What would you do??

[homeadrone]

Our landlords told us in Jan that they wanted to sell the property and we ended up agreeing a price to buy it from them. This was based on an estate agent valuation who claimed that they were valuing higher than they were in 2019 as prices should go up post-election. We only got as far as agreeing a price (450) just before the lockdown happened.

Fast forward to now and obviously things have changed a lot. On the one hand we actually have more cash available as we were able to release some equity from our company. On the other hand the BoE is predicting 16% house price falls and I can see from Rightmove that many landlords have been spooked and are putting properties on the market.

We've told them that we're not comfortable with the price we agreed and they've told us to come back with a revised offer. In January they squeezed us for the full estate agent valuation without even giving us a discount for selling direct. But we know they have to sell in the next couple of months so suddenly we actually have some sway in this negotiation.

If we offered 400 we could actually be cash buyers. Any more than that and we'd need a mortgage. Do you think we could offer 400 for a super quick sale?

The answer to the inevitable question - yes we like the place but this isn't the forever home. It's more that it's convenient for us as we already live there and it's suits what we need right now.

I'd offer £400k making it very clear you wouldn't need a mortgage and can complete quickly. They're unlikely to get anyone else along in such a good position within their time frame

To knock 50k off a 450k price tag would depend on the desirability of the property and the position of the buyers. No harm in asking, but if you want to buy it then you might want to think about your upper limit in anticipation of the 400k being your starting bid.

Sold prices for similar properties in the same area would give you a picture of what they would probably accept.

Have you had a survey/ valuation done? I think that would give you better idea of price you should be looking to pay rather than relying on an estate agents valuation?

It was madness settling on one Estate Agents valuation. And no adjustment for a direct sale

What have similar houses sold for?

I know it was madness using an estate agent valuation but we're first time buyers and we were naive. Also they had all the power as they had a year to find a buyer and the estate agents were saying the market was booming and prices were going up and up. Now it feels the tables have turned and we actually have some power in this negotiation.

Any fall in house prices will at least be partly dependent on supply and demand. Are there lots of similar properties on the market nearby? Would you be able to buy one for £400k? Is there much competition in terms of potential buyers? If yes, yes and no, you may have some grounds to reduce your offer, but if not and you’re doing it to save yourselves some cash, I’d look at the bigger picture. Do you love the property? Are you likely to stay there long term? Was £450k a good price pre-lockdown? If it was a good deal then, it will be a good deal again, and would save you a massive amount of stress and inconvenience trying to find, view and purchase another (presumably similar) property at the moment. We just pulled out of our sale when our buyer (very similar position to you - huge deposit, small mortgage) reduced their offer by a similar amount - it really, really put our backs up as property round here is extremely desirable, holds its value and they offered when the writing was already on the wall re. lockdown happening and likely economic impact - and we didn’t need to move. I guess it depends on their position. It’s not a strategy without risk of you ending up in a worse position than you are now.

We've not had a survey done due to the lockdown but could arrange one now. We had a family member who's a surveyor come round in Jan and check it wasn't falling down. He couldn't find any issues we weren't already aware of.

Get your offer in asap. If they have to shift in 2 months they'd be daft not to take it as there is no way on earth they will get it marketed, sale agreed and completed in that timeframe. If you're genuine cash buyers with no mortgage required I'd bite your arm off.

I'd also query if they can charge either you or the vendor the sale fee as strictly speaking the landlord approached you regarding the sale, not the estate agent.

If you've been living there for a while, do you need a survey? Any issues will have presented themselves unless you're going for a intensive structural survey?

See what similar properties in the area are on market for. Take into consideration a 5-10% drop in price and see if the £400k is around that.

If your landlord needs to sell they will probably accept the cash offer. The house could end up being worth less than that so he should be playing it safe and taking that offer.

I think it sounds a reasonable offer under the circumstances and they may well take it. You can take a reasonable stab at recent valuations by looking at the sold prices on Rightmove. How these will change is difficult to predict. but the pressure will be downwards. Be prepared to prove your willingness to move quickly by having a solicitor ready to go and proof of funds (to show no mortgage is needed). If they push back be prepared to bide your time. They are hardly likely to get a quick sale . Any estate agent fees are not your problem.

What sort of tenancy agreement do you have?
Can you retain your residency even if it is sold? If you can, the sales value with a sitting tenant would be a lot less than with vacant possession and that's the price you should perhaps be offering.

We're on a rolling monthly contract with them so if they put it on the market I expect they'd want to boot us out pretty sharpish to start doing viewings. I think they'd struggle doing viewings with the covid situation and us still living there.

We tried to compare against sold prices in the area but the prices are so all over the place it's really difficult. We felt 450 was probably an ok (not amazing) price in Jan but have now lost all faith in that assumption.

Thank you for all your comments. I'm feeling less like an arsehole than I did this morning! I don't want to mess them around but I do feel as though they played hardball with us in Jan and don't want to be a mug.

They can't even issue a section 21 until September...

Ok I've just seen another property come online which has one extra bedroom and a much bigger kitchen and garden for 465. That's convinced me the price is definitely way too high. Should I sent them that as evidence of why the price is wrong?

how do you know for certain they need to sell within 2 months?

They've got to move for work and have already started doing viewings in the new area they're moving to. I guess they could rent for a while but they don't seem keen on that idea at all. I think they've got loads and loads of stuff to move.

Yep, and if I was in their shoes I'd be very happy with that considering the economic data on the table. In real terms, you're changing your offer by about £42,000 as estate agent fees won't have to be paid.

That's actually about 10% under asking which isn't even as far as most economists believe we'll go. I wouldn't actually go higher in your position under any circumstance. The market is really yours to play with at the moment and if its rejected I'd shop around.

They'd be mad not to bite your hand off imo. Your speed is invaluable. Wait longer and they'd probably lose more.

Just get the offer in! Do it now and if they come back needing justification (can't see why) then you have all the info ready. The important thing is to get the deal on the table.

Just put it forward and see what they say. If I was them (and depending on their circumstances) I'd be minded to meet you in the middle at £425. As you are not negotiating through an agent you could do this through your lawyer. Otherwise I'd put it on the open market. You are also not having to pay any moving charges so you save there.
A survey about the condition is not the same as a valuation for a mortgage by the way.

I wouldn't even get into comparisons. I'd just stick to your cash situation and they can decide from there. You're a golden ticket in this market.

Out of interest, why are you even renting with that much cash? (Completely nosy, sorry!!!)

Get your own valuation survey done. Not an EA but an independent surveyor and use that as your basis to negotiate.

Being a cash buyer is a big plus. I was listening to the radio this afternoon and they were saying that mortgage brokers were getting nervous about
-people who have taken the mortgage holiday
-people who are reliant on commission, overtime or other non-guaranteed income.

If they are buying another house before they've sold this then it will cost them extra Stamp Duty which is something else to factor in. They get the money back (subject to rules) but they need to find the extra cash in the mean time.
Play hardball (but have a Plan B).

400 seems reasonable drop considering they are selling direct with minimal effort and the economy is due to struggle

Haha @Home2018 you're allowed to be nosy. Reason is that most of the cash we've only come into in the last year. Inheritance on mine and my partner's side plus a bit of a windfall business wise.