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.

So you don't want advice that makes you out a bad person?
It is blackmail and how do you know it's not ruining people's lives just because they are child less/free professionals?? You sound like a bitch

I hope you offer your buyers the same percentage reduction on your property, if you feel so strongly about it.

You sound like a bitch

You sound unhinged! 😆

I would sell and move into a rental for a while and see what the market does. I did for 18mths and with small kids and it turned out to be a great move.

She's not a bad person ffs. It's a transaction, a big one, so if she changes her mind because she's able to, then that's her choice.

All this 'it's morally wrong / blackmail ' BS 🙄

It is blackmail

Do you understand what blackmail is?

Fuck off.
She’s overpaying a company who are disposing of an asset.
If the chain collapse, as it will, her busters will buy a cheaper property also.

*buyers

Yes, I love the property and was in competition with one other buyer. To be fair the estate agent could have been making it up, but there is no way of knowing, is there?

It's true that my buyers could do the same and if they did, I would be forced to renegotiate anyway. But it's less likely because I put my flat on at a modest price and accepted their asking price offer. If they did, I would accept that that's what is happening at the moment.

If my vendors refused, I would either sell anyway and rent, or else stay in my current flat. I would not try to buy again at the moment. I find the spread of responses here helpful and will spend time doing the analysis, I'm surprised that so many people don't see how much things have moved over the past few months.

I've taken on board the point about the mortgage offer, so thanks to those who have raised it.

You sound like a bitch a bit harsh @JungleBellsHoHoHo, op is worrying about getting into negative equity, not sleeping with your husband!

All this 'it's morally wrong / blackmail ' BS

And there's such hypocrisy too! If the op had said another buyer has offered me 50k more posters would be replying "you have to think about yourself", "it's a business transaction". No one would talk about blackmail!

There’s risk the seller will say no and walk away but if you are willing to take the risk then I’d suggest speaking to the estate agent. We’re close to exchange on selling our flat (agreed sale price in September) and I’ve been half expecting the buyer to reduce their offer. I’d check your mortgage offer would still be valid - we reduced our offer whilst we were buying due to a lease issue and we just had to get a new mortgage offer letter.

Exactly, this is a head decision based on changed parameters. It is not just negative equity, it is the possibility that it becomes more expensive to live there (due to inflation and the expenses entailed with this specific property) and I would have used all my savings on the purchase.

Thanks to all for the rational replies, there is some good advice here and I will be taking it on board before acting (or not) decisively. It's not buyer's remorse, though a fair challenge. I knew I was paying a high price for it at the time, but did not think it would slump in value or that we would see the economic shock that we have. It's true that cost of living was rising back in August, but the mini budget took us into a far more difficulty than we were facing back then.

Our buyer tried to do this back in 2018. They wanted to drop the value of our home by £10,000, which was 5% of the value.

I said no. I had done all of our forward planning based off the price offered.

They then came back with ‘We guess we have to withdraw our offer them”.

I came back with “OK”.

I guess our buyer didn’t want to lose all of the money they’d already spent, as they continued with the sale regardless. However, it wouldn’t have bothered me at all if they hadn’t, as we hadn’t paid out much that we wouldn’t get back.

In fact, we had planned to fill in all of the holes in the walls from picture hooks etc and repaint, and we’d planned to have the oven and carpets cleaned for them as a nice gesture, but we didn’t bother after that, so it saved me money in the end.

YANBU. It's a transaction, people forget that as house buying gets so emotional. They can say no but might say yes.

The fact they have a portfolio of properties is irrelevant. The fact that they were aggressive about getting the maximum price for the property is how selling works. So basically your question is the sellers have no chain and you want to reduce the offer price now the market isn't as strong. Ask your solicitor to resubmit and take it from there surely?

You can, but are you prepared for your seller to decline? If they do agree (which I doubt they will), you will need to notify your lender who may have to adjust their lending and issue a revised mortgage offer. Perhaps you should withdraw and find a cheaper property?

Yes, thanks. And the thread itself was set up to ask that question - is it as simple as instructing the solicitor, no wider legal implications?

I have let myself be drawn into a totally different conversation.

I would be incredibly honest as you have been here and go for it. I can’t imagine your vendors would be surprised at this point anyway, speak to your solicitor and agent and see what they say about moving forward with it. People negotiate down all the time for various reasons.

What does your mate in finance do, that he knows better than the Bank of England, five plus years my arse 😂

it’s a shitty thing to do and I’d wonder if you ever even intended to pay that, just get as close to exchange as possible and then hope they had to take it.

legally sure you can do it, morally, unpleasant stuff.

“I have let myself be drawn into a totally different conversation.“
On the bright side, the rest of us are enjoying it though.

Glad to be of service!

I sold a flat that was rented out a little while back. The buyers messed me around big time. In the end I informed them that if we didn't complete by the end of the month, I was withdrawing and would not consider selling to them. The seller holds the cards in this situation as they are not dependent on selling to move to a new place. My buyers completed before the deadline and the flat sold for the agreed price. Similar situation when my son sold his flat last year. Buyer wanted to reduce price by £5000 just before exchange. He said no and flat sold at agreed price.... If you are happy for the sale to fall through then by all means risk it but it is a risk.

Well just be prepared that the very same may happen to you.

I would dump you as a buyer too. That's not just talk either. We've walked away from house buying or selling when someone starts behaving like an arse. Sometimes it's a matter if principle and we've never regretted it.