Price reduction after initial offer

[Gamergirl86]

Just an observation really but I've noticed what seems to be a worrying trend of buyers asking for reductions before exchange and sellers agreeing to %reductions.

I've been reading the property threads for a few months due to our own situation (selling and purchasing a new house) and I've noticed a huge number of people commenting of either thinking about asking for a reduction or sellers casually mentioning they agreed to a reduction.

When I move last, 7 years ago, this was unheard of. Perhaps I just got lucky?
Is this the norm now?
It worries me because if our buyer doesn't pay what the agreed sale price is we won't be able to afford our onward purchse: a choice we.made directly related to the sale.price on our current home.

Should we have anticipated that our buyer will ask for reduction down the line? Am I being naieve?

It seems that the agreed sale price is now just a starting number and the Real negotiation starts after all all the paperwork/surveys/queries are back.

Anyone more experienced got any insights?

In this situation now as the seller of a property. I can understand why they’d do it after a negative survey, but I’d be interested to know why buyers push for a reduction between exchange and completion. Just trying their luck? Are there ever any legitimate reasons? I couldn’t imagine doing it as it seems like such a crappy thing to do to somebody.

Yes I think negotiation is expected depending on what is uncovered in the searches and surveys and whether it was apparent on viewing and factored into the price. My search results were so bad we’re walking away, we’re not even going to negotiate. My buyers didn’t negotiate but there weren’t any gremlins to uncover, thankfully, I’ve done my best to look after the house and fix anything that needed doing straight away.

I guess what's thrown me the most isn't reductions for serious survey faults but for little, what's I'd term DIY issues, like a single guttering bracket or cracked paving or a few slipped roof tiles.

I'd sort of expect to have to sort a few things over the first 6 months of buying a new house but it seem more and more that people would rather ask for money off, often round up to four or five thousand for these little jobs.

They can't change the price after exchange. It usually happens just before exchange when everyone's almost ready to complete where the seller feels forced to agree to a price reduction or risk starting the whole process again with a new buyer.

Well if they are little repairs, surely the price adjustment is small?

My DD renegotiated 10k after a survey but there was a very good reason for it and she got a quote to do the work (and the owner let the builder in to assess it). The work was done immediately after completion and before they moved in. So it wasn't just a random figure picked out of midair and the owner would likely have wanted to do it if she had stayed as well.

That's the only adjustment in price I've ever heard of.

We asked for a reduction after offer, but its because the survey brought back major faults that weren't apparent on viewing and the mortgage lender downvalued it. In the end I offered what the bank said it was worth siting the building survey. It needed at least £30k worth of work to make it weatherproof and secure and the bank valuation was £10k less than our initial offer so I felt a £10k reduction to match the bank valuation was fair since we couldn't borrow any more to get the work done. The house is worth more than £500k so it wasn't a huge percentage.

Thanks for that. Realised after I posted it that I got it mixed up!

We sold 2.5yrs ago and having heard of this trend we told the EA that unless the survey found catastrophic faults (subsidence, flood, roof about to fall in etc) then any attempt to renegotiate the price at the last minute would result in the house immediately being withdrawn from sale.
Obviously we knew that no issues were going to be found and we were also in an excellent position of not having to sell that house to enable us to move into our new one so could prolong the sale if necessary.
The EA understood completely and I think was quite pleased as it made their job easier.

Clear from the outset, I like your style!

About 10 years ago our vendor asked just before exchange if we would pay more (10-15k, I think) because he had significant debts and thought he’d get more cash out of the sale than he was going to.

We declined on the grounds that wasn’t our problem (but we did agonise as the process had gone on for a long time considering there was no chain). Thankfully he agreed to the original price, but I’ll never forget the CF.

Are there any legal assurances that a buyer can give that they won’t seek a last-minute reduction (for a bogus reason)? Or is it just a matter of trusting their word?

It happened to me last year. Cash buyers were purchasing my house as a landlord. I had an ongoing purchase that depended on the sale. They wanted to drop the price by £5k at the point of exchange. EA got them to agree to £2.5k as there was no reason for it and I really needed the sale. The date for exchange was agreed and they did not send the deposit to their solicitor in time for funds to clear and be sent to my solicitor. Fortunately our ongoing purchase was very understanding as we couldn’t exchange with them either. It held up the chain. That was a Friday. They did exchange the following Tuesday.

@North0ftheBorder unfortunately I don't think so under the English system.

Its stories like this which make me really nervous- no real reason just trying to get money off by scaring vendors with a collapse in sale. And it seems to happen more often than not.

It seems to be a UK thing. I've bought in other countries where you'd be considered the dregs of humanity if you tried to blackmail a seller into dropping the agreed price later on simply because you fancied a discount.

I think it had quite a bit to do with the people we sold to. They were incredibly well off, would not be living in the property, and I think the type of people who were used to walking over others. The EA hinted the same as they were quite rude to them throughout the process. When they failed to send the money to the solicitor so that we could go head with exchange, they really didn't see that that would be a problem to us (and everyone else up the chain who couldn't exchange either). We were just unlucky.

Totally agree with you, we're in the same position now. We have a full market offer (because it's already been priced fairly) and if they deduct anything, we'll be forced to pull out.

