Pulling out of purchase - Opinions please

CoffeeFirst

TLDR;
- buying house and doubling current mortgage payment (our salaries have increased proportionately, so currently affordable) 
- mortgage down valued but vendor not willing to accept any reduction
- expected to complete before stamp duty (told throughout vendor the same) everything place and ready but did not happen (reason below)
- worried about the future of the market (seems opinions are starting to slow)
- a lot of work required for it to be comfortable home (est. hasn't been modernised in around 20 years, but don't expect improvements will increase value - semi next door much higher spec and valued higher, but still less than we are paying. Not an issue, just no buffer for us i.e. if we could add 5% then market dropped 7%, only 2%).
- if house prices drop by 7.2% by 2023 (when we would remortgage) our LTV would be 90% so any further drop could mean we struggle to get a mortgage and if availability of credit reduces we'd be screwed 
- NB. not bothered about making money, it is a very long term home for us, just really worried about ending up in financial difficulty
- should we take the risk and hope the market doesn't suffer too much and it is only a short term risk or pull out and wait the market out and save a larger deposit? Maybe even move in with parents for a little while.   

We have been trying to buy for the last 6 months, we made offers on around 7 properties until one was accepted, all except one offer was over asking but it was never the highest. Unwittingly, I didn't realise properties quite often get down valued when mortgaging!! 

We offered £10k over asking price (my partner put the offer in, we had actually agreed £5k over asking, I think he forgot this). Offer was accepted. We were always very clear we wanted to complete before the end of June. Our vendor had their offer accepted on a property that was no chain. We pushed everything through, as did our seller and could have been in a position to complete at the end of June (all legals in place on our sale and purchase and vendors purchase of no onward chain). But our vendor refused as they said they couldn't get organised to move out in time. Lots and lots of chasing and pushing and I find out the property they are purchasing is occupied by someone who is moving into rented (hence no chain), but the rented they were moving into hadn't been purchased by their new landlord (our solicitor had at never been told this, we were all getting frustrated that they kept putting us off, and this ended up being why!!!) and that then completed on 30 June. 

My concern is, I don't know if it's irrational or not, we are paying out £14k (extra deposit due to being down valued by lender and stamp duty) that is immediately lost. House prices started to dip and reading forum posts market likely slowing. The house we are buying needs a lot of work, e.g. new ceilings, combi boiler (personal preference), electrics, all finishes, kitchen, bathroom (they haven't done anything since they brought it, looks exactly same as the previous zoopla ad in 2012 and it wasn't modernised at that time either, I'm talking fluffy blue carpets), but these things won't add value (house next door at much higher spec finish is valued (on zoopla, the one we are buying val matches on zoopla, mortgage and estate agent valuations) less than we are paying. My worry is when we remortgage in 2 years, if house prices fall, by 7.2% or more we would be at or above 90% LTV (factoring in what we will have paid off by the time we remortgage!).

HOWEVER, we really love the house and could see it being really long term, it's on a "desirable road" for the area (the area isn't one of the most desirable/popular in the city overall) close to family and friends. We aren't bothered about making money on it, if we knew it wouldn't ever go up in value we would still buy it. I'm just scared of it going down in value and struggling financially. Further context, we are doubling our mortgage and monthly payments (moving out of first home we brought which is a new build and not made much money on, a few percent), our current LTV is just under 75% so market changes don't pose such a risk and we save quite a bit each month as a buffer.

Are we being crazy/irresponsible and should we just pull out now?



   

GDB2222

I don't think there's any point apportioning blame for missing the June deadline. You are here now, and the SDLT will be higher. 

You over-offered in the stampede to avoid the extra SDLT, but that hasn't worked out.

Of course, you should reconsider. Maybe reduce your offer, or simply pull out.

AdrianC

CoffeeFirst said:

TLDR;
- mortgage down valued but vendor not willing to accept any reduction

We offered £10k over asking price (my partner put the offer in, we had actually agreed £5k over asking, I think he forgot this). Offer was accepted.   

So what's actually changed since your offer went in?

