FTB ready to exchange contracts - feeling the blues due to Covid-19 and potential depression

Beck1987

Hi there,

Hope everyone is keeping safe out there and taking the necessary precautions for them and their loved ones.
While we deal with a global pandemic, one not seen in the last 100 years, I know that surviving this is our primary concern, and nobody is really looking at the housing market at the moment, as a priority .

However, we are going through a purchase at the moment. And there are a ton of threads already started on this forum which I have 
To keep it short and concise:
- We are FTB, and we found a property we liked after a search of about 1 year in the area we liked (Hillingdon, London)
- We are 2 weeks away from exchange of contracts and in a chain, with the upper chain already moved into a rental house
- We have offered a good price for a 3 bed semi_detached. The surveys from the bank and our own independent survey came back with the same value of the property that we offered. 
-We have 20% deposit with a fixed mortgage for 5 years. Both of us are financially OK, with about 6 months of spare finances if both of us loose our jobs when a depression arrives (she works in pharmaceutical industry, so her job is secured, mine not so much)
- When we visited the house, the sellers and EA told us there was no upward chain, as they plan on renting a place before buying one. We got our offer accepted beginning of January, with an initial completion date 18th of March. In the meantime, the sellers found a house, so a chain is in process, meaning completion date is moved towards April, when a potential lockdown might occur. Obviously we are gutted that they did not tell us about the chain earlier (as they withheld this info), and now we are waiting for their searches.

We have done our homework, and we are positive an all around market crash will occur.
We want to live in that house for about 10+years, and I know house values will go up and down, but I would want to avoid negative equity. Last time around in 2008 house price went down by 25%.
We are paying 480k on the house. We thought it is best to go ahead with the purchase, but that it would be best for both us and the sellers to sustain a potential decrease in price, so we have lowered our offer to 450k. 
The EA called us back, trying to bully us into buying it, and stating that the sellers would never agree to a 30k drop and that we need to decide what we want to do, as there is another buyer in line (mind you there were 3 offers when we made ours). He started saying that our worries are unfounded, and that it would never be possible for a 2008 style crash, as just this week he had 5 completions. 
I really didn't like his tone and thought he was bluffing, and I pushed back, wanting to retreat out of the deal.
We agreed it was best to wait it over the weekend and we decide on Monday what to do.

Taking my negative sentiments towards the EA out of it, we don't know what to do.
Do we go ahead, as prices will bounce back; and being we are financially OK , we can ride out a market crash?
Do we pull out all together get our deposit back, as there are money to be saved later in the year when house prices go down?
Do we go ahead with the 30k price offer and see if the sale will go though?

This thread is also to find out other opinions, but also a means to vent online as well, so, I am sorry about the long read

Thank you 

Doozergirl

Did prices drop 25%?  Unless people had to sell, they mainly sat it out.  Sitting on the other side of it, unless you actually got caught in the thick of the storm and had to sell with nothing to move up to, it made little difference.  

I think the government  view is here that this is going to be a short, but very sharp shock.  

This is your decision.  Everyone has different opinions.   Gazundering at this stage is a horrid thing to do, but if it's that or pull out, it gives the vendor a choice.    In the vendor's position, unless desperate, I'd wait it out.  Things will recover.  

greatcrested

Beck1987 said:

The EA called us back, trying to bully us into buying it, and stating that the sellers would never agree to a 30k drop and that we need to decide what we want to do, as there is another buyer in line (mind you there were 3 offers when we made ours). He started saying that our worries are unfounded, and that it would never be possible for a 2008 style crash, as just this week he had 5 completions. 
I really didn't like his tone and thought he was bluffing, and I pushed back, wanting to retreat out of the deal.
We agreed it was best to wait it over the weekend and we decide on Monday what to do.

Well in one sense he is bluffing and anything he says about a crash is purely him doing his job ie to pursuade you to buy at the price his client, the seller, wants. Ignore that and make your own mind up about

* whether there will be a crash or not

* whether you care, given that you are buying a home (not an investment) for the long term

But in another sense he may be reflecting the seller's position ie not to accept a lower offer. So if the seller simply says 'no' to your reduced offer, how will you feel and what will you do?

graphs

Stick to your guns. In 6 months you will be in negative equity no question about that.

Thrugelmir

Two weeks before exchange you are in of collapsing the entire chain. Hardly surprising that the EA is grumpy!  Just imagine the impact on the others in the chain once they hear the news. 

GixerKate

There is a term for what you have done - 'gazundering', not surprising that the EA is pretty annoyed, I would be! 

davidmcn

Any logic behind the figure of £30k?

Beck1987

GixerKate said:

There is a term for what you have done - 'gazundering', not surprising that the EA is pretty annoyed, I would be! 

Thrugelmir said:

Two weeks before exchange you are in of collapsing the entire chain. Hardly surprising that the EA is grumpy!  Just imagine the impact on the others in the chain once they hear the news. 

Yes I know, I am not really proud of myself.
But I am panicked and I am not Nostradamus to have predicted this pandemic.
The changes in circumstances occurred during conveyancing, so I need to protect  myself as well. I have worked really hard for the past 5 years for a deposit.

Beck1987

davidmcn said:

Any logic behind the figure of £30k?

Nobody knows by how much house prices will go down. So I thought that if they will go down by 60k in the next months, I cover half of the hit and the sellers half.
It's just a guesstimate  

Beck1987

greatcrested said:

Beck1987 said:

The EA called us back, trying to bully us into buying it, and stating that the sellers would never agree to a 30k drop and that we need to decide what we want to do, as there is another buyer in line (mind you there were 3 offers when we made ours). He started saying that our worries are unfounded, and that it would never be possible for a 2008 style crash, as just this week he had 5 completions. 
I really didn't like his tone and thought he was bluffing, and I pushed back, wanting to retreat out of the deal.
We agreed it was best to wait it over the weekend and we decide on Monday what to do.

Well in one sense he is bluffing and anything he says about a crash is purely him doing his job ie to pursuade you to buy at the price his client, the seller, wants. Ignore that and make your own mind up about

* whether there will be a crash or not

* whether you care, given that you are buying a home (not an investment) for the long term

But in another sense he may be reflecting the seller's position ie not to accept a lower offer. So if the seller simply says 'no' to your reduced offer, how will you feel and what will you do?

That's what I am trying to figure out as I'm torn between not wanting to lose a lovely house and not wanting to end up with the short end of the straw.
Last crisis had a big emotional impact on my upbringing as my parents divorced due to the financial problems cause by that crisis. 

lincroft1710

Beck1987 said:

GixerKate said:

There is a term for what you have done - 'gazundering', not surprising that the EA is pretty annoyed, I would be! 

Thrugelmir said:

Two weeks before exchange you are in of collapsing the entire chain. Hardly surprising that the EA is grumpy!  Just imagine the impact on the others in the chain once they hear the news. 

I have worked really hard for the past 5 years for a deposit.

So have probably all the other people in the chain, either now and/or as FTBs