But our house sold within days of being on the market, so I'll be playing hardball if they try it on. No reductions or we'll pull out and put it back up for sale.

They do it because they can. If more people don't entertain it, it'll become less common.

>And it seems to happen more often than not.

People don't come on the internet to specifically post about what a stress-free purchase they had. They come to whinge.

I've been keeping an eye on articles regarding gazundering that hit my inbox (I'm boring enough to get daily market emails) and I'm of the opinion that the companies who publish these 'surveys' have a vested interest in making the normal house buying process look terrifying, i.e. companies who auction off houses are doing 'research', and after quickly putting it into google just now, the first article I came across was a law firm who also specialise in person injury claims. Not on the top of my list of reputable firms.

The trouble is, press copy and paste articles that claim to be research without fact checking them or looking at what overall actual percentages across the market are. It breeds fear. I wouldn't let it worry you to the point of crippling anxiety.

I would:

NOT sell to a cash buyer; these are the worst for gazundering

NOT sell to anyone who is not completely invested in both the house and the area; anyone who might be on the fence, apathetic about your home and therefore might be liable to have a wobble should be avoided at all costs

I would:

Get my EA to financial qualify prospective buyers and make sure they can comfortably afford to buy your home (without, at the same time, trying to flog them their own financial services, which is on the rise).

Make sure you know your home's true worth. Even if you get 3 EAs in they'll all be trying to get your business and may ALL overvalue it. You can actually pay to get an RICS qualified person in to value your home independently, but you have to pay. Last time I looked it was about £320 for a 300-350k home.

Give priority to those in the shortest chains; FTBs living at home, people who moved into rentals after selling their house, that sort of thing.

Listen to any bad gut reactions you have about buyers - but this would involve meeting them.

FWIW we have no idea when our purchase is likely to complete; it could be October, January, or if their house purchase falls through, it could be summer next year. We know this, and we've no intention of dropping our asking price because we're fully committed to THIS house and THESE sellers, who are very, very good people.

@KievLoverTwo you are absolutely on the money about MN only showing a small and rather specific cross section of house buying!

It definitely happens- we negotiated back and forth with our buyers after their initial offer was too low, they then asked for that amount off very close to exchange so it was clear they only ever intended to pay their first offer amount.

Its definitely shitty behaviour (unless there is a legitimate reason for the money off of course) but it's also risky- we rolled over but plenty more would tell them to go swivel.

A "worrying trend" of people actually wanting to get what they think they are paying for.

I don't see any problem in asking for discounts if surveys reveal things that were not seen on inspection. That is the whole point of getting a survey.

If the mortgage valuation comes in lower then fine to reduce your price.

What is out of order is waiting until 1 day before exchange and then dropping the offer.

If you do intend to revise your offer price then you should do it as soon as you are aware that you will want/need to revise it.

I agree to an extent if the survey shows major structural isues reductions should be discussed bit ay thay point, id probably just pull oit of a sale. It reads more and more as though buyers are refusing to accept that older houses (anything other than a new build really) expect a zero issues property which is highly unrealistic. All houses need maintenance over time.

As for the mortgage valuation, the only reason to reduce an offer price on this account is of the over all valuation is lower than the mortgage ie a 500k house is valued at 480 and the buyer is relying on a mortgage of 490 ( which is very unlikely to happen)

If your mortgage is lower than the valuation, what difference does it make? A valuation is just an estimate of the proce and the banks valuation is solely on the purposes of mortgage.

A down valuation really only affects folks with high mortgages 80%+. There's absolutely no reason to reduce offer price based on a bank valuation if the total still exceeds the loan amount.

The reasons we are pulling out are (and it’s taken months to tease all this info out of the vendors): landlocked (no legal right of easement from nearest public road), no legal right to water (private supply crossing land with no rights in place), recent conversion missing building regs for glazing and electricity, medium risk of subsidence for ground type with no mitigations in the build to prevent subsidence, amber flood risk, no new build warranty.

I really don’t think people should be allowed to sell their houses without having bare minimum paperwork for all this stuff worked through first. The English system really sucks. It takes ages to get the search info, then months of questioning the vendors, follow up surveys, all at great stress and expense, as your disappointment and anxiety builds.

This house was marketed as a high spec finished house ready to go at the top end of the price bracket for its type. Not a cupboard of gremlins which make it unmortgageable on many counts.

houses are so expensive these days, people need to get their paperwork in order before going to sale and be realistic with issues from the outset instead of trying to hide everything. There are bad buyers but there are also bad vendors.

Disagree. If you have been stupid enough to offer twice what a property is worth (exaggeration for clarity) and then the bank says its only worth half, then you're either nuts to continue with the purchase at the current price or so flush with money that it makes no odds to you. Very few are in the latter position and should welcome an opportunity to correct an error.

'As for the mortgage valuation, the only reason to reduce an offer price on this account is of the over all valuation is lower than the mortgage ie a 500k house is valued at 480 and the buyer is relying on a mortgage of 490 ( which is very unlikely to happen)

If your mortgage is lower than the valuation, what difference does it make? A valuation is just an estimate of the proce and the banks valuation is solely on the purposes of mortgage.'

I don't agree with that at all. It would be a foolish mistake to significantly overpay for a house at the moment. Most people can't afford to effectively throw away tens of thousands of £.