Buyer reduced bid by 9% before exchange

RM_2013

[Deleted User] said:

RM_2013 said:

I tend to agree that I would take the offer but request an early exchange/completion.
No harm in trying to negotiate and see if they would offer at least original asking price? 

How does an early exchange/completion differ to what would normally happen? There is no chain on either side.

It wouldn’t differ at all and I didn’t realise until seeing your other replies that you’ve already pretty much got to the point where exchange is fairly imminent.  My perspective was just from a personal point of view and if a buyer reduced their offer at this late stage I would just want everything done and dusted and for things to move asap.  Hope all goes well  

killerferret666

Its a developer, they will not make any decision on 'wanting the property' with their heart. It will all be down to the profit numbers.

If it was me id counter offer and meet in the middle ground and see what they come back with. They are probably expecting some sort of counter offer. What they come back with will give you an idea of where they truely stand but being a developer they will just pull out if the numbers dont work after a couple of back and forths.

theartfullodger

Thank them for their kind offer, explain you didn't realise the price was flexible, but that being the case, just for them, the price went UP £9k.

Cheating bullying opportunistic developers...

[Deleted User]

lookstraightahead said:

[Deleted User] said:

I would advise them that the price has increased by 9%.

Which they would laugh at (especially being a developer) but if you're not that bothered about selling then it might be a risk worth taking.

Im well aware.

lookstraightahead

theartfullodger said:

Thank them for their kind offer, explain you didn't realise the price was flexible, but that being the case, just for them, the price went UP £9k.

Cheating bullying opportunistic developers...

The thing is artful they've paid over and the market is all over the place. I'm not one for even offering if I can smell a bidding war, and I never go back on my word, but I sort of get their point as to why they now want to pay less. I turned down a developer who was offering me more for my late MIL house purely because they were a developer. 

But if the op needs /wants to sell, going back with an increase won't help (I don't think). It's down to whether the op wants to risk putting the house on the market again.

prowla

The developer has played you: offer a high price to grab the deal and then reduce it at the last minute.

pollyp123

anselld said:

All those reasons are probably true to some extent but they don't even need a reason.  Your choices are obviously to accept, reject or try to negotiate a middle ground.

Don't read too much into your EA comments, they are primarily interested in getting their commission.  Arguably if it is a property suitable for HMO conversion the current turmoil has minimal effect on developers and if one was interested there will be others.  Article 4 must be backed with specific planning criteria on what will be accepted so minimal risk if the developer does their homework.

Personally, I would reject and remarket on principle.  The current buyer still has the option to proceed at the agreed price unless someone else comes along first.

Rejected on principle is an emotional reaction and is the wrong thing to do. If you don't think you'll get the same price then just accept it.

born_again

jcuurthht said:

I'm selling my late mother's unoccupied property. The accepted bid in April was from a property developer who converts houses to HMO. They bid 7% over the asking price and above all other bids. They are using a bridge loan to finance the purchase.

They said the reduction is due to:

1. Article 4 being introduced in the area, meaning they will need planning permission to convert the property (higher risk)
2. Increased interest rates

Other potential reasons:

1. This is a tactic they always use when purchasing
   
2. They are capitalizing on the market switching from a seller's market to a buyer's market, and know I wouldn't get as much if I re-marketed the property
   
3. They think I want to get rid of the property ASAP and will accept the lower bid

Afterall, the buyer is purchasing the property to add to their BTL portfolio. This won't be their home. I am not surprised that they attempt to improve their position (I suppose I wouldn't be surprised if anyone did this actually).

The EA said it's unlikely we would get as many or as high offers as we did in April (rising mortgage rates, mortgage products being removed).

How would you handle this scenario?

So they wait to just before exchange to bring that up. They will have known that from the start.

i think you hit the nail on the head with "This is a tactic they always use when purchasing"

So give them a figure halfway as the least you will take & tell them take it or leave it. As you are in no hurry & can wait it out. All they are doing is looking at their profit %.

[Deleted User]

Call their bluff, they have waited until the last minute...

[Deleted User]

pollyp123 said:

anselld said:

All those reasons are probably true to some extent but they don't even need a reason.  Your choices are obviously to accept, reject or try to negotiate a middle ground.

Don't read too much into your EA comments, they are primarily interested in getting their commission.  Arguably if it is a property suitable for HMO conversion the current turmoil has minimal effect on developers and if one was interested there will be others.  Article 4 must be backed with specific planning criteria on what will be accepted so minimal risk if the developer does their homework.

Personally, I would reject and remarket on principle.  The current buyer still has the option to proceed at the agreed price unless someone else comes along first.

Rejected on principle is an emotional reaction and is the wrong thing to do. If you don't think you'll get the same price then just accept it.

To be fair he also outlined a number of reasoned points why it may not be justified to reduce a price, so you cannot reduce his contribution to one turn of phrase.

Also, I do not take issue with the idea of being principled. Generally speaking, holding people to their offers is laudable and a strong negotiating tactic.

Of course - in some cases a small reduction for good reason could be considered.

And, whilst the market may plummet this time, advice to accept low ball offers was commonplace on here at the start of the pandemic, the crystal balls were faulty then! 

To accept 9% less is to buy into fear rather than facts.