Advice sought on buying from landlord

FinallyFTB2021

Hi all, 

We're currently renting, and the landlord is planning to put the house on the market. We were invited to make an offer, and offered the full price based on the valuation of the property as communicated by the EA. However, this was declined and they have asked if we can increase our offer by an additional £5K (for information, the valuation price was £335K). We're FTB, and based on affordability calculations from our broker, and on our AIP, this is still within affordability (I realise this is not an exact science!), but I'm uncomfortable increasing our offer as we only have 5% deposit, meaning that we would struggle to make up the difference if the bank value the house per the original valuation. 

I wondered if anyone has any experience of being a similar situation or can offer any words of advice? We have been in the house for almost 10 years, and would like to stay here if possible.

Thank you in advance!

Mahsroh

Without knowing the specifics of the house and how the initial asking price sits relative to reality, i'd say £5k is *unlikely* to make much difference.

We had a similar thing with ours. It was listed at £380k "guide price", we offered that, and the vendors came back saying they wanted another £5k so we agreed to up the offer to £385k. Mortgage valuation came back at £385k.

The person doing the valuation will know what your offer is and will be looking at it from the mindset of "is this property worth what they've offered?", and whether it's £330k or £335k it's unlikely to make much difference. 

eddddy

It's difficult to know what your landlord plans to do.

• If you leave your offer at £335k, the landlord might decide to put it on the market for a few weeks to see if better offers come in.

• If you increase your offer to £340k, the landlord might still decide to put it on the market for a few weeks to see if better offers come in.

I guess you could say to the landlord that you'll increase your offer to £340k, but only if they stop marketing it and proceed with you.

Schwarzwald

Assuming £335k is in line with EA guidance and assuming a 4% rental yield and you paying somewhere between £1-1.2k pcm, it’s hard to see the LL dropping your offer over a £5k difference, in light of the expected LL’s loss of rental income between you moving out and completion with another buyer and the inherent risk of an unknown buyer ultimately not completing the purchase after many month.

one would expect you have a strong hand if the £335k is market value and LL cannot reasonable expect to receive offers in excess of £350k+.

I would try to make the LL understand how convenient selling to you is vs marketing the property elsewhere and it’s not worth losing it over £5k

TBagpuss

I think the biggest issue is that you can't make up the extra if the mortgage valuation comes back lower. Obviously if that happens then you can ell the landlord and seek to negotiate down again, and perhaps also remind them that if they sell to you they will be saving on Estate Agents fees.



Could you negotiate at all? 
What is the housing market like in your area? Are properties moving quickly? are they typically going for asking price or above? 

Gycraig

I don’t think you quite respect the powerful situation you are in, it’s very rare for houses to sell for “market value” with sit in tenants as frankly people don’t want to buy houses with tenants in and landlords don’t want to pay market price. 

It will take thousands of pounds and 6 months to a year to evict you at minimum. 

He doesn’t have to pay estate agent fees if he sells to you without advertising. Saving him a small fortune and a lot of effort. 

Please don’t let him walk all over you when purchasing this property. 

london21

Depends how bad you want the property.

Would have been cheaper if you landlord sold it to you directly without the EA and fees.

Landlord listing with EA could lead to bidding and gazumping. 

Sistergold

If I were you I would agree to pay the extra £5k and mention that as long as it’s inline with bank valuation and mortgage funds coming through at that value.  When the valuation comes if it’s down valued then you ask for a reduction. 

If you love the area, and house £5k is not too much to pay as there will not be moving cost, no bidding wars and you are buying a house you already know. If you go ahead at £340k and bank approves it then that should be okay I think? 

Mimi123456

Your LL has some nerve to ask for 5k more! 

It’s very petty given all the money he’s saving on EA, months of vacancy. And as someone who has lived in the place for 10yrs you are as reliable as a buyer can be! 

ProDave

I think your LL is an idiot.  He has an offer from you to buy it, that will avoid him paying agents fees and give a smooth sale (hopefully)

The alternative for him is sell probably for a lesser amount to another landlord, or start the procedure to end your tenancy and evict you, which will cost him money and take time.

I wish my tenant would buy ours like that.

theoretica

You say 'as communicated by the EA' was that the EA talking to you?  If it was, I would be tempted to ask the EA to explain to the landlord all the advantages of selling to a sitting tenant.  That way hopefully you aren't the one pointing out how hard you could be to evict.