Re value ??

ScottFitz

Good morning,
Hope this post finds everyone safe and well. I am after a bit of advise, I have agreed to purchase a property before the virus outbreak, however, as yet we have not exchanged contracts.  I am a little concerned that the value agreed for the property is now not the current active market price due to the outbreak. Do I go back with a revised offer as the property may no longer be valued at the agreed price ? I have myself been placed on the Furlough scheme and with this will lose 20% of my income until recalled. I just need to be very sensible with this purchase as I am a single Dad with two small children I need to look after.

Many thanks for your time

Kind Regards
Scott Fitzgerald.  

[Deleted User]

 I don't understand how the virus would effect the valuation of your property? Has it caught the virus? 

ScottFitz

The value before this for example say 160K now if the house prices have dropped by 10% then its surely now only worth 144K 

TuppenceWorth

Has there been a mortgage offer? Valuation for mortgage purposes?
If not, you could wait and see what this throws up...

Chetnick

He understands what you were asking he is just trying to be smart.

ScottFitz

Yes have mortgage offer and valuation complete but not exchanged. Just if prices have dropped say 10% then I am overing 10% and will have minus equity before I even get the front door keys.

davidmcn

ScottFitz said:

if prices have dropped say 10% then I am overing 10% and will have minus equity before I even get the front door keys.

"If", yes. Do you have evidence that prices have dropped, and if so by how much?

ScottFitz

Just every financial paper your pick up to read. Forcast is between 5% to 10% as things stand, FT expecting worse with longer to recover than the crash in 2008 !

Vestraun

Now is the time to either negotiate a new price based on how much you can afford given your new circumstances, or pull out. As you haven’t exchanged, the ball is in your court. 

[Deleted User]

I pulled out of a BTL at £330k. If prices drop 20% which is being suggested then that house would be worth £264k and my mortgage would be almost 95% not 75% 

They are giving dire warnings about the economy etc. 

Im just going to wait it out then see how the land lies next year regarding prices etc ( but then again I dont “need” to buy now so time is on my side ) 

OldMusicGuy

It's pretty simple IMO. The "active market price" is what you've agreed to pay and what the buyer will accept. So if you go back and say you are dropping your offer by 10% and the buyer refuses to accept that, then the "active market price" hasn't changed. General market valuations will only start to settle on a "new normal" once we are further through this. The "new normal" might be lower, about the same or even higher. No-one knows what will happen as things get back to normal. The doom merchants love hearing the sound of their own voices and the papers make their money by printing scare stories, so you will hear a lot of (IMO overblown) negativity. However, there's no denying that the housing market does face a period of uncertainty.

IMO you should make the decision based on your own needs. If you need to move, really like your house, can afford it and plan on staying for a reasonable amount of time in the new place then go ahead. If your need to move isn't pressing and maybe you are worried about finances, reduce your offer and see what happens. However, you might lose the house you are buying if you do that. Are you prepared for that to happen? It may be hard to find an alternative at the current time.

We are buying a new build. We negotiated a very acceptable deal back in March and are sticking with that. But it is our forever home and we hope to live there for at least 20 years, so any short term bumps won't matter to us. The developer has reduced the price of one type of house on the development (the ones which will be hardest to sell) but all other asking prices are unchanged.