Feeling sick about amount we offered for house... is changing the offer unwise? (Scotland)

[geezahoose]

We live in a 'hot spot' area where property has been selling for substantially over the home report valuation over the last year.

Last week we had an offer accepted on a house locally - we offered 20% over the home report/survey valuation. We were able to do this because our buyer offered 25% over for our property. I think we offered so much out of a combination of desperation and frustration about missing out on previous properties after we'd offered what we thought was a 'realistic' price...

However, I am now feeling sick about this. It's an insane amount of money (we'll have none left over) and it'll make the house we are buying the 'most expensive' one in the (council/ex-council) neighbourhood. (Annoyingly, if the property we offered on had been one of the privately built ones on the next road over, our offer would be less insane compared to recent sales.)

Is it worth asking our solicitor about reducing our offer by about 5k (this would only be around 3%)? We could say that we are willing to pay the original price if need be but were wondering if the sellers would accept that slight reduction? I know this is bad form & there's a risk of them bolting, but it's making me so incredibly stressed.

Again, we only just had the offer accepted last week so it's still early stages - I wouldn't want to reduce the offer at the last minute.

Any words of wisdom? I feel so stupid!

I'd tell you to jog on and find another buyer. It's a hot market, they'll find someone else. You're fine taking 25% over for your property, but think you're justified in going back and trying to screw your vendor for less.

If I was the seller I'd be worried you were going to drop out of the sale entirely and would be deciding whether to out the house back onto the market. Its a seller's market at the minute so personally i wouldn't do anything to give your seller cause for concern.

If you didn't want to pay that much why did you put in such an offer?

You either really want the house, and should put in your best offer, or you like the house but not enough to put in your best offer and know you might lose it to a higher offer.

I did this in the housing bubble before the crash of 2007-8, although not quite 20% over, more like 15%. I was desperate to move because I had an unmanageable commute and I could not afford to keep paying for surveys and legal fees and losing out (as that was how it worked then). I still feel stupid like I overpaid, but I balance that against the fact that DC have grown up here and gone to good schools, have their friends and my life is been much easier because I don’t have to commute far. So rings and roundabouts but I sympathise with how you feel but I also agree that your options are to withdraw or complete.

The market is crazy just now - a house near me went on the market on a Friday and was sold by Monday. So the sellers could easily just put it on the market again.

@Someoneonlyyouknow

You will still be at the Missives stage where you are agreeing what is included in the sale. If all white goods, curtains, some furniture, hot tub, dog etc would you be happier with the price? If you have to do work immediately you may be able to justify reduction, now that you have priced it. If you simply can't afford it you should withdraw (solicitor won't love you but meh). If it's concerns that you have paid more than recent sales prices are rising in many areas and your house may be 'better'

Dog???

No, you can't.

You have committed yourselves to paying that sum on X date . Your lawyer , on your behalf, has agreed certain financial consequences should you fail .

You have (I hope) agreed with your lawyer, a fee for the conveyance work s/he is doing on your behalf (plus compulsory taxes.fees to other bodies). YOU HAVE BOUGHT their legal expertise and advice on the property purchase so please make the most of it. When you have questions (such as this thread) ask your lawyer for answers . Email is more efficient than phone.

@2bazookas

No, you can't.

You have committed yourselves to paying that sum on X date . Your lawyer , on your behalf, has agreed certain financial consequences should you fail .

You have (I hope) agreed with your lawyer, a fee for the conveyance work s/he is doing on your behalf (plus compulsory taxes.fees to other bodies). YOU HAVE BOUGHT their legal expertise and advice on the property purchase so please make the most of it. When you have questions (such as this thread) ask your lawyer for answers . Email is more efficient than phone.

It's very unlikely that they are fully committed to the sale at this stage (apart from legal fees).

You could ask your lawyer for advice- but I think if I was the seller I would just sell to someone else as it seems very flakey. Would you rather buy this property? Or pay less and buy somewhere else?

@Ariela

Wait and see what your survey uncovers, I'd go for full structural survey regardless, and if there's things need doing, work out the cost and it's feasible to negotiate on the basis there's stuff doing. Likewise if your buyers drops their price. But I wouldn't do a 'buyers regret' reduction now - they'll only pop it back on the market, and if the house ticks all your boxes and you were happy to pay extra then go for it..

The OP is in Scotland; none of the above applies.

In the Scottish system, sellers are legally obliged to provide an independent professional survey and valuation , called a Home Report, free to every viewer/prospective buyer. HR's comply with a fixed format.
IOW, before making an offer on the property, OP had the full lowdown on its current condition, and any potential problems have been flagged up (an HP might, for instance, warn " evidence of woodworm infestation /possible subsidence, recommend specialist investigation". )

Pull out or you will forever resent how much you paid for your new home. There are plenty more houses out there.

The problem here is you don't want to get into the house and be disappointed by how much you spent of you think it's not worth it.

If you think you will be like that, I'd pull out.

I just did the same and we bought the house (also Scotland, "sought after area" actually our neighbours is up for sale j wonder if you've put an offer in on it lol)

But the house has had so much work done we can see we paid for quality and a lot of stuff the previous owner has done must've cost a fortune, well we know it did as he documented and receipted everything! I think if we came to sell in next five years we may not get quite what we bought it for but we did make 60k profit on our last house so I'm not going to be too upset about losing 5 or 10k if we have to.

