Re value ??

TuppenceWorth

OldMusicGuy said:

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.

What he said....

Crashy_Time

ScottFitz said:

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.  

You need to wait until the emergency is over, then get it revalued, many property funds held in pensions for example are locked just now because commercial property especially is undergoing a value shift.

OldMusicGuy

Crashy_Time said:

You need to wait until the emergency is over, then get it revalued, many property funds held in pensions for example are locked just now because commercial property especially is undergoing a value shift.

Aha, our resident doom monger

This point is completely irrelevant. Commercial property already faced long term issues with high rents and declining high street sales. Now, many small high street businesses are likely to go out of business, while digital commerce and homeworking will increase, putting even more pressure on the commercial property sector. But those pressures don;t apply to residential.

There is indeed uncertainty in the residential market. However, with some predictions already saying the bounce-back could be underway in six months, who knows what will happen? Most likely outcome IMO is that we will see a zombie market for the next 3 to 6 months with most private sales being taken off the market and only those that have to sell trying to make something happen. New builds will be out there but the bigger developers will be able to just sit on the assets they have on the balance sheet and reduce operating costs by stopping work (most of the builders are contractors). So they won't face huge pressure to reduce prices in the short term.

When the market gets going again (6 months plus) there will likely be shortages of supply in some areas, whereas others may have gluts. Maybe the best bargains to be had are out there now rather than in six months. Maybe not. So my advice to the OP stands - if you have negotiated a good deal, want the house and can afford it, then go ahead, but if you have uncertainty over finances and are worried about what might happen, see if you can negotiate a lower price on the understanding that you might lose the house. 

Just another reference point from the real world of house buying (rather than Crashy's imagination). We made an offer on a new build house that had been on the market for 18 months in mid-March (just prior to offering on our current property). We offered 6% under asking (we are cash buyers). The offer was refused because the developer felt they could get close to asking. The property has since sold at a price higher than we offered. 

MobileSaver

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.

Prices haven't dropped by 10% though! Following the last financial crisis it took 18 months for house prices to drop significantly. If you don't buy this property where will you live for the next 18 months and what will it cost you?

Similarly transactions dropped by 50% after the last financial crisis so one way of looking at that is that if the market drops there's a 50/50 chance you'll still be buying a new place or alternatively staying wherever you are now... So ask yourself "Do I feel lucky?" Well, do ya, punk?

Beck1987

MobileSaver said:

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.

Prices haven't dropped by 10% though! Following the last financial crisis it took 18 months for house prices to drop significantly. If you don't buy this property where will you live for the next 18 months and what will it cost you?

Similarly transactions dropped by 50% after the last financial crisis so one way of looking at that is that if the market drops there's a 50/50 chance you'll still be buying a new place or alternatively staying wherever you are now... So ask yourself "Do I feel lucky?" Well, do ya, punk?

  
Dirty Hairy style of selling or buying houses 

Thrugelmir

MobileSaver said:

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.

Prices haven't dropped by 10% though! Following the last financial crisis it took 18 months for house prices to drop significantly. If you don't buy this property where will you live for the next 18 months and what will it cost you?

What type of recession are you expecting to see? V, W U or L shaped.......... or a combination. This is a very different crisis to the GFC of 2006-2008.  As a bare minimum a degree of caution seems sensible. No need or rush to make important decisions. 

Vestraun

This is nothing like the financial crisis. 

Crashy_Time

OldMusicGuy said:

Crashy_Time said:

You need to wait until the emergency is over, then get it revalued, many property funds held in pensions for example are locked just now because commercial property especially is undergoing a value shift.

Aha, our resident doom monger

This point is completely irrelevant. Commercial property already faced long term issues with high rents and declining high street sales. Now, many small high street businesses are likely to go out of business, while digital commerce and homeworking will increase, putting even more pressure on the commercial property sector. But those pressures don;t apply to residential.

There is indeed uncertainty in the residential market. However, with some predictions already saying the bounce-back could be underway in six months, who knows what will happen? Most likely outcome IMO is that we will see a zombie market for the next 3 to 6 months with most private sales being taken off the market and only those that have to sell trying to make something happen. New builds will be out there but the bigger developers will be able to just sit on the assets they have on the balance sheet and reduce operating costs by stopping work (most of the builders are contractors). So they won't face huge pressure to reduce prices in the short term.

When the market gets going again (6 months plus) there will likely be shortages of supply in some areas, whereas others may have gluts. Maybe the best bargains to be had are out there now rather than in six months. Maybe not. So my advice to the OP stands - if you have negotiated a good deal, want the house and can afford it, then go ahead, but if you have uncertainty over finances and are worried about what might happen, see if you can negotiate a lower price on the understanding that you might lose the house. 

Just another reference point from the real world of house buying (rather than Crashy's imagination). We made an offer on a new build house that had been on the market for 18 months in mid-March (just prior to offering on our current property). We offered 6% under asking (we are cash buyers). The offer was refused because the developer felt they could get close to asking. The property has since sold at a price higher than we offered. 

Can you give us a post code was that so that we can monitor your prediction?

hazyjo

Depends on what and where you're buying. Friend of mine put her flat on the market a couple of days before lockdown. Three viewers, three offers, one over asking price.

If it's in demand, it'll sell again at a similar price. If it sat on the market for months and is a bit of a compromise property in a slightly dodgy area, I'd prob just hold fire if prepared to lose it, or buy it.

OldMusicGuy

Crashy_Time said:

Can you give us a post code was that so that we can monitor your prediction?

That would be pointless because if you read what I posted, you will see that I said it will be patchy. Some areas could have a lack of supply, others may have a glut. The housing market is complex and varied. I've moved from the south east to the south west, and those markets are quite different. I think there will definitely be some bargains to be had in the short term but I don't see an overall big drop coming. Already the number of houses on the market has diminished and there's hardly any new properties coming on the market in the areas of the south west I have been monitoring. We would struggle to find something suitable if we were looking now.