Going over asking price by 150k…stressed!!!

[MovingandStressed]

Hi all, I need someone to calm me down! We offered in March on a property that we loved, asking price 700k and because there was so much interest (think could barely get a viewing etc) we offered 150k over in a sealed bid process to secure it. We were told after we won the bid by the agent that someone actually went slightly higher but they wanted to sell to a family.
Now the market has gone down considerably since then, we had got a really good offer on our house (also paying over asking) but they have now pulled out and we are looking to have to reduce our asking price by 50k. Fortunately we can borrow enough to allow us to buy the property we like before selling ours (paying an absolutely extortionate mortgage in the process).
Now massively panicking that the price we are paying for the house we love is way too high in todays market (it’s a very lovely location - bit of a one off - which is why all the interest). We would intend it as a forever home. Needs oodles of work extensions etc and totally gutting (we are used to doing big projects but this time I wouldn’t have the intention of moving!!), but the plot is fab and I love it. In terms of buying the property, if we had sold this, we would only have a tiny mortgage, but we need a bigger one for all the extension work, but still half what we are currently paying, so the interest rates don’t worry me tooo much. I want a good investment though and I’m getting really nervous about the fact that we are overpaying asking price hugely for this and that they probably wouldn’t get that in todays market.

help!!! Do we renegotiate the price?

We were told after we won the bid by the agent that someone actually went slightly higher but they wanted to sell to a family.

Do you believe everything people tell you (especially EA) if so, I have some magic beans for sale...

They told you that to make you feel relieved your bid won

21% over asking price AND a £50k drop in your selling price is HUGE numbers. If you're in the affordability bracket whereby £200k is doable lucky you and it is definitely your forever home then why not. But you're paying out £200k on a house that still needs gutting/extending/shit loads of work doing? That's an awful lot of extra money on a house that despite being your dream home still needs ripping apart at HUGE cost to make perfect.

I'd only ever go that much over if the house ticked all the forever home boxes without needing all the major work.

Bonkers.

Depends on the contractual arrangements around the sealed bid process.

I believe in Scotland you won’t have recourse but in England you can walk away which gives you leverage.

Sounds like OP may be in Scotland. Buying process is different here. People usually market houses as “offers over” £XX. Huge offers like this are not unusual in desirable areas. Solicitors and estate agents can advise what to offer based on the value stated in the home report but it’s a bit of a guessing game if it goes to sealed bids - which is done when there’s lots of interest. We were advised to offer 10% over home report value when we were buying. We did this and ours was the lowest offer! It’s a bit of a nightmare for buyers.

You obviously really wanted the house so I would not do anything to risk losing it. If you can still ‘easily’ afford it, then just accept the difference. It’s a forever home and you’ll kick yourselves forever if you were to lose it.

Really no need for the estate agent to lie at this point. The bid is in and accepted. I suspect OP is in Scotland where it’s common to hear about the other bids after the process is over.

If it was THEDREAM home. Try to negotiate gently but stick with it if they wont reduce. 50k over a lifetime is immaterial.
In fact i felt we overpaid on our house by 50k... 4 years on only 1 house vaguely near as nice has come on and it was 100k more than we paid and snapped up

If its an good homanbut you want an investment - go fish.

Well as this property needs ‘totally gutting and extensions’ they could have gone shopping up to £1.3m

Yep, anyone who describes their home as an investment should be prepared and happy to see it's value go up like a rocket and down like a stick.

Sealed bids are a mugs game. I have been involved twice. We won one, but pulled out because we felt we over offered. When we saw how much the house eventually went for, it confirmed that we had offered far too much. We lost out in one and when I spoke to the EA about it, they were absolutely gobsmacked at the amount the winning bidders offered. It was so much more than the other offers. I do feel a bit sorry for them because they could have offered far, far less and still got it. I’m never doing sealed bids again.

You need to reconsider what you say about not being worried about the interest rate imo. I can't imagine why you would not at least be trying to renegotiate down to the original asking price. You're going to overpay massively at just knocking off 50k. I guess if you love the house that much and are really wealthy, then ok, but be realistic about the costs of borrowing and the direction of travel for values at least.

https://www.bnnbloomberg.ca/jpmorgan-sees-risks-of-7-interest-rate-and-hard-landing-in-uk-1.1941726

But, you don’t know what rate they’re looking at, given the purchase has been going several months likely already have an offer below todays rates. We also don’t know how long the fixed tie-in period is for.

