How should we play the negotiation following survey?

[ScaredOfNegotiation]

We made an offer at the absolute top of our budget on a lovely house, thinking it needed little to no work. The building survey came back saying that the loft conversion is not actually a "habitable room" (despite being marketed as a bedroom), partially on the basis of not having all the proper fire safety measures in place (okay, that's fixable), but far more worryingly, because the floor has significant movement (joists not strong enough to support habitation etc.), and we would need to basically do a full re-conversion of the loft in order to make it usable as a bedroom.

The plot thickened yesterday as, due to an error by the vendor's seemingly incompetent solicitor, we found out that the EA had lied to us about a previous offer that had been accepted on the house. Basically, an offer had already been accepted, but that buyer's chain fell through, and so the vendor put it back on the market, which is when we viewed it and put in an offer. The EA had told us that the previous buyer had offered asking price. It turns out that actually they had actually offered 2% lower than asking price and had it accepted. We felt pressured by what the EA said (as the previous buyer was still interested, and the EA made it sound like there was a lot of other interest too), and so went in much nearer asking. We are cash buyers, so probably did not need to go in so high, as the vendor doesn't need the money for their move, and are clearly keen to move quickly.

What should be our strategy for negotiation? We want to ask for a reduction that will cover the cost of making the loft conversion habitable (as it was advertised), but I also want to mention how disappointed we are to have found out we were lied to (not their fault, but it affects how we feel about the purchase, given that we're really pushing at our limit — they should be angry at the EA/solicitor really). Clearly if they were willing to accept the previous lower offer, the house was overpriced, since the previous buyer must have given the highest offer (perhaps even the only one).

One final complicating factor is that I believe they had a competing offer at the same time as ours (though who knows anymore?), which was higher than ours. They went with ours for the cash-buyer convenience, so clearly that aspect does matter to them (also evidenced by the fact that they pulled out of the previous sale when the buyer's chain fell through, in order to get a move on), and I'm wondering if that will help us here.

Please help! I have a constant nervous sick feeling in my stomach because I have no idea how this is going to go, and I feel cross about the lies, the inconvenience of fixing the loft problem, and the fact that we seem to be overpaying regardless. We do really like the house, but we would have to draw the line somewhere, and I don't know where that somewhere should be.

I'd honestly walk away, sounds like a bloody nightmare!

Didn't you post this earlier in the week? I remember the floor issues!

You could have just updated your previous thread on this. Imho you need a structural survey to be able to put a figure on how much it might cost to put right the issues to know the max to pay for the house and make it financially doable for you. If you don't have a structural survey then you probably won't know exactly what the issues are or how to fix them or how much that will cost.

What the buyers supposedly accepted from the previous purchaser can inform a lower offer, but I wouldn't get too caught up on that as you still might not be able to put the loft conversion issues right just by paying 2% less. Plus the market may have risen locally in the intervening time.

If you still want to try to get the house and want to renegotiate the price then first you need to convey to the sellers that your survey has revealed structural issues with the loft and it not being suitable to be a bedroom and in order to progress you need a structural survey so you can then get quotes for remedying it. You then flag that this is likely to mean a renegotiation of the purchase price, but until you have more info you won't know how much you'll need to reduce your offer by. Their reaction will then be key to whether you get a structural survey or not. I would make it crystal clear you expect to renegotiate the price if the works required are more than a few hundred pounds and you need the sellers to say now, before you incur more costs, if they are not prepared to renegotiate. Then everyone knows where they stand. This only works if you are prepared to walk away. You've a much better chance of renegotiating the price based on evidence of work being needed than on a he said she said someone offered less basis.

That's the thing, we don't want to incur more costs unless we can be confident that the seller is willing to negotiate. We would also potentially want to get a few other things checked out that the survey raised (though less serious). We were wondering if the following would be a sensible approach: tell them that the survey has raised some serious issues, and that we would like to negotiate the price in light of these. If they say no to any prospect of negotiation, we walk away. If they are open to negotiation, we then provide two options: they drop the price by £X now (which could be negotiated, but which we would expect to cover the costs based on surveyor estimates and general market information), or we send in tradespeople to do whatever (likely invasive) checks are needed, to get more accurate quotes, and then negotiate on that basis.

