Don't know what happened to the original ones who tried to gazunder but had they just got on with it they would have been in the house that they wanted and gained £80k on.

[cleopatrascorset]

We reduced our offer by about £100k on our present house. Despite the moral outrage on MN about doing this, I didn't feel bad and our seller took it in their stride. The fact was I was convinced we had overbid by that much and, despite loving the house, was prepared to lose it and the £2k of survey fees I'd already sunk. We made it very clear to the EA it wasn't game playing, but bricking ourselves we'd unnecessarily put an extra £100k on the mortgage. A lot is about how you present it...

[wallywonker]

You can give it a go but be prepared to the lose the house.

If you were my buyer I'd just pull the plug and put it back on the market. I don't like being messed about.

[WombatChocolate]

'I don't like being messed about'
But as a seller, the property you have is now worth less than - couple of months ago when an offer was made and the exchange of cot facts hasn't happened yet. You can call it being messed about if you like and take offense and withdraw it from the market or put it back on.....and the EA will either advise you to put it on for less or that younwillmprobably have to accept an offer of less. This is the reality of the market now. It is not like being gazundered in a stable market, which you genuinely could call being messaged about if nothing has been revealed by the survey.

Negotiating house prices is always a bluff and deal thing. People have an asking price and even they offending know how far below they will go. Buyers make an intitial offer and hope the seller will come down as far as they want/need.

A sale only happens when the price can be agreed. The same is true now but market conditions have changed due to this HUGE economic crisis which will have repercussions on all aspects of the economy for many years. To pretend the housing market is the same now as pre Covid is just idiocy to be honest. All the factors that drive demand and supply are changing and driving prices down....it's already happening.

[WombatChocolate]

Most people don't have to move right now. So most people who had made a pre-Covid offer can now lower their offer. They should also expect any offer on a property they are selling to be lowered too. Anyone selling who really doesn't want to take less will probably just withdraw from the market while this is going on and play a waiting game and see how things pan out, or take the view that a small drop now is worth taking as a bigger drop will be there in 6 months time.

Different places do have different markets and will be impacted to varying degrees. To think some areas have seen prices rising seems to be taking that too far, but some will see smaller drops and some properties within those areas, even smaller drops. But this downwards trend isn't just a localised thing at the moment. It is across the market and anyone who refuses to see this because they had already accepted an offer a few weeks ago, really isn't looking at reality.

I agree that the way renegotiations are done is important. Anything that sounds like being cheeky or trying to take advantage doesn't go down well. Careful explanations that make sense to sellers help - so people understand a detailed survey that reveals serious problems with a property and if you can explain that prices are dropping and you have received a drop in offer on your own or evidence of falling prices or just statistics about the economic outlook and concerns about negative equity or LTV etc it makes a more compelling case. Sometimes sellers worry about losing face and allowing them to accept a lower offer without losing face can help a lot. Whilst making a lower offer, reiterating positives about yourself, such as having a buyer who is ready to go ahead, having mortgages in place, being keen to complete by X date, mentioning how much you love the property and how you regret the need to lower your offer can all help. I have often written an email to the EA telling them these things and working hard to get the tone right. And I've asked the EA to send my exact wording to the seller...because I don't want the tone and meaning to be lost in translation by a ham-fisted EA who is thinking about their commission. If I've had doubts that it might get through I've gone via solicitors. But tone and making it all sound carefully thought out and reasonable and that you regret it and hope to now proceed quickly can all smooth the way.

[orangeDutch]

@Wombatchocolate right again. Interesting advice about getting the message through exactly to the vendor. Wish I had heard that a week ago. The EA was furious that we were reducing our offer so I imagine our carefully crafted, respectful and evidence based email did not get surfaced to the vendor. We didnt even think of going through the solicitor. Great advice for anyone considering a reduction.

[Smallgoon]

@cleopatrascorset Did you secure the house with your reduced offer?

[cleopatrascorset]

I did. And still friends with the sellers! To be fair they bought it for £125k and sold it for almost 10 times that.. 25 years of the London property market.

[DeadHouseBounce]

I think many will just be wondering if they still have a job, not could they sit by the seaside or next to a field and work remotely. In a lock-down scenario you will still have to obey the same rules in the country as people in the city, and fields and sheep although very nourishing for the soul do get boring for most people after a while, especially a generation used to being attached to a smartphone all day. I think the exodus to the country is not really going to happen, and I doubt many in the countryside, unless they are selling or are an absentee landlord would welcome it.

[Patienceisvirtuous]

We are sticking with original offer and moving shortly.

I would have felt more comfortable paying less in the current circs but we want to live there for a long time so hopefully it all goes well.

Just for interest the house sale price was £230k, we are paying £245k.

[Whathewhatnow]

I completed the sale of my house this week. No-one tried to gazunder.... so clearly some buyers are not as fazed by COVID as others. I know as a seller I was very lucky...

[rabbitcarrot]

It's very fair and understandable to ask for reducing the original offer.

Buying a property is probably the biggest investment in our life. With current high unemployed rate&redundancy once furlough scheme/self employee help grant stopped, house price will drop.

The area I am keeping an eye on it, the new listed house priced £370K
which is in a much better condition compared with £400k priced similar property before lockdown.

[Gutterton]

There’s my little seaside boost theory played out ....

www.homesandproperty.co.uk/property-news/housing-market-after-lockdown-rightmove-record-traffic-a138591.html

[Gutterton]

www.homesandproperty.co.uk/property-news/leaving-london-after-lockdown-righmove-home-buying-a138196.html