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Original poster

Property downvalued - how to renegotiate the offer?

141 replies

polka14 · 13/05/2022 19:46

Hi everyone. I made a thread about a month ago to say I'd had an offer accepted on a property that we'd offered almost 10% over in this crazy sellers market. It has now been downvalued a little bit from the asking price. So now the same offer price would have gone from about ~9% to ~11% over. There was a fair bit of interest and it went to best and final. The mortgage broker has advised we renegotiate - any suggestions on how to go about this? How you'd word it and how much to suggest?

We are new to all of this as FTB but on decent stable incomes with a decent deposit/savings but haven't had the geographic stability to buy till now.

Asking price: £465k
Originally offered asking, but at best and final went up to our max of £505k (obviously not knowing what the other offers were)
Lenders valued it at £455k

What is a reasonable renegotiation offer? I of course don't want to offend anyone but equally would like to get the best we can at this stage.
Thanks!

OP posts:
Threetulips · 13/05/2022 19:50

Depends on your deposit - then loan to value worth the mortgage brokers.

I would start speaking to the agent - anyone else would have the same problem. The vendors will have their future hour devalued - plus less on their selling price.

Could you meet half way?

paoejehah · 13/05/2022 19:51

Lots of houses seem to be being down valued at the moment, I wouldn't want to pay more than the valuation to be honest.

TooManyPJs · 13/05/2022 20:03

I wouldn't pay over the valuation either.

DenholmElliot · 13/05/2022 20:13

Another one here who wouldn't pay over the valuation. How much did the current owners pay for it, and when?

Shadowboy · 13/05/2022 20:17

I’d offer the original offer amount. And not a penny more. Lenders are cautious due to impending recession

LollyLol · 13/05/2022 20:18

Wow that’s a huge amount over the valuation of 455k. Are you desperate to have this particular house?

I’d tell the agent you want to reduce your offer by the 10k change in the valuation (as the rest of the excess was your choice to offer). If they say no, walk away.

erhsla14 · 13/05/2022 23:58

Thanks for all the replies. We don’t currently live in the area and our jobs make it particularly challenging. This house basically ticked all of our boxes with no alterations needed. It’s also in a developing area (can’t help but think this whole area will go up in value in the coming years). Also now is the right time for us to buy (can’t really keep waiting) and no idea how long it would take for something else that ticks all our boxes to come up. We don’t really want a doer upper. All things considered we went in at our best offer at best and final which felt absurd to be honest like a big gamble.

we still like the house etc, but do we have a leg to stand on to offer any less than 10k from our previous offer seeing as that’s the difference in valuation ? How would you go about wording this? There were other offers at over asking so we had to make our best guess and go for the max we could offer but equally don’t want to be ripped off. Is it common for people to renegotiate at this stage? What do I say without offending anyone as still want to buy this property?

justfiveminutes · 14/05/2022 08:48

I read that brokers are reporting 1 in 5 are now being downgraded. Lenders are protecting themselves due to the forecasts. I would say our Leander has valued this property at £455k. In light of this, we are unable to offer more than (whatever you decide). They'll be aware of the market changing and half expecting it. Of course they might decide to remarket it, but run the risk of it happening again.

erhsla14 · 14/05/2022 10:46

What would be a reasonable offer to make between the value of 455 and precious offer of 505?

BungleandGeorge · 14/05/2022 10:58

The asking price and price paid isn’t necessarily going to be the same as the lenders valuation, I’m not sure it’s fair to ask for a reduction on that basis? You offered what you were willing to pay not necessarily what the lender would loan you. If you now can’t get a large enough mortgage I guess you would have to renegotiate

rainingsnoring · 14/05/2022 12:05

What is your LTV and deposit amount? Can you actually afford to pay more that the valuation?

Lenders are understandably cautious because house prices are expected to fall now with the awful economic outlook. Lots are being down valued. I would not want to pay more than the valuation personally.
All you can do is say that you love the house but it has been valued at £X and you can't afford to make up the difference. You do have to be prepared to walk away though.

Movingonup22 · 14/05/2022 12:10

What is the maximum you can pay?

