How does renegotiating house price raise funds for work needed?

desgirl14

jonnydeppiwish! said:

desgirl14 said:

Hello!
I’m a first time buyer and had and offer accepted on a great house, searches have all been done but the homebuyers survey has highlighted a couple of structural issues that I would really like resolved before moving in.
I am in the process of getting some quotes done and would like to negotiate the price down with the seller, but, and this may be a really stupid question, I don’t understand how this can actually help me afford to do the work which is how it reads on most of the articles I’ve read. Please can someone give me a little more insight if possible?

For example:
Original house purchase price could be £200,000 and a 10% deposit of £20,000, but let’s say I need £10,000 of work done, by reducing the house price to £190,000 I’ve only saved myself £1,000 to go towards the work on the house if I then have a £19,000 deposit.

I think I can afford the work that needs doing if I don’t do all of the cosmetic changes I wanted to do on purchase but I’m wondering if I’m missing some benefit of renegotiating the house price? Any help understanding would be much appreciated! 

What work needs doing to justify reducing the offer? 

The main issues are the floor of the living room is sagging due to improper removal of a load bearing wall in basement and the roof is not structurally sound where chimneys holding up the roof have been removed but supports in the loft have not been put in place.

These (among others) were classified as urgent must fixes in the survey and the 2 that are a must fix for us to move in and live safely in the house. I don’t believe the house was priced accordingly to take any work needed into account.

desgirl14

I am still waiting on quotes for this work (bank holiday etc), the example I gave in my post was just an example amount to illustrate my point. I don’t yet know how much I will be asking to reduce it by. 

[Deleted User]

k12479 said:

desgirl14 said:

Original house purchase price could be £200,000 and a 10% deposit of £20,000, but let’s say I need £10,000 of work done, by reducing the house price to £190,000 I’ve only saved myself £1,000 to go towards the work on the house if I then have a £19,000 deposit. 

You're putting in £1,000 less cash, but will also need to borrow £9,000 less.

In your example the smaller mortgage will mean smaller repayments leaving more disposable income each month to save up towards repairs (or more money left over to repay a loan/credit cards/etc. for repairs)

Okay but that is going to work out to some small amount saved each month, meaning it will take decades to save up enough to fix the issues.

The OP hasn't misunderstood, this is just the stupid way houses are sold in the UK. It favours cash buyers and those with large deposits who can take on a bit more mortgage. FTBs are basically screwed.

For a lot of us it's a case of accepting a sub standard house and hoping to palm it off to someone else later, or buying an even worse new build.

The system is simply broken.

jonnydeppiwish!

desgirl14 said:

jonnydeppiwish! said:

desgirl14 said:

Hello!
I’m a first time buyer and had and offer accepted on a great house, searches have all been done but the homebuyers survey has highlighted a couple of structural issues that I would really like resolved before moving in.
I am in the process of getting some quotes done and would like to negotiate the price down with the seller, but, and this may be a really stupid question, I don’t understand how this can actually help me afford to do the work which is how it reads on most of the articles I’ve read. Please can someone give me a little more insight if possible?

For example:
Original house purchase price could be £200,000 and a 10% deposit of £20,000, but let’s say I need £10,000 of work done, by reducing the house price to £190,000 I’ve only saved myself £1,000 to go towards the work on the house if I then have a £19,000 deposit.

I think I can afford the work that needs doing if I don’t do all of the cosmetic changes I wanted to do on purchase but I’m wondering if I’m missing some benefit of renegotiating the house price? Any help understanding would be much appreciated! 

What work needs doing to justify reducing the offer? 

The main issues are the floor of the living room is sagging due to improper removal of a load bearing wall in basement and the roof is not structurally sound where chimneys holding up the roof have been removed but supports in the loft have not been put in place.

These (among others) were classified as urgent must fixes in the survey and the 2 that are a must fix for us to move in and live safely in the house. I don’t believe the house was priced accordingly to take any work needed into account.

Thanks for the information. In your position you have 3 choices imo.

1. pull out and find another property 
2. get a structural surgery completed to confirm if these are real issues, then renegotiate.
3. Carry on (if you love the house!) -

How long ago was the work done to render it unsafe?

babyblade41

Sorry OP this is a house I would walk away from with those issues & not having some good financial backing behind you.

A new kitchen is a long way off the radar .

I think your surveyor is right that it must be investigated further to see how costly those repairs would be.

Did you not notice the sagging floor when viewing?

I think you have a couple of options here & this would be mine in your situation  .1) pull out.
2, get a full structural engineer in to survey the problem but this is going to add to your costs quite significantly & surveyor could come back with a solution but possibly an expensive one.

If the house is what you really want then be prepared for it to be a bit of a money pit for the first 12 months before you even start on the cosmetics 

Flugelhorn

JReacher1 said:

user1977 said:

JReacher1 said:

user1977 said:

JReacher1 said:

user1977 said:

JReacher1 said:

You can agree with the seller to give you some money after completion to cover your repair costs. So your mortgage stays the same amount but they give you say £5k back after completion. 

