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.

Thank you. I did wonder if they were falling in some areas.

I am in East Anglia and I suppose I am only looking at the bottom of the market.

@Itsbiasedhere preaching to the converted here. I have a home & a mortgage but it's clear the obsession with ever increasing prices has screwed the economy up & I do have dc that one day will need a home. I'd favour higher interest rates, higher salaries & far lower income to house price ratio. We need growth & investment in people not property

If market changes had risen the value would you be willing to pay more?

I think you're playing a dangerous game - you said yourself they were keen to get top dollar and have other rental properties, so I think if you do this they'll more than likley drop the sale and find a tenant.

We had really similar 10 years ago, on day of exchange buyers got in touch via our agents and said they wanted to reduce their offer by £25K. The difference to OPs situation though is that the market was fairly buoyant at the time and there were no economic factors to consider other than I suspect they were just chancers and they knew we needed to sell urgently.

They had made the process very difficult all the way demanding all sorts of reports and certificates that both our solicitors and agents had declared were totally unnecessary and over the top e.g. written report at our cost to certify the garden water feature was operational and in good condition etc... etc...

I was so fed up with them at that point that I had a bit of a cry, put my big girl pants on and gave a firm no. They came back saying they would pull out and I didn't respond. At 4.55pm I got word from our solicitors that exchange had taken place at the agreed price.

Like you I ended up saving money as I didn't do any of the usual things I would have done like a professional clean, leave flowers, champagne etc... I just gave it a basic clean myself and between me and my family we stripped out absolutely everything that wasn't listed on the contents form so we left them with bare bulbs in pendant fittings and took all the light fittings, took every pair of curtains etc... It was incredibly petty and I would never and have never done that on any other house move but they really were the most CF buyers I've ever come across.

OP given the economic situation I agree that reducing your offer is the correct thing to do provided you do the sums before hand to make sure that any additional potential costs like a less favourable mortgage offer make it still financially right for you.

We recently completed on our house.

Took nearly 5 months to go through. We could’ve reduced the offer at exchange but we have a 5 year fixed mortgage at a low rate so because of that it felt reasonable.

I personally wouldn’t change the price so close to exchange. It’s a horrible thing to do, the time to do it is when you get the survey back.

I'd do it .

It's unlikely you'd lose your mortgage offer actually

Also you can still ruin lives of people who don't have kids rolls eyes

It's a shitty thing to do but anything seems to go in buying and selling property and you appear to have already decided that this is what you are going to do so not entirely sure what the point of this thread is? In this particular case I would expect that the vendors will refuse your reduced offer and you will collapse the chain and end up not moving. They are landlords with a portfolio so if the sale price has genuinely fallen they will probably just rent the flat out instead again. The rental market is still absolutely mad in most parts of the country so it is likely to rent very easily.

I think the kids thing is mentioned because parents have to prepare their dc to change schools and that's a huge upheaval and stress for kids. Adults have charge of their own lives but children don't, so it feels worse to change the expectations of children. I don't think the OP meant that adults aren't important

I completely understand your thought process, but have you also factored in the cost of having to relist your property if your buyers pull out? If your property has gone down in value too, plus mortgage rates may be higher than the one you’ve got for the new property, you’ll possibly be just as much out of pocket by dropping out of the chain than by going ahead with it.

I don't think asking for best and final with two buyers interested, and getting over asking if people were willing to pay that is in any way aggressive.

The market falling and cosy of living issues will apply equally to your buyer (perhaps even more so) so I hope you are offering them a reduction.

Not if she can’t get the same mortgage offer now, things have changed dramatically in the world of mortgages and she risks her offer not being extended or being offered at a significantly worse rate.

Totally depends when the mortgage offer runs until, they’re held for a certain amount of time, if it expires you have to reapply.

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!

This is a ridiculous statement, suggesting only people with kids would be impacted by their house chain collapsing is so incredibly narrow minded 🙄

You seem to assume that because the vendors have other properties they can afford to take a hit and that you will get sympathy on here that you world to if it were a young family with kids on school. Morally, gazumdeting is is dick move and causes lots of stress. If you genuinely feel you can’t afford the property then just pull out and stay where you are. If your think property prices have dropped then salt your yours has too. How would you feel about your buyers taking your approach?

Gazundering doesn’t force anyone’s hand. The vendors might prefer to take a bird in hand over the uncertainty of going out to a falling market.

The emotional intensity from some posters on this thread is fascinating.

I’d wager the majority of people have no experience of buying and selling in an economy like this. Glib moral sentiment about normal times doesn’t really hold.

Ordinarily I'd say gazumping is a dick move. However, when house prices are dropping, it would be incredibly foolish to overpay on a property. Your vendors know they are getting over the odds, they have no onwards move, they want to maximise their profit, and you want to protect your own financial situation. I'd attempt to renegotiate the price. If your vendor drops you, they are re-marketing in a declining market, and by the time they get another offer, and will likely get less than your renegotiated agreement.

OP: I would do it via the EA.

They will know the market for that kind of property in that location, and wanting to hold on to the sale will advise the vendors if they would not have anything to gain by ditching you and re-marketing. The vendors might still refuse your reduced offer and decide to hold on to the property instead. Especially with rents going the way they are.

But do look long term.

Would you get another affordable mortgage offer? Would you now get the same price on the flat you are selling? Any other cost implications?

We've just had this done to us. It's the pits and has caused so much stress and worry at an already stressful time. But if you have to, you have to. P.s. we asked our estate agent to approach other offers and so dropped the person out our chain.

Yes I would dump you too. What a horrible thing to do. How would you like it done to you!

@Bodgejobvendors I have never gazundered but if I was buying now I bloody would consider it. Have been gazumped 3 times though.

Yes, exactly.

All the messages 'it's a business decision' not everyone in business acts like this! And many that do don't retain business for this reason. Good business is done on integrity, trust and intelligent decision making. Sounds like the OP made a bad decision by offering over asking price and is regretting it and now that impact will be felt by others. You don't know any of the the other vendors personal circumstances. It's a shitty thing to do, but if it's the best thing to do I'd suggest speaking to your solicitor now and informing the chain today to avoid further delay and disappointment.

@supertato32 I would completely agree with your sentiment in "normal" times. Gazundering or Gazumping "just because" is an awful thing to do, and some buyers and sellers will try it on at the last minute (day of exchange for example) to maximise their profit. That's not good business. However, the property market has changed radically in the last few months. Interest rate rises have meant some buyers have their purchasing power reduced by around 30%. Property prices are going in reverse. It would be completely foolish for the OP to go ahead at an agreed, inflated price and her vendors know it, they won't like it, but they won't get that inflated price with anyone else now either. Sometimes, sh1tty as it is, in dire circumstances, you have to choose between protecting your own financial situation or someone else's.

Yes I would dump you too. What a horrible thing to do. How would you like it done to you!

Would you though? On principle. even if it meant, for example, that you would have to re-market your house in a slower market and possibly for no more than the reduced offer? If it meant the delay would lose you your mortgage agreement at a rate not available for a new one?

@SilentHedges I get what you're saying BUT why pay over the asking price in August. The property and financial markets had been rocky then. I think it's naive business decision from the original poster to begin with, and sadly for her bad decision making everyone will suffer. Also, Truss' awful budget happened some time ago so why didn't she do this a month ago? I think it's poor form on the OP.