£15k over. Jesus. I'd be having kittens. And I wouldn't believe someone went higher either. Estate agents are total liars.

I would renegotiate or pull out.

People don't (usually) ask for more in a rising market between offer and exchange, so don't think you should gazunder now. And as it went to sealed bids it is less likely to have been affected by the slight drop in prices (properties near me have been selling at same prices as a year ago).

It would make the buyer less inclined to want to pull out though, and more eager to complete quickly

Missives
Your offer must be sent as a letter from your solicitor. The seller will then consider the offer.

If they agree to sell their home to you, their solicitor will send you a letter called a 'qualified acceptance', which means they accept the offer depending on certain conditions.

The seller's solicitor and your solicitor will then send each other letters negotiating these conditions. These letters are called 'missives'.

Once the missives are accepted and both you and the seller agree on the terms, you have a binding contract.

www.mygov.scot/buying-a-home/making-an-offer

Just to be clear, you're thinking of buying the house without having sold yours? The £50k drop is to your asking price but you haven't actually got an offer at this level? No way would I do this without a watertight plan for what happens if your current house doesn't sell. I'd pull out.

Given the op is considering their options, they are presumably not committed at the offer price.
Also it's probably not a lie. They probably did get a 1 mill joke offer from their mate which was not in any way proceedable, so it wasn't accepted. And in unrelated news, the seller would prefer to sell to a person who bids 150k over askingfamily.
To be a successful estate agent every communication must focus on getting the transaction completed, otherwise how can they make any money?

I never understand this whole falling in Love, with a property nonsense. It’s a house do the numbers stuck up? If not, they’ll be another house there always is.

Hi All thanks for all the posts, I am in England. I think what we are really buying here is a plot in a lovely unique location. I get what posters are saying about deciding between forever home and investment but I don’t think a decision like this can only be one or the other, a forever home should also be a good investment and make you more equity, I’ve always done houses up and moved on so I can’t quite commit to us “never” moving again but I can’t see it happening for 15 years +.
I also agree with PP who said the estate agent could be lying about the other higher offer. They have been very transparent and good to deal with (unlike many others I know) so I think they are probably telling the truth but who knows.
If it was to go on in this market today at 700 I think it may be able to achieve offers of 750-775 rather than 850. Just a guess as this agent commonly values houses very competitively to generate interest. Houses in the same area are sitting and not selling quickly but they don’t have the same location. Appreciate what pps are saying that properties in unique locations don’t suffer the fluctuations of the market like other properties. So I feel we should probably gently and nicely try and negotiate 50k off to make us feel more comfortable.

That’s right. It is risky especially as we are selling in such a tricky market, if we can’t sell (get under offer) in next couple of months then I think we will rent it out and try again next autumn. However this is the absolute last resort as goodness knows whether the market will have dropped further by then!!

150K over asking is bonkers in a falling market so you are over paying and it isn't a good investment if this is your concern.
However, it sounds as it you have plenty of money, don't seem too concerned about the mortgage even at current rates and say it is your 'forever home'.
I would try to re-negotiate but you do risk losing the house if the sellers get offended or are unrealistic about the current market.

Is it wise to buy this house before you've sold yours? What if it's actually £100k you need to drop your current house price to in order to sell it?

I don't believe in forever homes. Each house I buy I'm already thinking of when we will sell. We've just bought a house that was very expensive, and it is imo top of the market, so I'll be thankful and surprised if when we sell in 10 years (when DC have finished school) we get what we paid.

I'd like to think we won't lose too much. But you can't know until it's actually time to sell.

We reduced our offer for our current home based on the buyers for our old home doing the same. They agreed and it was all good.

Firstly you're not proceedable. When you become proceedable, and can afford to buy at £850k, the question I would ask is how much would I mind if the house went to someone else for £850k? That's a simple way to judge its value to your life.

You sound like me, always onto the next one! But this is what we have always wanted so I don’t know whether it will be a forever forever home but certainly until DC finish school (15 yrs).
The house we are buying will in no way represent what we end up selling, major extensions and building etc, it will basically be a different house - but what we love is the location - so I hope with all (even paying over) that we will at the minimum break even down the line and hopefully make a bit too.