Homebuyer's Report Mortgage Retention

lava_lamp

Hi everyone. I've had a homebuyer's report returned for a house I'm trying to buy and could do with some advice please.

Amongst many other things, it says there is "evidence of movement in the form of cracking to wall surfaces internally and externally, and that a report should be obtainted from a structural engineer and any recommendations should be carried out... The horizontal cracking was noted to mortar joints which could indicate wall tie failure." He has recommended additonal specialist reports for mining (we're in Yorkshire) and cavity wall tie. He has also noted a serious leak and fungus in the roof of the outhouse which needs a roofing specialist to look at.

The agreed purchase price is £150,000 but the report has valued it at £130,000 with £20,000 mortgage retention. In the case of getting additional reports, who should be footing the bill for this, and any remedial works that follow? On one hand I would be willing to pay for the additional surveys, but I wouldn't feel right about paying for the work while the house isn't legally mine, nor am I in a position to finance the £20k retention until all the work has been completed. Is it usual for vendors to pay for things like this since any other potential buyers would be in the same position?

Additionally, how would the retention figure be affected by a reduced price? Let's say the sellers agreed to drop the price by £20k (highly unlikely I realise), would the bank still hold the £20k retention or would it go away given the new price?

I know that homebuyers reports often scare people, and there are some things on there that I'm not actually that bothered about, but the retention figure has truly shocked me and I don't know where to go from here (my solicitor is on holiday for a week so I can't go to her for advice). Thanks in advance!

tim123456789

unless you really must have this house

walk, no run, away now

tim

leespot

I'd run a mile to be honest, and it would be down to you to provide any further reports and associated costs.

booksurr

1, wall ties failure concerns would certainly justify a specialist report and a retention sum if confirmed

2. a mining report for a property in Yorkshire - that is normal and your solicitor should be doing that anyway

3 outhouse roof hardly needs a specialist. Surely you can see for yourself what condition the roof is in? Tiled roof? Sheet roof? Fungus obviously grows because the re is a constant source of water so there is a leak, whether that means replace whole roof or fix a broken bit only is just a matter of looking at the roof more closely than a surveyor does

as for retention - it is the buyer who pays for surveys and works because it is the buyer's funds that are being retained by their lender until such time as the lender is satisfied that the works have been done and the house is now worth what you as the borrower have paid for it

as others say, with such a big retention best look for another property

robatwork

If you really really want it, go back with an offer of £130,000 given the problems highlighted. Take it or leave it.

lava_lamp

Thanks for your replies everyone. I feared the outcome would be us walking away, which is a massive shame as we do really like it and it is in a really handy location. Head should rule over heart though and I don't really want to buy a house that isn't structurally sound.

robatwork wrote: »

If you really really want it, go back with an offer of £130,000 given the problems highlighted. Take it or leave it.

What would this mean for the retention? Would the bank be happy to lend if we agreed £130k or would they still want a retention in place while the structure is made good?

leespot

You might end up paying for the report and find that it actually needs more than initially thought - sometimes the reports are money well spent. Our report was approx £600 but we negotiated 23k off the asking price with it.

lava_lamp

That's quite a reduction in price! I'm not convinced we'd get anything like that to be honest, even armed with the list of the major issues the house has. My husband is going to call the surveyor in the morning to clarify a few things then I'll be calling the bank to see if they are going to go ahead with the retention, and what any possible renegotiation would mean.

We probably need to call the EA tomorrow as well, give them the good news. This is really crappy timing for our solicitor to be on holiday!

SG27

Basically you pay for the reports and the work. You would not want the vendors bodging something on the cheap just to get the sale through. But obviously you will want a reduction in price which you will have to negotiate

leespot

lava_lamp wrote: »

That's quite a reduction in price! I'm not convinced we'd get anything like that to be honest, even armed with the list of the major issues the house has. My husband is going to call the surveyor in the morning to clarify a few things then I'll be calling the bank to see if they are going to go ahead with the retention, and what any possible renegotiation would mean.

We probably need to call the EA tomorrow as well, give them the good news. This is really crappy timing for our solicitor to be on holiday!

It is a big reduction but then we did need a lot of work

At the end of the day, if the house needs work done it will need it done by whoever buys it - you or someone else. We negotiated a lot off the asking price, but in reality are spending double the amount we saved on the house. If the seller is serious about selling their home with the issues outstanding, they really should be open minded about the offers they receive. Our report gave us estimates for the work needed, which is what we based our negotiations on. Best of luck with everything.

eddddy

The challenge you would have is that you need a big chunk of cash to buy this property.

You don't provide all the numbers, so I'll guess at some, to give you an example.

Assuming the seller accepts £130k offer, and your lender offers 90% mortgages.

- Buying price = £130k
- Max 90% Mortgage = £117k
- Less £20k retention = £97k
- So you need to contribute £33k cash

- Cost of repairs = £15k (for example)

So you need a total of £33k + £15k = £48k in cash.

(But you will eventually get £20k back, once the work is completed.)