Purchase about to fall through due to misrepresentation

MobileSaver

Jemma01 said:

As a buyer, I wouldn't pay a penny more than what my valuation says, ... If the seller agrees, great, if they don't, plenty of fish in the sea.

That's the fundamental flaw in your strategy, there simply are NOT plenty more fish in the sea. There are posts here practically every single day bemoaning how few suitable properties at suitable prices are currently available.

Typically people stay in their home for around ten years on average and when it is time to move on no-one will even remember or care they paid an extra £5k ten years ago, especially when they see how much more their home is now worth.

Martico

RHemmings said:

silvercar said:

Jemma01 said:

As a buyer, I wouldn't pay a penny more than what my valuation says, at the end of the day, i want to be able to sell in the future without similar issues. I get you don't intend to sell today, but you don't know what the future holds. You might end up with a nasty neighbour/neighbourhood that pushes you out, or your priorities might change. If you become the seller, and I happened to be the buyer, it'll be on you to reduce the price. if the house isn't worth the extra 5k, tough! That's the seller's problem.

If the seller agrees, great, if they don't, plenty of fish in the sea. Your seller doesn't have an option to look for another buyer two weeks before exchange.

I don’t agree with this. In the long term, prices tend to go up. In 10 years time you may laugh at the anguish a mere £5k caused in the scheme of things.

Another person who has some skin in the game is the estate agent. If they cut their commission then that would eat some of the £5k. 

Think of what you can buy with £5k. That's what the OP is missing out on by buying at £5k over value and if they are not able to resell at that value. In the future £5k will be able to buy much less and be less of a worry, but that's not the same £5k. And, the two bedroom house (if issue not sorted by then) may be worth £20k less than it would have been worth had it had the full three bedrooms as originally advertised. (Assuming nothing else has changed.)  I.e. the same amount of value has been lost, not the nominal (and eventually less consequential) £5k. 

Or you could buy another few months' rent for that £5k, about the same amount as if you were to withdraw and start the whole process all over again

jimbog

Jemma01 said:

As a buyer, I wouldn't pay a penny more than what my valuation says, at the end of the day, i want to be able to sell in the future without similar issues. I get you don't intend to sell today, but you don't know what the future holds. You might end up with a nasty neighbour/neighbourhood that pushes you out, or your priorities might change. If you become the seller, and I happened to be the buyer, it'll be on you to reduce the price. if the house isn't worth the extra 5k, tough! That's the seller's problem.

If the seller agrees, great, if they don't, plenty of fish in the sea. Your seller doesn't have an option to look for another buyer two weeks before exchange.

The valuation put upon it by the mortgage company isn't what it's worth, it's not an exact science. The bank simply wants to ensure that their loan is covered. £5K is 'noise' in the valuation.

Try and re-negotiate with the seller to meet in the middle somewhere. You say you 'absolutely love the house'  - I think you will rue the day to lose it over £5K bearing in mind the expenses you have already incurred (that you won't be able to retrieve) and how you will need to spend those again on another property - that will then certainly become your problem   

ThisIsWeird

Hi AJM.

"It's a loft conversion. Every house for sale recently on the same road has one but is marketed as 2 bedroom by other EA. Around the valuation mark we have received from our lender."

Can you confirm - are you saying that the other houses in this street, those with similar (non-conforming) loft conversions, are correctly being marketed as '2-bed', but still have listing values of around £135-140k? Or, are these 'correctly-labelled' houses significantly lower in value?

Tbh, the 'value' of this property isn't an issue - last year it would be been £Xk, next year it will be £Yk, and this year it happens to be £135k. The decision is, "do I want it at that price?" (And, can I afford it...?)

Only you can make that call.

But, it seems as tho' you really like it, consider the accepted offer to be reasonable, will stay there a long time, and you don't actually need a third bedroom?

In practicalities; if that top 'bedroom' feels solid and firm underfoot, then regardless of whether the joists used 'conformed', they will almost certainly be strong enough, and will remain so. If that room is reasonably easy to heat, then - regardless of whether it 'conforms' - it'll likely be reasonably well insulated. (This aspect will be easier to upgrade).

