Valuation problems

mrpickled

Hi. I am new here, been struggling with this problem for a few days but don't know where to turn!! I found a lovely house and offer was accepted, the problem is that my buyers recently told me they cannot sell their house for anything like they thought. They have had an offer ~10% under the asking price which they are prepared to accept, but this means I can't really afford this new house, which they know and aren't sure if they should wait it out. They are private buyers so no agent involved/pressure and seem really nice.

I have the valuer going in to the house I want on Wednesday, should I wait and see how that goes? Or should I try offering less now on the price I like (I realise they probably wont accept). I am not sure what's less risky, there is a chance the valuation will come back and "undervalue" it - but if the valuer doesn't, I won't have a leg to stand on in negotiating will I !!

ThePants999

This is partly why it's common not to accept an offer on your house unless the buyer has already accepted an offer on theirs. Your buyers were not in a position to make a solid offer, they made a shaky one and you took a risk in accepting it, a risk that hasn't paid off.

Personally I'd not be dropping the price on my house just because I had buyers who'd been optimistic about how much they could get for theirs. They clearly think it's worth £X, even if they can no longer afford £X - get back on the market and you'll hopefully find someone who can and will actually pay £X.

Hoploz

Get an up-to-date market appraisal from a few EAs. If you're not seriously over charging then go on the market and find a new buyer.

If these people are in a chain and have fallen at the first hurdle they are no great catch anyway.

One reason to sell with an agent is because they can do the checks to ensure a buyer won't put you in this position, also of course they will oversee things further down the line and do their best to keep a chain together.

People may seem very nice to start with but it only takes one simple misunderstanding and relationships can turn sour very quickly with no middleman

mrpickled

Sorry but I dont think I have explained, let me try again.

I put an offer in on a house, which was accepted before Brexit, I already knew what my own current house was worth as I had it valued by an EA just to be sure that my private buyers were paying the 'going rate'. If anything they agreed to pay more than the market rate...

Things were going well until Brexit and my buyers told me that they had received only 1 offer and it was 10% under their asking price. So they quite plainly told me that this means they will need to downgrade the offer on my house as a result, by a similar %. This means that I can't really afford the price of the house I want. But I have spoken to a friend today who is a part time agent and she said people are offering 5-10% below asking prices since Brexit, in her opinion etc etc.

So I am now wondering if I should a) tell the vendor I am buying my NEW house from, that I can't go through with the sale and pull out entirely because I can't afford it or b) be straight with them and put in a lower offer given that this has happened to me too, and I believe others also.

If I choose b) would it be wise to do this BEFORE or AFTER the mortgage company's valuation? Which generally is a better position to be in to negotiate - with or without a valuation/survey to back things up? That is what I am trying to decide.

Crashy_Time

mrpickled wrote: »

Sorry but I dont think I have explained, let me try again.

I put an offer in on a house, which was accepted before Brexit, I already knew what my own current house was worth as I had it valued by an EA just to be sure that my private buyers were paying the 'going rate'. If anything they agreed to pay more than the market rate...

Things were going well until my buyers told me that they had received only 1 offer and it was 10% under their asking price. So they quite plainly told me that this means they will need to downgrade the offer on my house as a result, by a similar %. This means that I can't really afford the price of the house I want if I accept their offer. I have spoken to a friend today who is a part time agent and she said people are offering 5-10% below asking prices since Brexit, in her opinion etc etc.

So I am now wondering if I should a) tell the vendor I am buying my NEW house from, that I can't go through with the sale and pull out entirely because I can't afford it or b) be straight with them and put in a lower offer given that this has happened to me too, and I believe others also.

If I choose b) would it be wise to do this BEFORE or AFTER the mortgage company's valuation? Which generally is a better position to be in to negotiate - with or without a valuation/survey to back things up? That is what I am trying to decide.

Wait for the valuation/survey, but bear in mind that prices are likely to drop further as Brexit becomes a reality and issues in the EZ come to a head. (Not to mention China, USA, Middle east etc.)

mrpickled

Ok thankyou. There is the risk that the vaulation/survey will come back saying it's not overpriced in the current climate though. I suppose it's all about how plucky I feel!!!

Crashy_Time

mrpickled wrote: »

Ok thankyou. There is the risk that the vaulation/survey will come back saying it's not overpriced in the current climate though. I suppose it's all about how plucky I feel!!!

True, but if you are relying on your own sale to pay for the next house you either need to find a new buyer, re-negotiate the price of your next move, or find a way to put up the extra money? The person selling to you will either take your lower offer or find another buyer, that is how a market should work?

jimpix12

I'd reduce now. If the survey says it's priced correctly then that's odd given that Rics are valuing downward since the referendum.

david1951

http://www.rics.org/uk/news/news-insight/news/eu-referendum-valuation-uncertainty-in-the-run-up-to-brexit/

This doesn't seem to suggest a downward valuation until empirical evidence emerges, but rather a cautionary note about uncertainty to add-on to the valuation.

Can you back up the claim that RICS are valuing downward?

I'm not trying to be devil's advocate, just want to know if what you are saying is true after doing a short bit of googling myself.

Money_saving_maniac

mrpickled wrote: »

Sorry but I dont think I have explained, let me try again.

I put an offer in on a house, which was accepted before Brexit, I already knew what my own current house was worth as I had it valued by an EA just to be sure that my private buyers were paying the 'going rate'. If anything they agreed to pay more than the market rate...

Things were going well until Brexit and my buyers told me that they had received only 1 offer and it was 10% under their asking price. So they quite plainly told me that this means they will need to downgrade the offer on my house as a result, by a similar %. This means that I can't really afford the price of the house I want. But I have spoken to a friend today who is a part time agent and she said people are offering 5-10% below asking prices since Brexit, in her opinion etc etc.

So I am now wondering if I should a) tell the vendor I am buying my NEW house from, that I can't go through with the sale and pull out entirely because I can't afford it or b) be straight with them and put in a lower offer given that this has happened to me too, and I believe others also.

If I choose b) would it be wise to do this BEFORE or AFTER the mortgage company's valuation? Which generally is a better position to be in to negotiate - with or without a valuation/survey to back things up? That is what I am trying to decide.

1) You know what your valuation was pre brexit. Post brexit we are in a different place and you may find that there are fewer buyers in the market - this is what has happened to your buyers themselves. With fewer buyers supply and demand says that prices have softened.
2) You can explain to the vendors of the house you want what has happened and see if they can reduce to help you bridge the gap. A slowdown in the market may affect them too, if they don't help you out they may be months selling their house
3) You can pull out.
4) If your vendors aren't prepared to shift on their price why would you want to pay for a valuation?

mrpickled

Sorry so you are saying I should reduce my offer now? Or after the valuation?

The valuation is part of the mortgage setup fee, its not a typical high street lender!