If your lender agrees. It's likely they'd treat as being no different to a reduction in the price, so wouldn't work.

It would work. The lender isn’t involved in this as you pay the full price of the house. There is just a separate agreement with the seller to give you a cash amount on completion. 

Why would it be a separate agreement, unless you were doing it fraudulently?

I don’t think see how this can be fraud. 

Because the lender will expect the borrower (and their solicitor) to declare the actual net price being paid, not just a fake "headline" price which ignores the cashback element.

Even if you can't see the problem, it's a suggestion best ignored by the OP.

I’ll stick with trusting the legal advice that was provided at the time by the solicitors as opposed to the musings of a random anonymous person on the forum 😉

The legal advice I was given when a buyer tried this with us 30 years ago included the  words "barge pole"  "no" "illegal" "never" "fraud"

TheJP

JReacher1 said:

user1977 said:

JReacher1 said:

user1977 said:

JReacher1 said:

You can agree with the seller to give you some money after completion to cover your repair costs. So your mortgage stays the same amount but they give you say £5k back after completion. 

If your lender agrees. It's likely they'd treat as being no different to a reduction in the price, so wouldn't work.

It would work. The lender isn’t involved in this as you pay the full price of the house. There is just a separate agreement with the seller to give you a cash amount on completion. 

Why would it be a separate agreement, unless you were doing it fraudulently?

It was done as part of the house sale and was covered by a legal agreement drawn up between the two solicitors. On completion the seller agree to pay £5k to my friend which was used to fix a couple of things that were wrong with the house. 

I don’t think see how this can be fraud. 

The solicitor acts on behalf of the lender, there is no way the solicitor would not have informed the lender about the agreement. This sounds like a retention which is based on work that needs to be done from findings after exchange. Otherwise it would have been a price reduction and a new mortgage offer would be drawn up.

sammyjammy

desgirl14 said:

Cactus_Flowers said:

Would it be possible to only put in 5% deposit? That would leave you with over £10k cash left over to start the work. I think there's a Gov scheme to help with 5% mortgages at the moment, if there are no banks giving them out them.

I’m not really comfortable with going for a 5% deposit and I am now far enough along in the process that my mortgage has been applied for and agreed. Thanks for the idea though. 
I think I can find the money it just means I don’t get to update the kitchen yet which I really wanted to do.

I was just struggling as everything I read about responding to a bad survey  suggested renegotiating the price to pay for the work that needed doing but I couldn’t see how this actually helps you pay for the work straight away - turns out it doesn’t! 😅

Unless the kitchen is really bad spend a couple of hundred quid revamping, it you can get some brilliant paints for kitchen doors these days, paint is your friend in the early days to freshen everything up and make it feel like yours, its always good I find to live in something for a while before you think about changing things anyway.  I think you're right to keep the mortgage as it is, you'll thank yourself when you come to remortgage.

user1977

TheJP said:

JReacher1 said:

user1977 said:

JReacher1 said:

user1977 said:

JReacher1 said:

You can agree with the seller to give you some money after completion to cover your repair costs. So your mortgage stays the same amount but they give you say £5k back after completion. 

If your lender agrees. It's likely they'd treat as being no different to a reduction in the price, so wouldn't work.

It would work. The lender isn’t involved in this as you pay the full price of the house. There is just a separate agreement with the seller to give you a cash amount on completion. 

Why would it be a separate agreement, unless you were doing it fraudulently?

It was done as part of the house sale and was covered by a legal agreement drawn up between the two solicitors. On completion the seller agree to pay £5k to my friend which was used to fix a couple of things that were wrong with the house. 

I don’t think see how this can be fraud. 

The solicitor acts on behalf of the lender, there is no way the solicitor would not have informed the lender about the agreement. This sounds like a retention which is based on work that needs to be done from findings after exchange. Otherwise it would have been a price reduction and a new mortgage offer would be drawn up.

Or it was in the days when lenders had less of a problem with cashback arrangements and they were actually ok with it.

Or it was a semi-crooked solicitor who couldn't be bothered attending to their duties to the lender.

babyblade41

I've heard of retentions after the sale which the solicitor holds to get the work done but not a cash advance after  for the simple reason it won't be legally binding.

Eg:
my offer for 200k gets accepted by buyer 

Survey finds 10k of remedial works needed doing ASAP.

Buyer & Vendor agree between them selves to have a cash advance sent after completion.

Completion happens , ex buyer reneges on the deal & doesn't give  the new owner 10k 

No way of getting the money as it wasn't done through legal route .. 

It has to be done with the agreement of lender & mortgage offer adjusted to new price after reduction of price ........ is how I see it , could be monumentally wrong though & I quite often am