Negotiating Price before exchange

hazyjo

Ja171 said:

Borrowing slightly under 3x our joint income. Mostly my income so the risk. I don't think I would have too much difficulty finding a new job. The instability comes with sector and role.

That's a relatively low amount to borrow in this day and age. They would prob lend you 4.5x your salary, so I do think you're stressing a little too much! You should be able to overpay each month, reducing the risk of negative equity.

Ja171

Update: Agreed to a 12.5k reduction with buyer today. I still believe I'm overpaying based on current market drop but it comes down to do we want the property or not, and a home isn't an investment right...

pinkshoes

Ja171 said:

First of all, let me say I hate to do this. As a FTB we are getting closer to agreeing to a completion date. We offer £5k over the asking price in August to secure the home and were more than happy to pay this as we were not concerned at the time about being in a negative equity position.

The market has since had a downturn which is predicted to get worse. Pre COVID boom a similar home sold for £55k less than our offer.

I'm getting really stressed about being in a negative equity position from day 1. My job isn't super stable so my concern is that if anything were to happen and we lose the property in the next year or two we would end up paying the bank more, on top of losing the house. We can't really afford to do this.

To avoid a scenario where the mortgage is worth more than our house I am considering reducing the offer by £15k. Our deposit would mean that the mortgage balance roughly equals house value, in light of drop. I'm happy to take the risk of the market downturn, that is my risk not the sellers. What I can't afford though is potentially losing the home and owing more money on top due to being in a negative equity position.

Finding this all very stressful so would appreciate input. Am I concerned for no reason?

It's nice you got a £12.5k reduction, but if your job isn't super stable, then should you be buying??? Have you got enough savings to keep paying the mortgage for 6 to 12 months if you lost your job? Or family that could help you pay??

diystarter7

Ja171 said:

Update: Agreed to a 12.5k reduction with buyer today. I still believe I'm overpaying based on current market drop but it comes down to do we want the property or not, and a home isn't an investment right...

Only you can answer that question.
Even if the price stablises, don't forget the cots inc stamp etc.
Personally, I can see prices weakening as mortgages are dearer and people coming ogg their 5 year fixed rates in for a shock possibly even though they are aware of current rates.

The government can cook up some new schemes for FTB/etc which artificially inflates property prices to an extent it is what happens after that.

Timing is the key and catching the markets at the top and the bottom is mostly luck.

Thanks

Ja171

pinkshoes said:

Ja171 said:

First of all, let me say I hate to do this. As a FTB we are getting closer to agreeing to a completion date. We offer £5k over the asking price in August to secure the home and were more than happy to pay this as we were not concerned at the time about being in a negative equity position.

The market has since had a downturn which is predicted to get worse. Pre COVID boom a similar home sold for £55k less than our offer.

I'm getting really stressed about being in a negative equity position from day 1. My job isn't super stable so my concern is that if anything were to happen and we lose the property in the next year or two we would end up paying the bank more, on top of losing the house. We can't really afford to do this.

To avoid a scenario where the mortgage is worth more than our house I am considering reducing the offer by £15k. Our deposit would mean that the mortgage balance roughly equals house value, in light of drop. I'm happy to take the risk of the market downturn, that is my risk not the sellers. What I can't afford though is potentially losing the home and owing more money on top due to being in a negative equity position.

Finding this all very stressful so would appreciate input. Am I concerned for no reason?

It's nice you got a £12.5k reduction, but if your job isn't super stable, then should you be buying??? Have you got enough savings to keep paying the mortgage for 6 to 12 months if you lost your job? Or family that could help you pay??

Have savings to cover up to 5-6months if that did happen. Partner works so if you add that in could manage 9months max, in worst case scenario.

powerful_Rogue

Ja171 said:

Update: Agreed to a 12.5k reduction with buyer today. I still believe I'm overpaying based on current market drop but it comes down to do we want the property or not, and a home isn't an investment right...

A home is never an investment - It's a home.

propertyhunter

Ja171 said:

Update: Agreed to a 12.5k reduction with buyer today. I still believe I'm overpaying based on current market drop but it comes down to do we want the property or not, and a home isn't an investment right...

You've achieved a decent reduction, more than meeting you halfway, yet are still hesitant over £2.5k. Ask yourself - do you actually want this house? The price could drop further over the next year. How will you feel about the house then? You don't want to resent living there - there needs to be more to buying your home than getting the price right, it needs to 'feel' right too.

It's fine to change your mind, but probably best to tell the vendor asap so they can get on with selling their home.  

user1977

You haven't told us the price - what's the £2.5k in relation to that?

Ja171

propertyhunter said:

Ja171 said:

Update: Agreed to a 12.5k reduction with buyer today. I still believe I'm overpaying based on current market drop but it comes down to do we want the property or not, and a home isn't an investment right...

You've achieved a decent reduction, more than meeting you halfway, yet are still hesitant over £2.5k. Ask yourself - do you actually want this house? The price could drop further over the next year. How will you feel about the house then? You don't want to resent living there - there needs to be more to buying your home than getting the price right, it needs to 'feel' right too.

It's fine to change your mind, but probably best to tell the vendor asap so they can get on with selling their home.  

Not hesitant over 2.5K. If you read my post 15k was break even against mortgage rates not real MV. It's about paying a fair price currently not next year, so that's irrelevant unless I was buying next year. Wouldn't have agreed to the reduction if we were going to pull out.

You can buy a property and feel you have overpaid, you get on with it if you feel it works long term. Regardless of whether you like the home no one wants to massively overpay. 

I hate the ambiguity in the housing market, but it is what it is. 

Ja171

user1977 said:

You haven't told us the price - what's the £2.5k in relation to that?

It's not the 2.5k. I believe based on drops in other properties it's worth 30k less, but ovc have to offset that against higher rates. Paying 435k.

Thanks all for advice, much appreciated. Have made decision