Reducing Offer Price or Walking Away

[homeownerwannabe2022]

Hi everyone, I would really value some insights on how to move forward in my situation.

I had an offer accepted on a house back in late July, and things have been moving along fine. But I'm starting to feel uneasy about proceeding given the sudden impact on interest rates and the expectations of house prices to decrease in 2023 as a result. My sellers have a good mortgage rate locked in (they told me this), but I didn't get to this point yet (I'm a FTB, perhaps a rookie move). Thus, they are keen to complete very quickly, or else they will be stuck with a high rate like me.

I am lucky in that I have a good sized cash deposit, but the rise of interest rates is still going to cost me quite a bit. I just got my survey back, and the suggested amount of work/additional surveys is about 20K. I know these can be overly cautious, but this coupled with the higher interest rates is giving my head a wobble. I feel as if I have 2 options:

1. Pull out and hope that I can find a comparable home for a lower price (thus have a smaller mortgage) in 2023. I've already seen houses on Rightmove being reduced or sitting for months that would have sold in days earlier this year, so it does seem that the market is slowing down.
2. Try to renegotiate the asking price from 410K down to something that factors in the survey and the market so that I feel comfortable proceeding (but what is reasonable? I don't want to be cheeky, but I also don't want to make a bad investment)

What would you do? Thanks for reading this.

How did you get this far without getting a mortgage offer?

I'd think you were taking the piss if I was the vendor!

I agree I don't know how anyone hasn't asked you about a mortgage offer yet

You can try and offer less, but they may not take it.
surveys always bring up stuff, but is the £20k an estimate or a finger in the air cost? The vendors will want to know?
were there other people interested in the property? It all makes a difference. The price they want isn’t always what they get, it’s all a bit of a back and forth negotiation at this point.

I'd be advising the vendor to write you off as a bad prospect, 3 months into the buying process and no mortgage offer yet.

I always think that someone who does not have a mortgage in principle offer from their bank before they make an offer is a time waster.

If I were the seller unless the survey uncovered a major, unexpected structural problem that would justify a price reduction I would write you off for having wasted my time for the past 3 months.

If I was the seller I would be remarketing the property with the view that you were a time waster, no mortgage offer after over two months is ridiculous.

Wow that estate agent messed up, you sound a terrible prospect as a buyer!

From your point of view, you may be better off either pulling out or negotiating a discount. You don't sound that invested in the house so another may suit you just as well.

You’d be mad to continue at the moment.
Stand on the sidelines until next April and see what’s happening then.

The market has changed so quickly I can see both sides.

I think you’re allowed a rethink and I say this as someone who was really upset to lose our buyer last year three months down the line which meant we lost out on the house we wanted.

I doubt I would even accept an offer from someone who didn't have a MIP.

You offered nearly 3 months ago and still don't have a mortgage organised, have I read that right? Why ever not?

She wouldn't need a rethink if she'd done what she was meant to and apply for the mortgage as soon as the offer was accepted!

I’d offer less based on the survey BUT first of all check whether these things that the survey says must be done really need to be done. Given that you have messed them around and the lack of a good mortgage rate is your own fault I’d be prompt in all dealings moving forward and also be willing to compromise on the price.

I feel very sorry for your vendors.

Fluffy the market has changed considerably.

I really think you should pull out and wait until 2023. But if you really want this house then it’s reasonable to reduce your offer in view of the state of the market, the survey and increased interest rates.

The vendors might not like it, but I’m afraid their preferential mortgage rate is not your concern so you shouldn’t feel guilty. You need to take the emotion out and make the best decision for your own financial future.

I feel sorry for your vendors. We had to have mortgage in principle before our offer was accepted and had 4 weeks to get a full offer which we did

I think it depends on what’s in the survey. If it’s major stuff (like roof, subsidence etc) which hasn’t already been priced in, then I don’t think it’s unreasonable to negotiate on that basis. But I do think you risk them walking away if you negotiate purely based on your mortgage rate having increased- and if they do, just bear in mind that there are likely to be far fewer good properties on the market over the next 6 months (I suspect no one is going to be selling unless they really have to because of divorce, death etc), so you may be stuck in your current living arrangements for some time.

Regardless of mortgage offers which obviously should have been applied for over 2 months ago, I agree with @C4tastrophe
I wouldn't proceed at the moment unless you are struggling with your current accommodation or have to buy now for any other reason.

Depends how much you want this particular house. If it is great value in size and location and you 'see' yourself there, you might not find something that equally grabs your attention for some time. To of you just felt ok about it and you feel be you have seen better for the price then give it a go.
However, the seller might not view the market in the same way as you. They will have done their own research and will know what they will or won't accept. It also depends on how desperate they really are to move on. Be aware also that while you stall they may get a better offer than yours. You want to drop the price so don't be too indignant if they come to you saying they have a better offer which they will take if you can't match 😁

Thanks all. I of course did not have intentions of being an "awful buyer" - I have an AIP, but I'm new to this process and clearly learned a lesson about when I need to apply for the mortgage. I can still afford to buy the property given the new rates, but I am feeling very pressured by the whole situation as things are changing very suddenly, and I don't want to regret my decision as these very difficult economic times.

Did you check the surveyor was on the list of approved surveyors for your mortgage (that you don't have an offer for)

They will probably tell you to walk.

Don't expect their estate agent to help you find another place on his books; he won't want you messing up his other clients.

Have you got your mortgage now? If not, you may find the property gets undervalued anyway depending on how your offer compares to the wider market.

We offered in April when the market was crazy and had a very slight undervaluation, lots of people we know had significant undervaluations in the first half of the year. I’d imagine the banks will be even more cautious now about valuing properties, given the risk of falling prices!?

But it's almost 3 months in - a lot of property transactions only take 3 months so how can you not have a mortgage in place by now? If I were your seller I would be fuming with their estate agent as they should have checked you were actually a serious buyer, which I'm sorry to say you are not. A quick google of the house buying process would have told you you would needed to apply for a mortgage long before this point. Ignorance is no excuse I don't think, so you either pull out or suck up the higher mortgage rates, but make your decision soon as it's not really fair to string your sellers along for any longer.

I would walk away if I were you, you can of course ask for a discount which may or may not be given but if you were buying from me I would be wary of you. You sound (quite rightly) like a very nervous FTB and nobody can blame you in this market. The only thing I would be worried about is that whilst house prices may drop interest rates will rise so one will balance out the other and who knows where rates will end up.

We are on the verge of a Sterling crisis, you shouldn`t be buying just now, RUN away.