Key Post Gone sale agreed , should I proceed with purchase?

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Fella

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Unsure whether to post this in Corona forum or here , basically a family member has gone sale agreed and they have paid deposit on "dream home".

I rang them this morning advising them that in my opinion it is a bad time to buy . My sister hadn't considered impact of covid19 on house prices .

I suggested at least wait and continue to rent as I cannot see prices increasing and the downside seems unlimited.
She doesn't see it the same way , she doesn't want to lose "dream home " they only have mortgage approval for a few months and that time is nearly up , her husband works in hospitality sector and is concerned about how bank will view mortgage approval so wants to hurry this up as she thinks bank could view his employment prospects different now .

I suggest at least contact the seller and see can you negotiate a discount , which she says she will consider .

Should I just leave them be ? I fear they are making a really bad move going ahead with purchase .

Thanks
 
While speculation about house prices is not allowed on Askaboutmoney, we will make an exception for this specific thread as it must affect quite a few people. It will be rigorously moderated though and noise will be deleted.

Brendan
 
At the very least, one can say that there has to be huge uncertainty - I hate the expression, but it is uncharted territory.

In the immediate future, a lot of sales are going to fall through because people will have lost their jobs or their incomes.

I would also expect the lenders to tighten their lending criteria.

But your friend raises a good point. She has loan approval now - will she get it again?

However, if her husband does lose his job after they sign the contract, they could be in deep trouble. Unable to complete the sale and unable to get the deposit back.

It's hard to see an upside for some long period of time.

Brendan
 
Fella said:
her husband works in hospitality sector and is concerned about how bank will view mortgage approval so wants to hurry this up as she thinks bank could view his employment prospects different now .
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I'd be more worried about getting into debt that they might not be able to service, than any impact on house prices.

What kind of timeline have they got on purchase?
They don't have to make a decision really until they get contracts to sign. Things are evolving daily - they'll have a lot more information by the time that comes along.
 
RedOnion said:
I'd be more worried about getting into debt that they might not be able to service, than any impact on house prices.

What kind of timeline have they got on purchase?
They don't have to make a decision really until they get contracts to sign. Things are evolving daily - they'll have a lot more information by the time that comes along.
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Yeah that was my point also , my sister says her husband has never been out of work which is true and he will get a job somewhere . He was gardener , worked in construction and various other bits during last recession, but they had trouble getting mortgage approval so they went to a mortgage advisor and have been following advice of saving x amount per month .

I believe contracts are to be signed fairly soon , she was on to her solicitor and couldn't get through to anyone on Friday , she's anxious to sign , which I can understand from renting an apartment and struggling for space .They've planned and are looking forward to this move for a while.

I don't want to be all negative about the move and if I felt house prices where only going to drop by a small margin I'd say fire away but it's hard to see many positives for the economy now and I'd hate to say nothing and see them going down the road I've seen many others post about here and end up with repossession , negative equity , bankruptcy etc.
 
Hi there,

I am in a similar predicament. Went sale agreed in October and one thing or another has delayed the purchase so nothing is signed yet. I am glad of this now as I'm sure I would be able to get a better deal in the coming months or next year. I am a public sector worker so job is somewhat secure (who knows though) so I am not worried about mortgage approval.

My concern is about getting my booking deposit back from the estate agent in case they go under.

Thank you.
 
Do we think this will affect the whole housing market? The early job losses have been in the lower paying industries, so do we think this will affect the lower end of the market?

The biggest open question for me is how are banks going to react? It would be interesting to hear what happens when your sister speaks to the bank, I would assume they might do further checks before allowing draw down?

However, in a scenario where banks keep lending, and those that have secure jobs continue to have the ability to purchase, we would only see a short term blip?
 
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If it’s a dream house and they would be worried about getting mortgage approval again I would go ahead. Unless they’re concerned about ability to repay. Nobody knows how long this will last. People will always need home. The latter is all we’re sure of right now
 
If it's the dream home then buy it. Her husband may be out of work but the bank won't repossesses once they continue to engage.

I bought one house near the top of the market and another near the bottom. TBH both times I more or less knew where the market was but my personal and financial circumstances were the determining factors.

Over the course of half a lifetime it won't matter whether she bought in 2020 or 2022.
 
The same principles that apply in relation to investments apply here. What’s your time-horizon? If the intention is to move again within the next 10 years, I would tread more carefully. But if this is a “home for life”, I’d be less wary of ploughing on.
 
Is it not fair to assume that house prices have fallen ? Nothing is valued the same as it was a month ago , I don't think it's speculating on house prices it's just not visible like share price is . We get a glimpse of what to expect maybe by looking at REIT prices although it's doesn't track prices fully it would indicate that house prices are as effected as any other asset.

Ultimately it effects us all if people pay too much for property wages drop , job losses and houses end up sold to vulture funds , repossession is impossible and mortgage rate is higher than our European neighbours.

I'm very surprised by the replies saying it will make little difference , when you look at the maths of how much an extra 100k will cost you over 20-30 years it's a very significant amount .

Why would you make the biggest purchase of your life for most people and pay over the odds ? It seems crazy to me .

Think of it this way , imagine the stock markets closed last month before the drop as they anticipated major volatility , and you rang your broker with 300k to invest in an all world tracker and he gave you the price it was just before it closed the last price traded , would you fire ahead with this ? Your not speculating on share price but intuitively would you feel you where getting a good deal ? Your investing for life but I don't think many would take the stock broker up on his offer .
 
Gordon Gekko said:
The same principles that apply in relation to investments apply here.
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Hi Gordon

As Fella points out it's very different.

When you buy shares you pay the price today and conclude the contract today.

Someone who has gone sale agreed on a house is not concluding a contract.

It is very likely that all asset prices have fallen substantially over the last month.

Brendan
 
Brendan Burgess said:
Hi Gordon

As Fella points out it's very different.

When you buy shares you pay the price today and conclude the contract today.

Someone who has gone sale agreed on a house is not concluding a contract.

It is very likely that all asset prices have fallen substantially over the last month.

Brendan
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Yes, but I would still contend that one should look at it through the prism of one’s time-horizon.

If it’s the “home for life”, is there really merit in reneging on the contract and antagonising the seller? My own sense is no, and how much will the property really have fallen by? And in any event, amortised over a lifetime, how much is it really?
 
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