Reducing offer close to exchange

[ChocHaloTop]

Will give some background to avoid drip feeding. I am currently in a chain of two properties, close to exchange. Both went on the market back in August, before Truss came into power and the cost of living crisis blew up. In my area, the market has fallen and properties are now going for about 10% below current asking prices, which in turn are lower than they were back in August.

I am the middle of the chain, with first time buyers buying my flat. I went for a conservative listing price and quickly sold for an asking price offer.

The flat I am buying is owned by a couple who have a portfolio of properties and decided to sell one (previously rented). They are not in a chain and were aggressive about getting the maximum price for the property (declining asking price, and pushing for best and final offers between two bidders). I put in an offer at 10% above asking price and got it.

It was the upper end of my budget and will take all my savings, which I was ok with at the time as I was expecting to be able to build them up again quickly enough. Now I have to think about the reduced value of the property (could be as much as 20% under what I am paying) and also short term realities of living costs, job insecurity, etc. that we will be facing over the next few years. I have spoken to a friend in finance who knows this market and says it is unlikely to recover even to the original asking price in the next 5+ years. The flat also carries a lot of associated maintenance costs due to the development it is part of, so inflation will impact those as well as the overall property value. I am single, so all costs are on me alone. I need to reduce my offer to make it viable.

Obviously reducing the offer will piss my vendors off, but I intend to drop back down to the original asking price, which I don't think they would get in today's market and so still feels generous. As well as the market drop, it is an unusual property and only had two bidders after 12 weeks on the market in the first place. Given their circumstances, I don't feel bad from a moral perspective as I might otherwise.

FWIW everyone in the chain is a childfree professional and staying in the same area, so if the chain were to collapse it would not be ruining lives!

My question is, how do you go about reducing an offer at this stage? We have not reached exchange - can I simply instruct my solicitor to do it? Are there any legal risks or considerations? I know that I risk collapsing the chain and also could lose money spent so far, but that is preferable to getting into an untenable financial situation for the long-term.

Any advice on how best to approach this would be greatly appreciated.

Would this affect your mortgage offer?

What the difference in cost that’s making you consider this?

Potentially the fist time buyers may not be able to buy due to the changes in interest rates. They could be outside of the affordability now.

Are you sure you should be buying it anyway. If it only had two bidders in the most buoyant market in recent history, I’m not sure how easy it would be to sell on again when you want to move on.

Personally I would only be buying now if it was a long term move eg I could stay there a long time, scope to stay there. I also think the gov has run out of props. We are in for some very tough times.

How close though? Next week? Next month? You sound like you're going to do it so best to get it done via solicitor asap cc the estate agent. Fwiw I think you really want to pull out. Good luck.

Thank you. I would estimate we are a couple of weeks from exchange. The original target date was 23rd December but my vendors are pushing to close.

Given that you’re buying a property from people who rent it our, and don’t appear to be dependent on it for any onward purchase, I think the likelihood is if they can’t get want they want for it they’ll just keep renting it out. If you can buy something up similar for less, then that’s great…long as your buyer is willing (a) to wait, and (b) doesn’t try the same move on you….

Out of interest what would happen if your buyer reduced their offer ??

Others have said this but you don’t seem to have picked up on it. If they did accept your reduced offer, you would have to get a new mortgage offer. We tried to get a bit of money knocked off for issues with a garage, but when we found this out, we decided not to do that we could stick with our original offer.

Lots of things to think through. Generally speaking, I think it's a pretty awful thing to do especially when done just prior to exchange without an obvious reason. In your circumstance, I can totally understand why you feel that you don't want to make a very poor, irreversible financial decision. What I don't understand is why you agree to pay 10% over asking in a market which had already started to fall slightly.

Personally, I would only be upsizing and increasing my mortgage in this market unless it was essential and I had secured a decent price relative to the local market. Is your move essential or could you wait a year?

As other have said, how would reducing the price affect your mortgage offer?

How much do you love this property and how would you feel and what would you do if they decline to reduce the sale price? Are you willing to take the risk?

