inadvertent gazundering advice sought

1stTimeBuyerr

I'm a first-time buyer seeking some advice about negotiating a price reduction from a vendor who's already accepted our offer. I know in principle this is gazundering and it's not a good or ethical thing to do but our hands are frustratingly tied.

What has happened is this: our mortgage lender gave us an agreement in principle about a month ago. My partner is self-employed and had 5years worth of accounts detailing her income, which includes rental income. Our broker advised us to go with this particular lender as they'd take 100% of this rental income into account. On the basis of the agreement in principle we received, we found a flat (in North London) and had an offer accepted at 8% below asking price.

Now our lender has changed their criteria, will only take 50% rental income into account and have offered to lend us a considerable amount less than originally agreed. We can make up some of the shortfall by digging deep for some extra deposit, but we can no longer match the original offer price- we're about £9,000 short, which would take our best offer down to 10.5% below the original asking price.

We have already spent money on a survey of the house and there are a few problems that could bring the price down a bit, but not by that much. So we're now regrettably in a position of having to say to the vendor that we can't meet our offer, and to ask if he'll sell for less.

I was wondering if this is a common occurrence and how best to go about negotiating the price down. Should we just be upfront with the vendor about what's happened with our mortgage and hope that he recognises that given the market conditions (with prices generally heading downwards) ours is still a reasonable offer at 10.5% below asking price?

pinkshoes

Just be upfront and honest, and say that your lender will no longer lend you the initial amount, therefore your new best offer is £9k less. The can choose to accept or decline.

It will depend if they've had other parties interested.

1stTimeBuyerr

Thank you, much appreciated. As far as I know there was only one other offer when it was on the market, at roughly the price we'll have to offer now so I don't think we're taking the mick...

firstaspect

Just tell the truth, if you didn't gazunder in this case you'd have to pull out completely. However obviously it's not 100% that they will accept your new offer.

1stTimeBuyerr

Thanks for the advice, we took our revised offer to the seller and he turned it down. Didn't give a negotiation price, just flat out rejected it and is putting it back on the market. We're really gutted but there's not much we can do. So, back to the drawing board having been burned for hefty survey and valuation fees...ouch.

westlondonbuyer

How have you left it with the vendor? If he can see that you are genuine, and that your situation couldn't reasonably have been foreseen, you may find he comes back to you. I once dropped out of a purchase - no thought of gazundering, just totally underestimated the cost of work and realised I couldn't afford it once the building quotes started coming in - and the vendor came back to me a month later and we went ahead with the deal at a lower price. Helped that we'd got on and that I'd been totally transparent with the paperwork.

satchmeister

1stTimeBuyerr wrote: »

Thanks for the advice, we took our revised offer to the seller and he turned it down. Didn't give a negotiation price, just flat out rejected it and is putting it back on the market. We're really gutted but there's not much we can do. So, back to the drawing board having been burned for hefty survey and valuation fees...ouch.

Well the seller has just lost a buyer and there are few buyers around. The seller may regret the decision taken in haste, lowest mortgage lending levels for 10 years announced today. Ensure you start having some viewings with the same EA ie you are still keen to purchase.

nell53

Hi
Did you discuss this with the EA? Could you get them to try to get the vendors to agree. It seems a shame at this stage that they and/or their EA won't try everything to keep the sale on track. Just a thought.

1stTimeBuyerr

The EA has been trying to negotiate with the vendor but he won't budge apparently, even having seen the copy of the survey report we got that suggested there are a few major repairs and renovations needed.

I think he'll just re-rent out the property, and given that the rental market in London is booming (because no-one can get a damned mortgage) he won't exactly lose out financially. In that respect, it probably doesn't matter that there are so few buyers around- if he doesn't get the price he wants, he won't sell. Pretty hard to negotiate under those circumstances.

We have been totally transparent with the paperwork so far and I am going to talk to him personally this afternoon to see if we can come to an agreement, though I have a feeling it won't work. Thanks all for your advice.

nell53

Hope it works out for you. I did wonder if you were the FTB at the bottom of my chain, but unless you're buying in Balham, you're not guilty.

Mine has asked for a £40K reduction on his purchase which the vendors have refused point blank and have put theirs back on the market today-leaving all of us further up the chain floundering.

1stTimeBuyerr

Nope, not me! I thought asking for a 9k reduction was pushing it, but 40k is astonishing- I can understand a point-blank refusal to negotiate with that. Sorry to hear about your situation though, that's really tough.