Buying house in the UK

Question

My situation is the following. I found a house in Leeds (UK) that I liked that was advertised for 160k asking price in May 2021. I viewed the house and liked it so I entered into a biding war with some other guy that drove the price to 175k (even thought I told the seller that the house is probably not worth that much money and the bank will not value that house at that much money, hence bidding more was pointless as the final verdict will be decided by the banks valuation of the property when they analyse the mortgage).

Both me and the other potential buyer are using loans from the bank to purchase the house hence we can't give much more money that what the bank can value the house at. So I told the seller pick one of us and decide as ultimately the price will be the same for both of us as this is not an auction.

The seller picked me as a potential buyer and we started to involve the solicitors to get the documents ready. In June my bank made an evaluation on the property and valued the house at 165k. I told the seller that I can not give much more than that and reminded him what I told him in May that ultimately the bank will decide the value of the house. We spent 2 weeks renegotiation the price and eventually settled at 166,300.

From that point we waited for the solicitors to get their work done and by October we were finally ready to exchange.

At this point I receive a message from the seller telling me he feels the price is not right for him and he feels the house is undervalued and wants me to give more money. My solicitor can't do anything about it as legally we still haven't exchanged contracts and the seller can pull from the deal at any time.

What should I do?

This feels like extortion at the last moment but looking at house prices in that neighbourhood I cant see a house like that under 190k. So he must be using this moment in the market as a opportunity to squeeze more money from me.

Answer 1

You fundamentally have two options:

1. offer to pay more money
2. say "no thanks, if we can continue at the previously agreed price I'm still in, otherwise I am out".

The seller is obviously hoping, based on your inevitable emotional attachment to the property at this point as well as the solicitors' fees etc you have already racked up and the fact that prices elsewhere have gone up in the meantime, that you will pick option 1.

You should only pick option 1 if you can afford the house at that higher price AND you would not end up feeling like the seller cheated you, i.e. you agree that based on the house price rises in the meantime it is fair for you to pay more than originally agreed.

I would be willing to bet that if you go for Option 2 the seller will continue with your deal. Clearly the originally agreed price was enough for them before, so it ought to still be enough for them now.

Actually technically there is an Option 3 - tell the seller "you are clearly not operating in good faith, I'm withdrawing my offer" and then go and find another property, but that is throwing the baby out with the bathwater.

My opinion - and I am not a legal or financial advisor etc., and I know nothing of your specific circumstances - is that you can't blame the seller for trying, but equally you should just treat this as part of "the game" and go for option 2.

Answer 2

In the UK this happens all the time.

In the UK process no binding agreement is made until contracts are exchanged, often long after the sale has been nominally 'agreed". This means that at any time up to then both buyer and seller are free to withdraw from the sale without notice and with no penalties. Often during that time buyer and seller have put considerable effort into making the sale go forward, perhaps agreeing to sell their current house or buying a new one, or making other arrangements.

This does leave both sides open to ploys where one side threatens to withdraw from the process unless the price is increased (or decreased), leaving the other party with the choice of paying the increased (or decreased) amount or starting the whole process again. Terms like "extortion" have frequently been used to describe this tactic.

Unfortunately there is not much you can do about it. Consult with your agent (or their agent if you don't have one). You can try to negotiate (again) the price. The seller may not be really prepared to pull out of the deal if you stand your ground and are prepared to drop out rather than increase your price. Since you say you can't get a mortgage for more than the valuation, that should be a good point in your favour.

In the end your choices are:

1. Re-re-negotiate the price
2. Pay the price asked
3. Stand your ground and continue only at the original price.