Gazundered.

[Damini]

Anyone had any experience of this before? We're supposed to exchange on the 19th, and our buyer has just dropped her offer from 125k to 120k, because of concerns about ongoing costs involved in owning a leasehold property. Basically, our freeholders are talking of setting up a management company, and throwing around the figure of £15 a month, but nothing is finalised yet so that figure could change.

My inclination is to stare her down and say no, but the woman we're buying from is buying a repossession, and it has to complete within 28 days.

I'm very annoyed. The house above ours sold for 105k, and it needs new double glazing, a new front door, a new boiler, a new kitchen, a new bathroom, new carpets throughout, and IT IS COVERED IN PUBES AND TOENAIL CLIPPINGS. So, do we risk losing the sale and the house we want? Do we offer to meet her halfway (which is still a fuckload of money considering the circumstances). Or do we bend over?

 

[MYstIC G]

I'd be inclined to say tell her to fuck off.

However you've wanted out for ages and do you really want to risk being stuck there? How many other offers have you had?

 

[WPKenny]

Our paperwork for the purchase isn't 100% complete yet so we have a few days to see how it plays out. Let her sweat a little and see if we get the answers we need from our freeholders to counter her lower offer.

She made the mistake of justifying why she was doing it. So if we can remove that issue then she basically has to go back her original offer or stick to her guns and say she lied and was trying it on but her lower offer still stands.

We'll have to wait and see. The solicitors are chasing enquiries for us.

 

[MYstIC G]

So is the potential management company her reason?

Can the freeholder actually do that, i.e. can they modify your existing lease?

 

[WPKenny]

So is the potential management company her reason?

Can the freeholder actually do that, i.e. can they modify your existing lease?

It's not a question I've asked directly but seeing as this is going through three different sets of solicitors at the moment I'm guessing it must have come up.

I'll take a look into it myself.

But yeah, the fact that the freeholder is talking of moving the paperwork over to a management company and that costs for this are currently undefined is the reason for her lower offer.

 

[Gumbo]

She's dropped her offer by 333 monthly management fee payments, or 27 yearsish?

Tell her you understand her dilemna, but are only prepared to accept one years worth of management fees, to get her started ie £180, or £124,820. Oh, and she'll have to cover any additional legal costs to you, as she's changing her offer at this late stage.

 

[WPKenny]

So I've done a bit of poking around the intarweb.

It seems that the management company can only charge "reasonable" fees and that if the leaseholder doesn't like it, they can go to an independent tribunal.

We've recently replaced the windows, door and the garage roof and they're all still under warranty.

When the property upstairs does finally sell then the lower price reflects the fact it needs new windows etc so they should be fitting them out of their own pocket.

We even coated the decking again this year. So I can't see how they can bring up any surprise charges that couldn't very easily be disputed.

Anything catastrophic will be covered by insurance.

Trouble is, our buyer wants this all in writing which is proving to be pretty difficult and at the moment, every day counts.

 

[Scouse]

I'd get out of there tbfh. Management fees are a sure way to put off buyers.

The house above went for 15k less - add the 5 grand on to that and you're back at what you wanted originally. So, for me, the decision comes down to do you want to take the hit or risk a possible long time to sell 'cause of incoming fees?

 

[Chilly]

your opportunity cost may well be more than the 2.5k you stand to lose

 

[Cadelin]

Its a buyers market and you are in a chain. As a first time buyer recently, I found out how much it really was, I revised down my initial offer simply because I thought they would accept less. She can pull out at any moment up until the exchange of contracts and there is nothing you can do, so keep her happy.

You must know how much you would have been prepared to accept for the property when you put it on the market. Remember what you have to lose here, sometimes you have to take a hit to get what you want.

 

[WPKenny]

Its a buyers market and you are in a chain. As a first time buyer recently, I found out how much it really was, I revised down my initial offer simply because I thought they would accept less. She can pull out at any moment up until the exchange of contracts and there is nothing you can do, so keep her happy.

You must know how much you would have been prepared to accept for the property when you put it on the market. Remember what you have to lose here, sometimes you have to take a hit to get what you want.

The problem is, we based our price range of purchasable properties on what we were offered on our house. We didn't *want* to pay as much for the house we're trying to buy but it ticks a lot of boxes for us and we wanted to make sure got it. I'm 99% certain she'd be mortally offended if we tried to lower our offer to her and she's already threatened to pull out of the whole deal altogether citing the stress it's causing her.

We therefore have to take the hit if it's the only way to sell the house. If we can answer her questions to the best of our ability then we can reduce the 5k hit and move it closer to the original 125k.