I'd rather go with the first option if we can agree on something that seems reasonable, because the more things that have to happen, the more stressful I find it, and I'm already feeling extremely stressed. I'm not sure what the seller is more likely to go for — I assume that might depend on how much they value convenience/time vs. money. Those of you with experience: would you ever consider the first option here?

How much is the house? How much is a 2% difference and what amount are you asking them to drop it by for option 1?

As a seller, a year on I still regret not asking to see the extracts from the survey my buyer was negotiating £000's off for. If you supply the extracts I'm sure they will be more amenable to your negotiation.

No, that's not going to work. What seller would negotiate without seeing evidence and a quote against the work? If your survey says further investigation needed, then it's up to you to get and pay for that. Then when you have a figure, you negotiate. And the common thing is to split the cost of the work, as you are benefitting.
If the cost of buying this particular house is so close to your limit that you want a guarantee of a price drop before you even get a report, you can't afford it. You are doing a lot of 'ifs ands or buts' here.
What the estate agent did is irrelevant and probably considered normal sales tactics.

As the loft conversion can no longer be considered a bedroom, I would reduce my offer based on the value of a property with 1 less bedroom. If you were getting a mortgage they would only give you a mortgage based on the number of actual bedrooms.
In my road, the houses with correctly converted lofts sell for around 20% more than those without.

Well, sure, it's up to us to investigate and get further quotations if the seller requires precise figures in order to negotiate. But we're only going to do that if we have confidence that the vendor will actually be open to negotiation.

I can imagine a scenario where a seller might be willing to negotiate on the basis of a surveyor's report (we would be happy to show them the relevant extracts), in order to reduce hassle and avoid having their carpets and floorboards ripped up (and potentially lose out on a sale even after this), which is what it sounds like would be required here to understand the extent of the problem. I can see pros and cons to both approaches for the seller, and it depends on what they value most (time, money, convenience etc.). I'm trying to work out whether it would be worth presenting them with the options of (a) re-negotiating based on what we know now, no invasive further checks for more precise quotes, and a done deal where we take on all future risk, or (b) get everything thoroughly and invasively checked, with the risk that we still pull out.

The main issue here is that we made our offer on the basis of this (quite large) room being a bedroom. It turns out it is not a bedroom, and that we would have to do some expensive and inconvenient work to turn it into one. So what's the basis of negotiation here? Should we be reducing our offer to match the price of an equivalent property with one fewer bedroom? Or should we we reducing our offer by the amount required to turn it into a bedroom? I don't think those are the same.

I'm not sure you can expect them to allow you to carry out invasive checks on a house you don't actually own (unless you're going to pay to put it back together for them). I certainly wouldn't allow anyone to take up carpets or cause damage.

I would have a look for what similar houses go for with 1 less bedroom and work out what you're prepared to offer based on that.

No one can tell you exactly what these people are likely to do though. They may prefer to gamble and wait for someone prepared to pay for what they are asking even with the work needed. If another person was proceeding with the house I assume they also had a survey and decided it wasn't that much of an issue for them.

The house is worth what someone is prepared to pay. We overlooked so many problems buying our current house. Perhaps we were mad, but we saw it as a lifelong project and weren't surprised to find problems. We knew the owners wouldn't sell for much under asking and there was a lot of competition for it. So we didn't dare reduce our offer based on our survey. It depends how much you want the house.

I wouldn’t muddy the waters with complaints about the agent’s conduct or offering various options. Keep things straightforward and state the major issue that the survey uncovered and then make your revised bid for the property.

One time when I uncovered a major problem, but was emotionally invested in the property and not keen to start my search from scratch, I requested the price drop by half of the estimated cost of resolving the issue. However I knew I wasn’t depending on using the room immediately, so had time to save up to do it. If I was dependant on the attic room immediately I’d probably want them to drop by the entire cost of sorting out the issue in order to go ahead with the purchase.

Be aware that the market is still rising every month, so delaying while you seek detailed quotes may well raise your risk of being gazumped. And the vendors solicitor will warn them off from letting you cause any damage in the course of getting any quotes.

Not a chance any seller will allow you to do invasive works when you're not committed to the purchase.

As a seller I'd also want to see the full survey before I started negotiations. It sounds as though you think you're in the driving seat but the seller holds all the cards really so giving them ultimatum is unlikely to be to your advantage unless they're desperate to move.

