How to renegotiate house price

adeelmpk

Dear all

I'm a buyer and very much liked a 4 bedroom end of terrace house [asking price £340,000] in a new development in Hampshire. The house I'm planning to buy was built and sold brand new just over 2 years ago at price below.


Property type: End of terrace | Tenure: Freehold | Last sale: £269,000 | Sale date: 15th Aug 2011

A month or so ago, whilst every property in the area was going like hot cakes I overlooked the fact that my offer £335,000 was actually overpriced compared to the market value. The offer was accepted pretty much straight away. The property original sale date and price as below which indicates that that buyer is going to profit a 24% price increase in approx two year period :huh:

Now I'm now kinda regretting the fact that house right opposite was sold for the price below, exactly same house, the only difference its a mid terraced house. I should have done more research before making an offer !

Property type: Terraced | Tenure: Freehold | Last sale: £295,000 | Sale date: 12th Jun 2013

Other houses in the area also average around the above price.

I proceeded with the survey as I was expecting that bank surveyor will take a safer approach and mark the property value down however my mortgage lender [Natwest] have already done the survey the marketed the property at above agreed price of £335,000 to my surprise.

Since then I've done a lot more research looking and comparing various reports and realistically the house has fair market value of approx £310,000 whilst £335,000 is a very top bracket.

Although I can back off from the deal as the contracts have not been exchanged yet so If I now pull out I would lose survey fee, time and effort and conveyancing charges etc. I am wondering if anyone has any better ideas to negotiate a more realistic price with vendors and keep the deal alive.

I am a no chain buyer and vendors are in a single chain.

Any ideas are much appreciated.

pinkpiglit

I suspect you're only going to annoy only the vendor (who may well decide to pull out of the sale.)

I know it's frustrating to see places sold for less, however, unless my math is wrong, you're paying c. 13.5% above the price of a house that was sold in June. Yours is an end of terrace rather than mid terrace which surely is worth a bit more. Also I suspect the market has moved on a heck of a lot in the six months since June (at least it has where I am where I wouldn't be surprised to find sale prices today are in excess of 20-25% above June sales)

If you were quite happy paying £335k and you like the house, then why renegotiate? You might find that you end up paying even more for something that you like less.

adeelmpk

pinkpiglit, you're right it's a approx 13% increase between June 2013 and December 2013.

Yes End of terrace adds an extra value of about 5-10k so if I account for that figure it's approx 10% price increase in 6 months [i.e., June 2013 and December 2013]. I couldn't justify that level of increase from any data I've seen. If you have any sources to prove it please post.

I love the house and to be honest that's probably a reason that I made a top end offer without much research. My only dilemma is that I don't want to end up buying a house which is already overpriced and if prices take a wrong turn in future I'd be welcoming a lot of negative equity.

On the other hand I would hate to pull out of the deal now. As such I'm keen to learn if there're any ideas in order to renegotiate without hurting the deal.

Just to add that vendors are purchasing another property to move into whereas I'll be renting my existing property so I have no pressure to buy which may not be the case with them.

jbainbridge

Let's face it you're under no obligation to exchange if you are unhappy. You've spent a small amount so far ... if you do go through with it how does it compare with what you feel you will loose - you'll have many years to think it over if you go through with it!

If you want to renotiate at this stage you have to seriously consider pulling out - and mean it.

However there's no easy way to tell your vendor you want to revise your offer down by £15k ... though in their heart of hearts they probably can't believe their luck with your original offer.

movilogo

It all depends on how much leverage you have. If you are prepared to walk away from the sale if your revised lower offer is not accepted then you are in a stronger position.

I was in a similar situation. I offered more and then felt I was overpaying. Then revised the offer which was not accepted so I just walked out (and the house still on market after 2 months).

Sometimes looking at sold prices (especially if it were in last 2-3 years) is very depressing. Mind that if you have to sale it in 2-3 years time you may not gain that much.

Thrugelmir

I wouldn't bother renegotiating. As your new offer is going to be substantially lower. The vendors may well consider you to be a time waster. Doesn't sound as if you've given any thought prior to making the original offer.

pinkpiglit

As long as you're ok with the possibility of losing the property, I think the only option is to be truthful. Are you a first time buyer? Perhaps tell them you got caught up in the excitement of it all and only now are you realising you were perhaps a bit keen and would they consider a lower price. See what they say.

I'm sure someone else will come along with a better idea - I'm afraid that's all I can think of as it's not a situation that I've found myself in to date. Sorry !

Mojisola

movilogo wrote: »

It all depends on how much leverage you have. If you are prepared to walk away from the sale if your revised lower offer is not accepted then you are in a stronger position.

I was in a similar situation. I offered more and then felt I was overpaying. Then revised the offer which was not accepted so I just walked out (and the house still on market after 2 months).

Your buyers might not have wanted you after you tried to drop the price.

Our buyers tried this - we told the EA to put the house back on the market and the buyers came back with the original offer. We've accepted it but are very wary that they will try something similar just as things are getting finalised. I've told the EA that if they try anything again, the deal is off and they can go and buy something else.

adeelmpk

Thanks for the replies all - Compared to vendor I can say that I am in better position if I really need to walk away from the deal. The vendors are in process of buying another property [or already bought] so they might get a little upset and a little pressurized if I start talking about renegotiating.

I'm a second time buyer, and the property I'm in at the moment will be rented out so I'm not really in a rush to buy apart from that fact that I actually do very much like the house I've made a higher offer on and as such would like to keep the deal alive without causing much damage. Yeah I know it's not a easy thing to ask but would appreciate if someone has dealt with a similar situation.

thequant

OP, I totally see were you are coming from. The vendors chanced their arm on someone biting and you took the bite.


I'm in a similar position myself, I offered a bit more than what I recognised was the true market price of a property. Now after doing some further research and some further issues that have come up it looks like I'm paying 10-15% more than the "market" price.


Fortunately I have had a bad survey come back which I am going to use to get my offer reduced. I suggest you find some pretext yourself.


One thing is I'm happy to pay slightly over the odds to secure a property I like, however I will not pay 10-15% more as that is going to decimate the equity provided by my deposit and I'm fully prepared to walk away.


I'm buying in a similar price bracket to yourself, the instant loss in my case is circa £30-45K, which makes any expenditure so far (surveys etc) pale into insignificance.

adeelmpk

thequant wrote: »

Fortunately I have had a bad survey come back which I am going to use to get my offer reduced. I suggest you find some pretext yourself.

thequant, I was kinda disappointed when my surveyor didn't mark the property value down. Since I asked for a basic survey I guess surveyor just did a drive and OKAYed the priced suggested by bank. After speaking to some local estate agents [minus the one I'm buying from] and my research from zoopla/mouseproperty data, it seems that I'm paying about 8-10% above property price i.e., about 20-25K more.

On the plus side I haven't been gazumped yet considering the premium I'm paying it would not be viable for someone else to bid any higher. Just to let you know there is lack of properties in this area and they're picked up like hot cakes as soon as something comes on market.

I'm still trying to justify the increase in 6 months [i.e., June 2013 and December 2013] which is 13.5% for the house sold right opposite. The only difference is the one I'm buying is an end of terrace and the other one is mid-terraced. Still a 13.5% increase in 6 months ?? Is it me or does that really sound unrealistic ?