London: unable to negotiate after survey

kcseb

Hi

We recently agreed to buy a victorian 3-bed for cash (I'm remortgaging somewhere else, hence the funds).

Lovely house, nice view on a fantastic quiet road in London. We agreed at £250k + £2k fixtures in fittings (even though the latter was a ruse by agent, to put us above other offers without breaching stamp duty threshold).

Anyway our surveyor came back saying the house needs a lot of work (fair amount of damp, possible rot of joists under kitchen, some minor roof repairs, plus rewire & replaster). His homebuyer's report said the agreed price is excessive given repairs, and to negotiate as you might be facing £50k refurb costs.

Sent his report to a v. experienced builder friend and investor who said 'there's nothing serious wrong with this house, we can do it for £30k tops, maybe less'. The friend has been turning around London properties (incl. Victorian) since the '80s, has done hundreds and owns dozens.

Nonetheless went back to the agent asking for £12k off (i.e. meet us half way with unexpected costs), and agent basically threatened to go back to the other buyers with offers close to ours if we did. Backed off as I know the London market is MENTAL at the moment, it's not EAs hyping it, houses really are selling in 2 days. This one did.

I mean what do people think, is this the wrong time to stand one's ground? I mean the house genuinely does need work.

K

kcseb

P.S. we DID send the survey, incl. the valuation of '250k is excessive, renegotiate')

thequant

I think other buyers will baulk at the £30k costs, he might go back to the other buyers but they will face the same problem.


Although ultimately your decision should not depend on what the vendor/EA/other buyers do. It should depend on whether it still represents value for you. At £30k costs I say not.


If others are willing to pay the full price, then only a fool would compete with other fools.

phoebe1989seb

Not only that......but some of those *other* buyers might be relying upon a mortgage, unlike the OP and thus be in a worse position regarding negotiating. OP, I'd be inclined to stand your ground......

TBagpuss

On the other hand, other buyers may only get a valuation, not a full survey.
How badly do you want the house? Are you willing to risk losing it for £12,000?
If you're willing to risk losing it, then call their bluff, and stick to your guns. If not, grit your teeth and pay.

kcseb

It's mortgageable according to our surveyor, so we would be competing against mortgage buyers if it goes back to the rival offers. Also I've seen too much evidence in the current London climate of people being so desperate that they'll pay over the odds. I've seen far worse condition Victorian houses go for more of a premium. I think the 12k is worth paying, as a long-term investment.

HOWEVER...thinking to try a Buy to let mortgage at the same time: i.e. we will still pay cash, but given we have to foot refurb costs, we want to try a BTL while we wait for searches. If the bank queries the value, then we will have a stronger case. And a mortgage would be ideal, to avoid plunging too much of our cash into the project upfront! I doubt vendor will object, since we still have the cash to complete.

egoode

I think you are unlikely to get any reduction as by the time they remarket it the value will have probably risen that much or more so the vendors are unlikely to care about whether you pull out or not.

Tancred

kcseb wrote: »

Hi

We recently agreed to buy a victorian 3-bed for cash (I'm remortgaging somewhere else, hence the funds).

Lovely house, nice view on a fantastic quiet road in London. We agreed at £250k + £2k fixtures in fittings (even though the latter was a ruse by agent, to put us above other offers without breaching stamp duty threshold).

Anyway our surveyor came back saying the house needs a lot of work (fair amount of damp, possible rot of joists under kitchen, some minor roof repairs, plus rewire & replaster). His homebuyer's report said the agreed price is excessive given repairs, and to negotiate as you might be facing £50k refurb costs.

Sent his report to a v. experienced builder friend and investor who said 'there's nothing serious wrong with this house, we can do it for £30k tops, maybe less'. The friend has been turning around London properties (incl. Victorian) since the '80s, has done hundreds and owns dozens.

Nonetheless went back to the agent asking for £12k off (i.e. meet us half way with unexpected costs), and agent basically threatened to go back to the other buyers with offers close to ours if we did. Backed off as I know the London market is MENTAL at the moment, it's not EAs hyping it, houses really are selling in 2 days. This one did.

I mean what do people think, is this the wrong time to stand one's ground? I mean the house genuinely does need work.

K

I am with the seller 100% on this one. Any house at £250k is almost certainly already undervalued due to the stamp duty threshold trap - I speak from experience. Even with a lot of work a 3 bed Victorian terraced anywhere in London is a giveaway at £250k.

movilogo

We agreed at £250k + £2k fixtures in fittings

Be careful with that. If HMRC can prove even £1 of fittings is not eligible, you will be stung with a £5000 stamp duty + potential fines.

Tancred

movilogo wrote: »

Be careful with that. If HMRC can prove even £1 of fittings is not eligible, you will be stung with a £5000 stamp duty + potential fines.

HMRC couldn't give a monkey's about a property worth so little. Do you honestly think they have the resources to pursue small fry? They go after £1M houses and the like. It's not worth their effort to chase a couple of grand - not cost effective. I used to work for the Inland Revenue as it was known then in the early 1990s and there was a policy of targeting potential offenders only if the amount that could be recovered was above a given level. HMRC are even more short staffed now than they were then, so you can imagine.

Mrs_Z

Well, I would say that if the property is your dream house and you are looking to stay there for years to come, then it is probably not worth negotiating the price and risk losing it - crazy as it seems. As you say, the market is mental in London and for that price, it will have other buyers who have the money to do it up (investors, etc). We are also looking to buy, saw a new instruction appear on Rightmove on Sat, phoned up the agent straight away asking for a viewing on the day only to be told: "Sorry, we can't fit you in for today as we have another 19 viewers booked in already and the house is likely to sell today....".