In sought after areas in Scotland,or certainly in the central belt there are certainly not plenty more houses available, the reverse is in fact the case

@2bazookas
In Scotland there is the Home Report- yes. However the OP could still decide they want to carry out a full survey or check something further as Home Reports have limitations and don't look at everything. So that might be an option for the OP.

It's only if the missives are signed that an offer becomes binding. It's unlikely the OP has got that far yet.

As you said the OP is probably best checking with their own solicitor.

It's a seller's market here in Scotland and there is a major shortage of properties coming on. You would likely lose this house so it depends how you feel about that.

Unless the Offer was subject to survey no way would I let a surveyor in
And why spend £100s on a survey for a house you are probably not going to buy
Your solicitor can not continue to act for you if you drop your price

If you want then house then I wouldn't offer 5% less as you would risk losing the house. The market is moving so fast that it's worth say 5k to get a house that you really want. I feel I paid 10k over my homes value because it ended up needing all new windows and boiler straight away. I still think it was worth it because I love the house and prices have increased now anyway.

No don't do that. If u want the house u have it secured not worth the risk to save £5K. They might be really annoyed and just say u know what, houses sell within a week at closing so it's going back on the market.

You are lucky u were in a position to offer as much over. I know a few friends that bought in areas that are ridiculously competitive and they were losing out at 12-15% over the home report value.

@osbertthesyrianhamster

I'd tell you to jog on and find another buyer. It's a hot market, they'll find someone else. You're fine taking 25% over for your property, but think you're justified in going back and trying to screw your vendor for less.

I wouldn't say we're trying to screw them... 25% on our current property is peanuts compared to the 20% of the value of the one we offered on. I think we just made a bad judgement, fuelled by desperation!

Thanks everyone for your comments - it seems the general consensus is either to carry on with the purchase or pull out. TBH, we probably won't find a house the size of this one at a more affordable price, but the fact that it's such a large sum of money over the valuation makes me feel ill, you know? Our mortgage won't be large, so that's not an issue.

Live and learn, I suppose!

I don’t really think it is live and learn though, but the state of the market. If you’d offered less, you might not have got the house. So more that it is what it is.

I think you are focusing on the wrong thing, a house is only worth what some is prepared to pay for it. You were prepared to pay a bit more because of your past experiences, that's absolutely fine and the stress that has caused you and that you want to avoid in the future has a value. If you can't afford the house, then of course pull out, but if you can afford the price you have offered then that's what it's worth to you so maybe change your mindset to it's a house you want and are fortunate enough to be able to afford.

It is what it is, geez, and if it's some of the markets I'm thinking of, you're damn lucky to have even got it for the 25% - some are going around 30% or lower 30s over. I'm thinking of one particular area in Edinburgh that has ex-LHA houses but sits in a REALLY good catchment area. It would be utter folly to then try to low ball or pull out.

I wouldn't bother doing what you suggest, I really wouldn't.

MIL just accepted an offer, a cash one, on a semi ex-LHA, 3 bed house in a certain place in Edin that's in an excellent catchment area for secondary school. It's a shit tip. It needs totally renovated. The house report made my eyes sting. The amount it's selling for blew my mind. She needs a bungalow so is moving out here to be nearer to us and because she can then afford the bungalow and then some.

BUT, it's on a quiet street with the busy street just around the corner on the other side (multiple buses passing through and you can even walk into town) it has a driveway in place, it has a HUGE back garden, being ex-LHA, it has large bedrooms for Edin and abundant storage, it's easy to get permission to extend or pop the loft, the whole area is full of that and most of all, it's a house with a big back garden and driveway and, as Edin is a tenement city, people are paying a premium to get into a house.

A bidding war was for it. If she found a timewaster, she'd simply say no and get someone else to pay for it because that's the market there just now, booming!

They paid about £20k for it about 30 years ago. But that's the way it goes sometimes. My family is abroad. My parents paid even less for a massive 4-bed bungalow/'ranch' style house, no council or that, there's not such a thing in most areas there, in the early 70s (house was built in the 1950s). It's worth nearly $1m USD now. It's location, size, catchment area are the reason it's worth so much. That's how the cookie crumbles sometimes! If someone wants to pay less, she'd (my mother is a widow now) would find someone else to pay what it's worth, which is currently about $800k.

I'd consider yourself lucky!

Maybe a better way to think about these 5 k is how much more mortgage you have to pay a month. Or what other expenses you would incur if you pulled out.

We overspend by about 10k when we bought, but our rent was expensive and we struggled to find anything we could afford. In hindsight a lower offer would've probably got us our home, but I wasn't willing to take the risk when we were spending several 100k.

Surely if you wouldn't find another house like the size of this one or at a better market price you're paying the tight amount? Everyone get a bit frightened when they get an offer accepted - it's the biggest transaction you'll ever take on. If you can afford it I'd proceed.

Is it a nice street? I bought a house (that I’m still in) that’s a mix of council and ex-council and I wouldn’t do it again. Especially not for 20% more than asking. Some of the council tenants - including, sadly, my NDN - are what you’d call interesting...

For the sake of £5k? Really? How much difference in mortgage payments would that make? The property market is crazy at the moment and everything is going substantially over the HR in hotspot areas.

I keep hearing about people bidding 20% plus over the HR at closing and losing out to others so if you pull out you risk missing out.