 

[Damini]

There's what we would have been willing to accept, what we got, what we then used to move sideways into a cheaper area (bigger house, aprox same cost). So we have made a move on a house that we can exactly afford.

And I must admit a lot of my problem is because I think it's a shitty way to behave. I can understand a small drop, but 5k?? On a 125k house? And doing it at the very last minute because they know our onward chain is dependant on a repossession exchange? It just strikes me as a low tactic.

 

[Damini]

If we do have to take the 5k hit, I'll be leaving a poop behind in the toilet as a house warming present.

 

[Damini]

In all honesty, I can't blame her for trying I suppose, but I don't think it's a very ethical way of behaving. 5k for a small financial commitment of aprox £15 a month seems a massive over stretch. She's supposed to be coming over tomorrow so I'm going to sound her out in person.

 

[Cadelin]

There's what we would have been willing to accept, what we got, what we then used to move sideways into a cheaper area (bigger house, aprox same cost). So we have made a move on a house that we can exactly afford.

And I must admit a lot of my problem is because I think it's a shitty way to behave. I can understand a small drop, but 5k?? On a 125k house? And doing it at the very last minute because they know our onward chain is dependant on a repossession exchange? It just strikes me as a low tactic.

It's not a shitty way to behave, its a negotiation.

You need to decide how much things are worth. How much would a property like the one you are getting cost normally, how much cheaper is it because of the repossession? How much would your flat sell for. From the sounds of it, she offered 20k more than a similar flat that needed some work doing. Even if the cost of getting new bathroom/kitchen/windows etc does come to say 25k, the difference is the new owner will get to decide exactly what it looks like.

I also think you are underplaying the landlord thing. When buying you want certainty. Uncertainty costs, because the buyer will want the seller to take most of the risk. Also an extra charge of £15 a month, while that doesn't seem like a lot over the course of say 25 years (ie the normal length of time a mortgage would be for) it will come to around £5000. With the limited facts I have it doesn't sound like they are being unreasonable, but I understand it can't feel nice to lose money you thought you had.

Just try and console yourself in the fact that if the price is lower the estate agent will get slightly less commission!

 

[WPKenny]

It's not a shitty way to behave, its a negotiation.

You need to decide how much things are worth. How much would a property like the one you are getting cost normally, how much cheaper is it because of the repossession? How much would your flat sell for. From the sounds of it, she offered 20k more than a similar flat that needed some work doing. Even if the cost of getting new bathroom/kitchen/windows etc does come to say 25k, the difference is the new owner will get to decide exactly what it looks like.

I also think you are underplaying the landlord thing. When buying you want certainty. Uncertainty costs, because the buyer will want the seller to take most of the risk. Also an extra charge of £15 a month, while that doesn't seem like a lot over the course of say 25 years (ie the normal length of time a mortgage would be for) it will come to around £5000. With the limited facts I have it doesn't sound like they are being unreasonable, but I understand it can't feel nice to lose money you thought you had.

Just try and console yourself in the fact that if the price is lower the estate agent will get slightly less commission!

It would be a negotiation if she'd entered into the negotiation at the time of us agreeing the sale. We offered the house up for a price, she offered that price.

Agreeing a price, formally submitting that offer to us through our estate agent, letting 2 or more other parties in the chain then go and spend hundreds or thousands based on that offer then changing your offer after 2 months is in no way a negotiation. It's underhanded.
It's why laws exist in other countries to prevent this kind of thing because it's a dishonest practice.

Imagine you put a deposit down on an item in a shop. When you went to pick it up, that item had gone up in price but you weren't allowed your deposit back. Is the shop negotiating with you or fucking you over?

And the 15ppm isn't being pissed up the wall, it's to cover the cost of insurance that the buyer would be legally obliged to pay for under the terms of her mortgage/lease. Paying it to the management company or paying it herself...it's still money she would be expected to pay all along.

 

[Damini]

The flat above doesn't just need some work doing - it is derelict, with a condemned boiler, broken windows, rotting windowsills (to the point of wood falling out), blood and feaces smeared carpets, flat roof on the porch in need of replacement, flood damage, loads of dodgy re-wiring done by an alcoholic man with a penchant for improvising, and a bathroom and kitchen in need of a total refit. So 20k difference between that and ours seems pretty reasonable, imo.

I have no issue with people negotiating a price, but to wait until a point this late in the day is, while yes, still a negotiation, not exactly the most morally virtuous path to take. If this had come up sooner, I'd view it in a far more reasonable light, and probably be far more inclined to play ball.

(Btw, we're not buying a repossession, the woman we're buying from is. So no bargain being had, sadly.)