If your mortgage rate will be unchanged and you are comfortable with losing the property, by all means try, explaining your rational. From your description of the sellers, it doesn't sound as if it is very likely to be successful.
However, if you are not too bothered about moving, I would just pull out and wait a bit or even consider selling and renting for a while.

This is a really shitty thing to do! If the flat was beyond your means, why did you offer 10% above asking price? If the owners of the flat were that 'aggressive' when wanting more for their flat, then I doubt they're going to say 'ok, that's fine.' You risk the whole chain collapsing and it's the first time buyer that loses in all of this. By all means do it, but it sounds a very calculated move.

I think It’s right that you have to do the sums to see if it even makes sense, and you have to be happy not to move for a while too.

If you ask to reduce the chain will most likely collapse as they were very adamant that they will only sell at a certain price, so not desperate. This means you will need to put you flat back on the market for the lower price. At the moment you are both buying and selling at an inflated price so it’s not much different to buying and selling at a lower price, it’s a percentage thing after all.

What did the mortgage valuation say?

@ChocHaloTop reduce to a price you would exchange at, or pull out now. Don’t fuck about.
Your vendor is a landlord so they are not selling their home to you, just a property owned by their business.
For them it should be the same emotions as selling a second hand car.
You must do what is correct for you today.
For all you know, your buyers may be asking themselves why the are over paying on your flat also.
FWIW I’d pull out now, or contact Dr Sam the spell caster for some advice.

Also, the fact that you say 'no one in the chain has children' WTF does that mean? I have kids but this will have a huge impact on people, does it really matter if they have kids?

Sounds like a 'friend' has done their best to scaremonger you. If you follow their logic, any property you buy will lose value and take years to get this back. So I suggest maybe not buying anywhere or offering under the asking price on the next place, or will you just do the same thing. Offer what the vendor wants and then just before it's about to go through lower jt. Imagine if you desperately wanted your flat and your buyer did the same to you!

Seems unusual that there wasn't a lot of interest (in your words) but you managed to get into a bidding situation and offered 10% over asking.

Fake competition? It’s an old estate agent trick if they get someone gullible coming in, or have no scruples.

Some types of property fall in price more than others and if flats tend to fall then I don’t blame you for wanting a reduction after agreeing over the asking price.
I think a lot of the over asking price offers end up back at asking price.
A house sale isn’t binding until contracts are exchanged.
Do you sums and work it out. Also it may happen to you from the first time buyers

If you change the price you will need to reapply for a mortgage. Which will mean a delay and cost everyone money, and your new mortgage will probably have higher payments due to interest rates.
Your current property is also worth less, what will you do if your buyers ask for a reduction ?
If they don’t just now then they will almost certainly ask for one when they find out the delay is due to you getting money of your new property.

Totally agree ,my daughter is selling ,close to exchanging,she would dump the buyer as well ,yes it’s blackmail

What's the mortgage rate you've secured ?

What made you offer in the first place and go so much over asking? Do you actually love the property? Most people would have held their nerve with something that had been on the market for so long.

You may be unpleasantly surprised when you do the maths on a new mortgage offer.

Is continuing with your sale and renting an option? I’d be sorely tempted. You’ll capitalise on old world prices and buy in the new.

Morally, your vendors are property hogs and part of the problem.

So I wouldn't think twice about reducing my offer

But I'm not most ppl, I see things as very black and white

A few thoughts 1) if you're honest with yourself, is this just buyer's remorse? You've had some time since the summer to reflect and (external circumstances aside) you now feel you've overpaid? That's what it feels like to me as this cost of living thing has been on the cards since way before the summer 2) is this flat a long term purchase? 3) when you lose your buyer and mortgage rate, it'll be potentially more expensive to buy the next thing, is that a chance you're willing to take? Do you need to move now?

I doesn't make sense to go ahead at the agreed price if the market has slumped dramatically. If I were you I would have the property independently revalued, if the valuation comes back as less than you are paying then you have something solid to justify the reduction. Property is a game of nerves and everyone wants the very best deal possible, but you are risking collapsing your chain. Get advice from your mortgage company and solicitor before you approach the sellers.

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