You knew you were offering more than the valuation, now you seem surprised at that basic truism, and expect it to be the vendor's problem.

The rest just seems to be cold feet and naivety at the realities of conveyancing.

- if house prices drop by 7.2% by 2023 (when we would remortgage) our LTV would be 90% so any further drop could mean we struggle to get a mortgage and if availability of credit reduces we'd be screwed
- NB. not bothered about making money, it is a very long term home for us, just really worried about ending up in financial difficulty
...
My worry is when we remortgage in 2 years, if house prices fall, by 7.2% or more we would be at or above 90% LTV (factoring in what we will have paid off by the time we remortgage!).
...
We aren't bothered about making money on it, if we knew it wouldn't ever go up in value we would still buy it. I'm just scared of it going down in value and struggling financially.

Whoever promised you the housing market would never drop lied to you. You might not be bothered about whether it rises, but rises and falls are all part of the same cycles. Over the medium-to-long term, they inevitably tend to increase. But, of course, past performance is no guide to the future.

BTW, you do not need to remortgage in 2023.

CoffeeFirst

GDB2222 said:

I don't think there's any point apportioning blame for missing the June deadline. You are here now, and the SDLT will be higher. 

You over-offered in the stampede to avoid the extra SDLT, but that hasn't worked out.

Of course, you should reconsider. Maybe reduce your offer, or simply pull out.

Thanks for the reply!!

It's really hard not to apportion blame (though accept there is no benefit to doing so) when both our solicitors and our vendors solicitor had everything in place and the vendor/ EA just failed to share information that would have meant, at the least, that our expectations would have been managed. It felt intentional too, particularly on the part of our vendors EA who didn't actually tell anyone (ours or the vendors solicitor) - I only managed to find out when our agent told me the name of the road our vendors was purchasing on, I sourced their EA as was so confused why they couldn't give us a date. 

CoffeeFirst

AdrianC said:

CoffeeFirst said:

TLDR;
- mortgage down valued but vendor not willing to accept any reduction

We offered £10k over asking price (my partner put the offer in, we had actually agreed £5k over asking, I think he forgot this). Offer was accepted.   

So what's actually changed since your offer went in?

You knew you were offering more than the valuation, now you seem surprised at that basic truism, and expect it to be the vendor's problem.

The rest just seems to be cold feet and naivety at the realities of conveyancing.

- if house prices drop by 7.2% by 2023 (when we would remortgage) our LTV would be 90% so any further drop could mean we struggle to get a mortgage and if availability of credit reduces we'd be screwed
- NB. not bothered about making money, it is a very long term home for us, just really worried about ending up in financial difficulty
...
My worry is when we remortgage in 2 years, if house prices fall, by 7.2% or more we would be at or above 90% LTV (factoring in what we will have paid off by the time we remortgage!).
...
We aren't bothered about making money on it, if we knew it wouldn't ever go up in value we would still buy it. I'm just scared of it going down in value and struggling financially.

Whoever promised you the housing market would never drop lied to you. You might not be bothered about whether it rises, but rises and falls are all part of the same cycles. Over the medium-to-long term, they inevitably tend to increase. But, of course, past performance is no guide to the future.

BTW, you do not need to remortgage in 2023.

The only change is that we are paying stamp duty, in reality. I definitely am guilty of being naive in that having offered over on so many properties and still not being sucessful (despite having sold to a keen FTB, that was ready to complete whenever, so not the worst chain position).... just assumed (guilty) mortgages reflected these crazy offers. Conveyancing wasn't the downfall - aside from my understanding of what is "no chain" and what information should be shared with solicitors (i.e. that the sale was dependent on another property transaction). My sister in law is our solicitor and they have previously worked with the vendors solicitor so I know 100% that it could have happened if not for the missing details. 

Also, I acknowledge we don't need to remortgage but farther in-law mortgage advisor has advised us so far it will get us better rates and save us money. 

CoffeeFirst

CoffeeFirst said:

AdrianC said:

CoffeeFirst said:

TLDR;
- mortgage down valued but vendor not willing to accept any reduction

We offered £10k over asking price (my partner put the offer in, we had actually agreed £5k over asking, I think he forgot this). Offer was accepted.   