Ie - it'll be like countless other 'conversions' across the country, and the longer you live there, the less important the fact it doesn't 'conform' will become. My house has a couple of daft stick-ons, en-suites and stuff, and if a buyer asked for 'retro' or an indemnity, I would make my feelings clear (before capitulating, of course...)

My personal only 'concern' would be safety, primarily fire. Is there a means of escape? Can one be added? (Ie, large egress window, rope-ladder, or whatevs). Yes, interlinked fire alarms. For 'day use', it's not so much of an issue, but if you use it as a guest bedroom, then check all that out. Possibly just a really good fire door will be enough. Possibly another layer of p'board on ceilings below.

So, my personal take on this - you like the house, you've gone a long way down the road, you are unlikely to find a significantly better deal - is to agree a compromise with the seller - 50:50.

Don't tell them you don't need a third bedroom - make it clear you will seek to make the room conform after you move in, and that will cost you.

Only you can make this decision, tho'.

GDB2222

I’m sure all the people involved want this purchase to happen, so it’s just a matter of sharing out the £5k shortfall. 

AJM1984

ThisIsWeird said:

Hi AJM.

"It's a loft conversion. Every house for sale recently on the same road has one but is marketed as 2 bedroom by other EA. Around the valuation mark we have received from our lender."

Can you confirm - are you saying that the other houses in this street, those with similar (non-conforming) loft conversions, are correctly being marketed as '2-bed', but still have listing values of around £135-140k? Or, are these 'correctly-labelled' houses significantly lower in value?

There have been 4 other houses on the road, within the last month or so, each one with the same building specifications; maybe slightly different garden size or parking. Listed as 2 bed with an attic room. The pictures show beds in the attic rooms but they are still deducted from the count. All of them are currently STC but I can see that all of them were listed as "Guide price 120,000 to 130,000!" except one which was listed at 130,000 and "Offers over!"

AJM1984

EssexHebridean said:

If you want the house, and do actually have the money to make up the shortfall (even if it will knock some of your plans for refurbishment etc down the road a bit) then I would suggest that the decent thing to do would be to ask the seller if you can meet in the middle - she drops the price by £2500, you add that same amount to your cash input. If that would mean that there were things that “needed” to be done to the house that could not be done, then it would need looking at differently, but if it just affects “wants” then I’d suggest a bit of give and take needs to be employed. What I will say is that any renegotiation of purchase price at this stage will need to be run past your lender, and they will very likely need to reissue the mortgage offer - your solicitor should be able to advise on that, assuming that they are also acting for the lender. 

Thank you, I do think you're right. Our MA is speaking to the lender on Monday about next steps and expectations regarding the offer. Our product has been reserved for 90 days and the email does say we can retain that if we need to have a second offer reissued. 
I'd, ideally, like the shortfall burden to be shared. To our knowledge the things we intended to do to the property upon purchase are needs, not wants. Two chimneys need fully repointing and flashing. They're in a very bad state and the water ingress is causing damp in the chimney breast areas; which need ventilation adding. The kitchen roof is flat and has standing water causing damage to parts of the support timber framing, so it needs stripping and some parts replacing. One brick wall along the boundary needs completely rebuilding and, although less important than the roof repairs, we would need it done for the safety of our family and pets. There's quite a list of things but those are the main points I can recall. Everything else was just going to wait. (Like the boiler being over 13 years old etc)

RHemmings

Martico said:

RHemmings said:

silvercar said:

Jemma01 said:

As a buyer, I wouldn't pay a penny more than what my valuation says, at the end of the day, i want to be able to sell in the future without similar issues. I get you don't intend to sell today, but you don't know what the future holds. You might end up with a nasty neighbour/neighbourhood that pushes you out, or your priorities might change. If you become the seller, and I happened to be the buyer, it'll be on you to reduce the price. if the house isn't worth the extra 5k, tough! That's the seller's problem.