I don't think it's fair to compare with houses that have fewer bedrooms - obviously a loft conversion from scratch would cost a lot more than remedying the existing 'room' even if it's thousands. The full new conversion would be 20K plus.
The onl wise thing to do is to base om the estimate for making chagnes and puttng it right - your surveyor should give you an idea rather than having a specialist - or bring a builder along as they don't normally charge / chrage a lort less for a quote than a specialist engineer would.
You should feel confident though as every other buyer would negotiate based om this too. And they want to move quickly.

Fixing the joists could be a nightmare because they go into the gable/roof structure and are difficult to retrofit. You don't mention issues with the roof support but that would need checking - if there are insufficient RSJs in the roof, then you're doing a lot of work. It's like repeating the conversion as the roof will need to come off.
Unless they were willing to reduce the cost significantly, I would walk away. They're then in the land of hoping someone buys without a full survey.

Can you go onto the local council website and search the public access for the planning permission for this loft room?

@NewHouseNewMe The surveyor pretty much said to us on the phone that it would be a case of putting in RSJs, and that the work could be equivalent to doing a loft conversion from scratch (though I assume without the addition of a staircase, since there is already one of those). Does this kind of thing always require the roof to come off?

And do you (or anyone else) have any sort of estimate of how much this might cost in London? I realise I will need to get some quotes to know for sure, but that's not possible today, and it would be helpful to have a ballpark figure. I've seen some websites estimating costs per square metre, but I don't think that can be the full basis for calculation, as that would make a "basic" loft conversion in a large house insanely expensive, and I can't imagine the actual work/cost involved increasing linearly with floor area.

It's about £50-75K for a bog standard dormer conversion from scratch in London including fitting but not supplying a bathroom.

@Salome61

Can you go onto the local council website and search the public access for the planning permission for this loft room?

Most loft conversions come under permitted development and no planning permission is needed.

New I don't think OP has a bathroom or wouold want one there. I think it's a bout 30K for a smaller size one, could be 40K if larger - as she already has stairs.

@CatAndHisKit is correct in that for the purposes of negotiation, we are not considering the addition of a bathroom or dormer (as those were not part of it at viewing time). We just want to understand roughly what it would cost to turn the room into what we understood it to be when we made our offer, i.e. visibly the same as it is now, but with floors and fire safety measures that render it "habitable".

We will likely want to add a bathroom at some stage, and that will, of course, be at our own cost. However in order to add a bathroom we would be legally required to bring the floors up to modern standards. So even if we chose to buy the place as it is, and take the risk of a weak floor, at the point we decide to do further work on the room, we will necessarily have to shell out for all the floor work too.

Firstly I’d stop thinking about the EA lying to you, the EA works for the seller, trying to get the best price is their job, you are just confusing things, especially if there really was another offer when your was accepted. Let’s face it EA often lie or extend the truth.
I’d just focus on the loft, if the sellers can’t prove that the loft fully complies with building regs (with completion certificates) and it therefore can’t be call a habitual room you need to reduce your offer by either the cost to make good or the difference in price for a house in the area with one less bedroom.
The seller may not accept this and may choose to not reduce the price, you have to then decide if you still want the house or not.

@Soontobe60

As the loft conversion can no longer be considered a bedroom, I would reduce my offer based on the value of a property with 1 less bedroom. If you were getting a mortgage they would only give you a mortgage based on the number of actual bedrooms. In my road, the houses with correctly converted lofts sell for around 20% more than those without.

Exactly this, if the loft does not pass building regs it cannot be advertised as a room therefore the house is listed incorrectly, the price needs to reflect the one less bedroom regardless of the cost of the loft conversion

It may not require planning permission but it would require building regulation pass for it to be classed as habitable

@ScaredOfNegotiation Walk away.

We had to remove a loft conversion and replace it. It cost more than just doing it from scratch. Needed new stairs and roof to be brought to building regs. It cost around £50K - London price - we did add in a bathroom at the same time though, but majority of the cost was the building.

I would play it fairly straight.
Work out clearly (before you say anything) exactly what you want and what you believe is fair.
Ask for this.
If they don't agree in full walk away.
They know the conversion isn't up to scratch and were hoping cash buyers would be fast and not kick the tires too much.
Throughout this I'd continue to view other properties and keep an open mind.