I'm just going to pretend it's a poker game. I think the most we'll have to drop is 2k, but as Kenny says, if we can get a firm answer to the question she's asking we should be able to hold our ground.

 

[Tom]

My reply would be quite straightforward.

"No."

 

[Roo Stercogburn]

Brinkmanship. You at least know for sure that your potential buyers are cunts.

The kindest thing possible I can think of is to offer no advice either way, its time to trust your own instincts on this rather than people posting big and brave things from the safety of internet detachment. However it turns out, just don't criticise yourself afterwards - you made the best choices you could at the time.

Or...

... just ask yourself: What would Shaeffer do?

 

[Shaeffer]

!!

What WOULD I do? Gosh, this is a cliffhanger and no mistake! I can't wait to see how it ends!

 

[Roo Stercogburn]

Dear little mite.

 

[Cadelin]

It would be a negotiation if she'd entered into the negotiation at the time of us agreeing the sale. We offered the house up for a price, she offered that price.

Agreeing a price, formally submitting that offer to us through our estate agent, letting 2 or more other parties in the chain then go and spend hundreds or thousands based on that offer then changing your offer after 2 months is in no way a negotiation. It's underhanded.
It's why laws exist in other countries to prevent this kind of thing because it's a dishonest practice.

Imagine you put a deposit down on an item in a shop. When you went to pick it up, that item had gone up in price but you weren't allowed your deposit back. Is the shop negotiating with you or fucking you over?

You haven't agreed anything until your solicitors exchange contracts. Estate agents agreements are meaningless.

Your analogy is not valid as you haven't put the deposit down on the house and when the deposit is down you will have a legally binding agreement.

I have no issue with people negotiating a price, but to wait until a point this late in the day is, while yes, still a negotiation, not exactly the most morally virtuous path to take. If this had come up sooner, I'd view it in a far more reasonable light, and probably be far more inclined to play ball.

I'm just going to pretend it's a poker game. I think the most we'll have to drop is 2k, but as Kenny says, if we can get a firm answer to the question she's asking we should be able to hold our ground.

Its not her fault you are part of a chain. You are learning the hard way that being in your situation does mean you may have to accept a significantly lower price than if you could wait. Having said that, the person ahead of you seems to be in a worse position, if they have to sell to buy this repossed home, you can reduce your offer to them.

It sounds to me like you haven't been properly advised on what can happen. Its almost like complaining that someone has bid at the last minute on an ebay auction.....

Having said that, you are entitled to hold your ground if you think its worth it. In any negotiation there needs to be a point where you will just walk away. You just need to make sure you are doing this because you are confident you can get a better deal rather than out of shear stubbornness. (I am looking at you Damini!!)

 

[MYstIC G]

And doing it at the very last minute because they know our onward chain is dependant on a repossession exchange?

I know this isn't very helpful but this is why you shouldn't let people know your business.

Sounds to me like she knows she's got nothing to lose by trying this as she knows too much about your situation.

I still stick by what I said though, you guys have wanted out for ages so it's a case of short term pain for long term gain.

 

[Garaen]

In the grand scheme of things, £5k isn't a massive loss (it's just the way it's been done that's the stinger). You have to ask yourselves, is moving out of that shithole area (from reading your previous posts) and settling into a new and better place worth the £5k? Or is it worth putting up a fight, potentially losing the buyer and having someone swoop in and take the property you have your eye on and then getting stuck in a buyer's market (where there is no guarantee you'll receive an offer for £125k in the future).

For me? I'd say try and haggle her down to £3k / £4k and take the hit - if i were to place a quantitative figure on the ability to move to the house i wanted without any future stress and uncertainty it would be definitely be worth more than £5k.

 

[Damini]

You just need to make sure you are doing this because you are confident you can get a better deal rather than out of shear stubbornness. (I am looking at you Damini!!)

I prefer to think of myself as more "compliance challenged"

 

[TdC]

can you be ok with an offer of meeting the buyer in the middle? so 2.5k? also, be aware and make them aware of the percentages they're haggling.

 

[Ch3tan]

Like a few others have said, wait her out a little until all the details are clear, and then if you feel she may pull out if there is no reduction, offer what you feel is a fair reduction, but give yourself some negotiating lee-weigh.

 

[Damini]

Well, we met up today. I wore my negotiation hat. It was invisible, so she was unaware of my cunning head gear.

£1500 off the price. And because I am lovely, she can keep my habitat lampshade.

I love that lampshade. Luckily (and don't tell Kenny) I secretly bought a replacement when Habitat was closing down, as I feared the buyer would covet it.

 

[russell]

Can I borrow your negotiation hat?
I need that hat! Glad it worked out in the end x

 

[rynnor]

Nice one - good luck with your new house!