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.

You sound like you've never been in a property chain. It's cut throat

You've higlighted why it's a shitty thing to do and why are some are saying it's like blackmail

"Give me money off - I know you won't say no because it'll leave you in an awful position and cost you even more money. I didn't do it survey stage, I've waiting until you're in the weakest possible position and have as much cost (both literal and emotional) sunk into it before dropping it on you"

It might be quite inconvenient for the people in the chain and not a 'nice' thing to do, but it is a business transaction and your ask is perfectly reasonable. You are buying the house for yourself at your calculated risk and this has changed so your price appetite changed. That is not your fault tbh.

Just try to do it asap so it's not close to exchange and in case the chain falls, people can find alternatives quickly

I mean currently it is buyer's market but when it was seller's market gazumping was not uncommon, actually even now I got a call from an agent to urgently come for a viewing of a property before the buyer exchanges (apparently this is a property under offer which the buyer has already carried out a survey) so it looks like some sellers are even trying to gazump at this environment which I thought was quite brave...

Also, there was another property that the buyer requested a cheeky? reduction of price before exchange and the chain fell apart but bc the original deal was made before mini-budget, the seller who refused put it back on the market now, but this property has been there for a while without much interest at current price...so it might even sell lower than what the seller could've have gotten

I am viewing places these days and running to a lot of vendors still married to recently sold prices / comparables or the price they had before their original deal fell apart. Not sure how that is going to help progress sales if you cannot think more rationally and adapt.... that is what a lot of buyers are trying to do with this new horrendous mortgage increase...

It depends on how much we are talking if I was selling an investment property and you wanted 2/3k off at this stage you might get it as we would have already paid fees etc. looking 10k nope not going to happen out of principle at this stage, so it would be going back on the rental market. Also if your buyer get wind of the hold up (estate agents talk) they might try the same on you.

You sound like you've never been in a property chain. It's cut throat

I was in one earlier this year but I take emotion out of it...

It's cut throat

but agree with this, hence why I think the OP should be cautious.

You just need to do the sums
how much your paying now with your mortgage rate
how much you want off
how much a new mortgage rate will cost you over your old one

in my sons case it’s cost him 1k in product fees and and extra £100 a month over 5 years due to his asshole solicitors

I think that's a lousy thing to do, personally. OP, you should've looked into the financial aspects BEFORE putting in your offer - that's on you, not on the sellers. I wouldn't sell to you in this instance. My NDN were due to move on a Thursday but on the Tuesday their buyer's buyer pulled the same trick and the whole chain collapsed, all that money down the drain.

Exactly. Lots of people are twitchy

My flat in London increased in value much more than my house in the Home Counties ever did over the same time frame.

You didn't offer on the house in today's market though. It stands to reason that your property will have also reduced by that sum! If you're happy to ask for a reduction, then you should be happy to let your estate agents know that you'll offer a reduction to your buyers. Would you though? Unlikely.

Nonsense! If her buyers are happy at the price they negotiated then that’s that.
The OP has realised/been caught out with the downturn in the economy and can’t justify to herself overpaying by tens of thousands in today’s market.
Shit happens. It’s her money, her decision.

It's a risk. Our buyer tried this and I told them it would be back on the market the next day. I'd do the same now. It's up to you if you think it's worth the risk.

@C4tastrophe it's life, I agree there. It's just worth noting that those actions could cause the chain to collapse.

It happened to me in reverse 7 years ago. Was a FTB, wanted to get the ball rolling but the vendor was dragging their feet. After 8 months of us being patient, vendor demanded 25k more due to the increase in value at that time. We pulled out.

It’s a chain of 2. Vacant property above, FTB below.

If you really want it, and don’t want it to fall though, you probably need to carry on with the price agreed. I would only reduce my offer at this stage if I was prepared for it to fall through. It’s OK to change your mind as well - especially with so much uncertainty and increasing strain on finances.

My buyer tried it years ago on the day before exchange was due. I told him via the agent to fuck off. We exchanged as planned.

I bet if it had gone up 10% since your offer you’d be incensed if your vendor wanted more money @ChocHaloTop. It works both ways.

By dumping the buyer now you would most likely get even less money for your house as the next buyer will also be cautious and probably looking at even higher mortgage rates.

LOL at all the moral posturing, it is an ex-rental from a large portfolio, take all the emotion out of it and tell them that the market has changed and the offer is reduced by 25%, take it or leave it. There will be PLENTY more property for you to buy.