So what's actually changed since your offer went in?

You knew you were offering more than the valuation, now you seem surprised at that basic truism, and expect it to be the vendor's problem.

The rest just seems to be cold feet and naivety at the realities of conveyancing.

- if house prices drop by 7.2% by 2023 (when we would remortgage) our LTV would be 90% so any further drop could mean we struggle to get a mortgage and if availability of credit reduces we'd be screwed
- NB. not bothered about making money, it is a very long term home for us, just really worried about ending up in financial difficulty
...
My worry is when we remortgage in 2 years, if house prices fall, by 7.2% or more we would be at or above 90% LTV (factoring in what we will have paid off by the time we remortgage!).
...
We aren't bothered about making money on it, if we knew it wouldn't ever go up in value we would still buy it. I'm just scared of it going down in value and struggling financially.

Whoever promised you the housing market would never drop lied to you. You might not be bothered about whether it rises, but rises and falls are all part of the same cycles. Over the medium-to-long term, they inevitably tend to increase. But, of course, past performance is no guide to the future.

BTW, you do not need to remortgage in 2023.

The only change is that we are paying stamp duty, in reality ****also that it got down valued, it's not that I'm not willing to pay that price I am, in theory, just then worried how big of a risk this poses****. I definitely am guilty of being naive in that having offered over on so many properties and still not being sucessful (despite having sold to a keen FTB, that was ready to complete whenever, so not the worst chain position).... just assumed (guilty) mortgages reflected these crazy offers. Conveyancing wasn't the downfall - aside from my understanding of what is "no chain" and what information should be shared with solicitors (i.e. that the sale was dependent on another property transaction). My sister in law is our solicitor and they have previously worked with the vendors solicitor so I know 100% that it could have happened if not for the missing details. 

Also, I acknowledge we don't need to remortgage but farther in-law mortgage advisor has advised us so far it will get us better rates and save us money. 

teachfast

Buy the one next door instead?

Gavin83

Honestly I think it’s shameful to over offer and then try and reduce the offer later on in the process. You were well aware at the time you were overpaying and therefore should be prepared to meet your original offer. I don’t blame the vendor for refusing to budge.

However if the vendor has caused you to miss the deadline I don’t think there’s anything wrong with taking this off of the offer.

It’s all largely irrelevant anyway. As the buyer you’re free to pull out any time you wish (up to exchange) for any reason and your seller can ask for whatever price they wish.

CoffeeFirst

teachfast said:

Buy the one next door instead?

If it was available we definitely would

nicknameless

CoffeeFirst said:

teachfast said:

Buy the one next door instead?

If it was available we definitely would

Pop a note through the door (naughty)?

CoffeeFirst

Gavin83 said:

Honestly I think it’s shameful to over offer and then try and reduce the offer later on in the process. You were well aware at the time you were overpaying and therefore should be prepared to meet your original offer. I don’t blame the vendor for refusing to budge.

However if the vendor has caused you to miss the deadline I don’t think there’s anything wrong with taking this off of the offer.

It’s all largely irrelevant anyway. As the buyer you’re free to pull out any time you wish (up to exchange) for any reason and your seller can ask for whatever price they wish.

We didn't reduce our offer when it got down valued, they had asked us the question when we made the offer and we accepted that risk (though I totally disagree that it is shameful, what makes you feel that way?), but naively assumed would not be down valued (obviously first error), but we weren't paying stamp duty so I managed to rationalise in my head that it was only £5k down valued because if we were paying stamp duty we'd be in the same position, but we aren't paying stamp duty..... oh wait you are now. 

I know it's hard for people to make an assessment as you don't really know every detail, but really what I was looking for (possibly naively), was to know what others in the situation would do. In the same position would they see it as a big risk? Am I making a mountain out of a mole hill. I've always been sensible when it comes to big purchases and this doesn't seem to be sensible (obviously if we didn't love the house I can say with 100% certainty we would walk away), it doesn't help I have mixed views from friends/family (my parents feeling strongly that it would be a huge mistake and have expressed this).