If the seller agrees, great, if they don't, plenty of fish in the sea. Your seller doesn't have an option to look for another buyer two weeks before exchange.

I don’t agree with this. In the long term, prices tend to go up. In 10 years time you may laugh at the anguish a mere £5k caused in the scheme of things.

Another person who has some skin in the game is the estate agent. If they cut their commission then that would eat some of the £5k. 

Think of what you can buy with £5k. That's what the OP is missing out on by buying at £5k over value and if they are not able to resell at that value. In the future £5k will be able to buy much less and be less of a worry, but that's not the same £5k. And, the two bedroom house (if issue not sorted by then) may be worth £20k less than it would have been worth had it had the full three bedrooms as originally advertised. (Assuming nothing else has changed.)  I.e. the same amount of value has been lost, not the nominal (and eventually less consequential) £5k. 

Or you could buy another few months' rent for that £5k, about the same amount as if you were to withdraw and start the whole process all over again

I wasn't suggesting withdrawing, but negotiating. Which I feel reasonable in the situation.

And, the cost of renting for the time is the cost of the rent minus the mortgage interest that would have been paid, and minus the interest that would have been earned on the deposit. So, it's more complicated than that. Home-ownership with a high LTV is not free. You are counting the cost of rent only, and ignoring mortgage interest + lost opportunity cost. 

Albermarle

AJM1984 said:

ThisIsWeird said:

Hi AJM.

"It's a loft conversion. Every house for sale recently on the same road has one but is marketed as 2 bedroom by other EA. Around the valuation mark we have received from our lender."

Can you confirm - are you saying that the other houses in this street, those with similar (non-conforming) loft conversions, are correctly being marketed as '2-bed', but still have listing values of around £135-140k? Or, are these 'correctly-labelled' houses significantly lower in value?

There have been 4 other houses on the road, within the last month or so, each one with the same building specifications; maybe slightly different garden size or parking. Listed as 2 bed with an attic room. The pictures show beds in the attic rooms but they are still deducted from the count. All of them are currently STC but I can see that all of them were listed as "Guide price 120,000 to 130,000!" except one which was listed at 130,000 and "Offers over!"

A bit strange that all 4 houses have converted lofts, but without building regs ( as well as the one you are maybe buying) . Maybe the same local builder did them all on the cheap/cash in hand !

AJM1984

Albermarle said:

AJM1984 said:

ThisIsWeird said:

Hi AJM.

"It's a loft conversion. Every house for sale recently on the same road has one but is marketed as 2 bedroom by other EA. Around the valuation mark we have received from our lender."

Can you confirm - are you saying that the other houses in this street, those with similar (non-conforming) loft conversions, are correctly being marketed as '2-bed', but still have listing values of around £135-140k? Or, are these 'correctly-labelled' houses significantly lower in value?

There have been 4 other houses on the road, within the last month or so, each one with the same building specifications; maybe slightly different garden size or parking. Listed as 2 bed with an attic room. The pictures show beds in the attic rooms but they are still deducted from the count. All of them are currently STC but I can see that all of them were listed as "Guide price 120,000 to 130,000!" except one which was listed at 130,000 and "Offers over!"

A bit strange that all 4 houses have converted lofts, but without building regs ( as well as the one you are maybe buying) . Maybe the same local builder did them all on the cheap/cash in hand !

It is very odd! The other houses have open plan attic rooms (again, with full double beds in) without doors and that's the key difference. The one we're looking at has sacrificed floor space to put in a full doorway at the top of the fixed staircase. The room is L shaped. Under all the ceiling sloping, where it meets the floor, the wall space is fully fitted cupboards with storage shelves and another door leading to a walk in closet next to the entrance doorway. The finish is superb, which is why we were surprised to find it had no building certificates. It has electrics, heating and two velux windows. One facing the front and one facing the back of the house.
Two houses around the corner, less than .2miles away, are advertised as two bedroom but depict the same loft conversions as the other houses. Again with beds in. They are listed as 110,000 and 120,000 offers over.