The people saying don’t pay more than the valuation are I think being unrealistic about life. It’s not just the bank minisming it’s risk but also the valuer (who could
be independent to the back). In either case for them it’s just a numbers game. For you it’s obviously about moving, needing somewhere to live etc. if that’s the reality of the market in that area it is what it is. In 2020 there were lots of problems with down valuations and look at where the market is now. Ben if there is a downturn it’s unlikely to go down to where it was at the start of 2020…

erhsla14 · 14/05/2022 13:04

I mean we can afford 505k, hence why we offered it in the first place. My point is if the property was valued to/closer to that figure we’d proceed as planned but obviously paying 50k over makes me nervous. The thing is they only asked for 465, the nature of the offering/best and final process has meant our final offer was 505k. Broker, friends and family are telling us to renegotiate to something better. As FTB we are inexperienced, unsure what to suggest next in order to get the best outcome. Eg. Suggest 480 and if they counter offer etc would go through with 490-495. If I suggest that at the outset it will likely be closer to 500k? Etc

MissWired · 14/05/2022 13:10

Straight into negative equity....what is wrong with people?!

erhsla14 · 14/05/2022 13:11

What do you mean by negative equity sorry? @MissWired

VintageGibbon · 14/05/2022 13:13

I'd just give them the details and see what they say. Tell them you were shocked to get such a low valuation from the lenders and the discrepancy is forcing you to reconsider your offer. Ask what they are prepared to come down to.

I'd be tempted to offer the original asking price, but nothing above it.

A580Hojas · 14/05/2022 13:25

All you can do is tell them what it's been valued at and wait for them to respond to you. That is a HUGE discrepancy, even on a high value property.

What a pp means by going straight into negative equity is that if you buy at anything much over the professional valuation then you are knowingly buying a house that is worth less, and would sell for less, than you have paid for it. It might not immediately affect you if you don't have a high LTV mortgage but you've got to admit it would be a pretty silly thing to do.

rainingsnoring · 14/05/2022 13:32

So you have any extra £50k in savings? You do realise the bank will only lend you the valuation amount (minus deposit)?

I think you need to do more homework into the housing market. It's surprising that you don't know what negative equity is (owing more on the mortgage than the house is worth). You also offered 505,000 on a house as first time buyers. Given that 499,999 is the limit at which you lose FTB preferential treatment with regards stamp duty it is a strange figure to offer. House prices are expected to stagnate at best (even Knight Frank, Savills, etc are saying this) so not a great time to be potentially getting into negative equity and paying much more than the house is worth.
Re negotiation, it depends on the seller's position and personality as to how much reduction they can/ are willing to take. No way of us knowing. Before you try to negotiate, I would read the responses on here, research the housing market more and think about it carefully.

MozerellaSalad · 14/05/2022 13:34

MissWired · 14/05/2022 13:10

Straight into negative equity....what is wrong with people?!

Do you know what negative equity is?
It isn't a decline in price- it is a property worth less than the outstanding mortgage amount.

We don't know how much deposit the OP has.

MozerellaSalad · 14/05/2022 13:42

If you pay £505k you would typically need a deposit of £50, 500 and you would borrow £454,500.
If you have a deposit of more that £50,500 then you can put down a bigger deposit and the bank may then lend. But the valuation is £455k and so the bank may (there maybe some leeway) only lend you 90% of that so £409, 500 and you will need £95,500 deposit. Do you have that much?

Did the broker suggest trying a different bank?

A reasonable offer would depend on how much deposit you have, using the sums above. (but there may be more flexibility if you have a different loan to value ratio).

Barkingmadhouse · 14/05/2022 13:44

If they had that much interest i would not be surprised if they pulled from your sale and remarketed as soon as you start trying to renegotiate

similarminimer · 14/05/2022 13:44

It seems completely unethical to lower your offer. You chose to offer over asking price, beating other bidders and now want to drop because.....

You now want to pay less than other people offered - cant you see that's unfair?

MozerellaSalad · 14/05/2022 13:47

similarminimer · 14/05/2022 13:44

It seems completely unethical to lower your offer. You chose to offer over asking price, beating other bidders and now want to drop because.....

You now want to pay less than other people offered - cant you see that's unfair?

You are assuming that the other people had a large deposit

(although you should only ever offer over asking if you do)

Viviennemary · 14/05/2022 13:55

It's all guesswork. If you think they will refuse your lower offer nd go back to one of the other people interested then it is a risk to offer less especially when there was a lot of interest. On the other hand you dont want to overpay. Think in five years time willl I be sorry I lost this house. If yes offer as much as you can.

erhsla14 · 14/05/2022 14:09

Hi everyone. Yes, we do have a reasonably large deposit and if it comes to it we are able to (just about) pay the difference in the mortgage amount etc but it feels really unwise to pay so much over valuation for this property. Our budget was up to 520k (for a bigger property). We are willing to pay a bit over, yes, especially in this current crazy market. Obviously don't want to be a complete fool and pay way too much over so asking for advice on how I can navigate conversation from here. I.e what would be a sensible/reasonable offer now so nobody is offended?

The spare cash that we had for furnishing/all the other costs associated with buying for the first time we now wont really have.

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