I've gone sale agreed (note: "sale agreed" means the sale has been agreed in principle - no contracts have been signed, no non-refundable deposits have been made etc.) on a house. The market I'm currently in was extremely competitive, houses were all generally going for significantly more than their asking price, as mine did.
I have nearly everything ready - loan arranged, survey of the house completed, solicitor ready to sign everything.
Now with Covid, a recession is more than likely coming our way.
Furthermore, with lock-downs in place - the seller is extremely unlikely to find an alternative buyer in the near future (it's an executor sale if that makes any difference).
I was thinking of trying to put some pressure onto the seller to lower the agreed price.
While I don't want to lose the house (and the money we have spent so far on legal etc.), I would also like to take advantage of potentially lower mortgage repayments.
Is it a bad idea to put this to the estate agent and be forthright about exactly why I'm asking to lower the price? Is there a "reasonable" amount to lower the purchase price by?
My intention here isn't to "screw" the seller as several commentators assume that I am trying to do.
At the end of the day, I'm a first time buyer who has effectively agreed to buy a house at "peak" economic health. Within a couple of weeks of this agreement, economic impacts of covid-19 were already being felt and the short / medium term prospects are not good.
At the end of this year, if covid hasn't wreaked enough havoc, there is a very real risk that Brexit could have an extremely negative impact on my country.
So while the honorable thing to do might be to commit to the agreed purchase price, this might be an extremely unwise decision from a personal finance point of view.
"Why don't you just pull out of the sale then?"
I could do that, that leaves the seller in a very bad position as well - it will be extremely unlikely they will be able to find another buyer in the short / medium term - so giving them an opportunity to consider my concerns might be better than simply walking away.
The bank valued the property about 6% lower than the agreed purchase price (mostly due to Covid). This effectively meant that the maximum amount the bank would lend was 6% less than what we had originally sought. We weren't willing to try and pay a larger deposit to fill the gap and informed the seller + estate agent (providing the banks valuation of the property). The seller agreed almost immediately to the reduction and we closed within a couple of weeks thereafter.