Reducing offer after offer has been accepted

[jimmy47]

I have agreed to buy a 4 bed semi for 300k.

We reached agreement about 6 weeks ago, and we are now awaiting contracts.

However, I am now thinking I am paying over the odds and I am considering pulling out or reducing the offer.

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Background:

This house is not in the Dublin catchment (obviously, at that price), in a good area of the particular town.

300k is the ceiling for this type of property in this area i.e. as far as I know, another similar house sold for this, a year ago.

This house is in very good shape, so, in a similar market would achieve the same or maybe a couple of percent more.

I was working on the basis that housing prices had not dropped as much outside of Dublin, and also that good quality houses in the best areas were holding their value. Just seemed that way from the asking prices (bit naive now I know).

I went in at 285, and ended up at 300. I thought it was reasonable but not bargain basement.

[I am not in a chain, and finance is definitely sorted and I can move quickly].
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Now, 6 weeks on, I am having 2nd thoughts.

Reasons:
Local property pages are finally showing price drops across the board

Couple of specific houses I was looking at have dropped in price (i.e. they are in reality considering much lower offers even where the old price is still advertised).

Even a couple of local estate agents said that prices are off by 5 to 10 %, even for good quality houses in good areas.

It just seems that the penny has finally dropped here locally that vendors need to be realistic.
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I am worried that I am the only eejit to be paying peak prices for a home.

But I am not trying to start a debate on property prices.

The thing is that a 4 bed bungalow has come up in the same estate, and I could get it for 315 ie 5% more. Bungalows normally would be about 15 to 20% more than a semi-D.

Now I am really starting to think I am mad to pay what I am paying for a semi D.

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I don't want to screw over my current vendor, as they are buying a new house. But I can't help feeling that I am being mugged.

I am seriously considering pulling out.

I haven't seen the inside of the bungalow yet, but am hoping to soon.

If it is suitable, I guess I can decide whether to pull out or not.

If I do pull out, I would explain to the EA my reasons. They will prob hit the roof.
I guess the other vendor might come back to me (after they calm down) and offer me a reduction.

If they did offer me a decent reduction I would consider it - I just don't want to pay over the odds, as it seems that I am.

Or, just as likely, they may be so angry that they refuse to deal with me and put it on the market.

I guess I should only do this if I am absolutely serious about the bungalow and willing to lose out on the semi. And if for some reason the bungalow is not right (say in a survey or whatever), I could be left with nothing, and have to keep looking.

I don't like the idea of gazundering, but I feel that I am being taken for a mug and that I will regret giving them so much for the house.

I know some people have a cynical attitude against EAs and vendors, and that some people feel that you should offer way low and wait it out.

My mindset is more that you should offer slightly low but realistic, haggle a bit and come up with a price that is fair on both sides, everyone happy and that way the deal will stick. My problem is that I now feel, the way things are panning out, that I am getting very much the bad end of the deal.

Anyone got any practical advice for me please?

 

[bacchus]

However, I am now thinking I am paying over the odds and I am considering pulling out or reducing the offer.

Few years back, sellers were not shy of gazumping (seller uping the price after offer has been agreed).

So, now, buyers should not be shy of gazundering (what you are trying to do)

What goes around comes around...

 

[oopsbuddy]

Why would you think that you're being taken for "an eejit" if an open market price was agreed between a willing buyer and a willing seller? What you're really concerned about is 'can I now get it at a lower price than the one agreed?' If you haven't signed anything yet, then I see no reason why you can't renegotiate or even walk away completely. It also seems a bit unusual to be concerned about the agreed price when you haven't yet seen the inside of the house! Can you get someone who is more experienced in property purchases to give you advice and maybe even help you with your negotiations?

 

[Diziet]

You think you would be able to get the bungalow for 315, yet you haven't even viewed it! How do you know there won't be other offers, pushing the price up?

I don't know where the place is, but you are buying a house to live in presumably, and have agreed a price that seemingly you don't think is hugely over the odds.

There will always be cheaper, as well as more expensive houses, but at some point you have to make a decision.

If you don't like gazundering, then don't do it. Your reasons don't seem particularly well thought out anyway.

 

[jimmy47]

Why would you think that you're being taken for "an eejit" if an open market price was agreed between a willing buyer and a willing seller?

Because I am not from the area and despite all the research in the world I can not know the local market as well as a local vendor and local estate agent.

And because the market had changed, the EA prob knew that, but I naively thought it had not changed for this area / house type.

Am not worried about being taken for an eejit, am worried about being an eejit...!

It also seems a bit unusual to be concerned about the agreed price when you haven't yet seen the inside of the house!

I assume you understand that I haven't seen the inside of the bungalow yet. I haven't, but I have seen a spec with a lot of photos and I have been round the outside of it. On that basis, I can make a rough comparison, but obviously need to see inside it and get a survey if it is still of interest.

 

[jimmy47]

Thanks for the responses everyone. I am taking them on board. I will also try to answer your questions, without trying to get defensive - after all I am the one looking for advice, and I appreciate it

You think you would be able to get the bungalow for 315, yet you haven't even viewed it! How do you know there won't be other offers, pushing the price up?

The bungalow was on the market before at 345 and did not budge. A local estate agent just told me I could have it for 315. But yes, what you say could possibly happen, good point.

I don't know where the place is, but you are buying a house to live in presumably, and have agreed a price that seemingly you don't think is hugely over the odds.

There will always be cheaper, as well as more expensive houses, but at some point you have to make a decision.

Fair point, but I don't think anyone should pay over the odds in the current market, especially for fear that things will get even worse. Buyers are a scarce commodity so why not make use of the fact that I am financed, chain free and ready to go, in order to get a FAIR deal?

If you don't like gazundering, then don't do it. Your reasons don't seem particularly well thought out anyway.

I don't like it, but neither do I like paying over the odds, esp when I can get something much better value for money, more likely to hold its value, in the same area.

Note: the semi-d never went on the market, we concluded a deal, via the EA, before they even took photos, so there were no other bidders involved.

 

[Importer]

I don't know if you're an ejit or not but I'll tell you one thing prices are falling.The IMF acknowledge it, leading bankers acknowledge it, myhome.ie acknowledge it etc etc. The dirty secret is out at last. Current house prices are not sustainable.

Now you might indeed pull out of the 300k house and buy the 315k house BUT in six weeks time, I fear you'll be back to square one again as prices fall further.

Do you really want to enter the market at this stage ?

 

[jimmy47]

Importer, thanks for the comments.

I hear what you are saying - *IF* prices were to keep dropping, would I be tempted to keep on gazundering, good question.

Maybe I should in fact sit it out for another while - its an option I will consider.

I don't want to get this thread shut down, as I think it is a fair question and of interest to more than one person, so please guys, try not to turn this into a 'discussion of house prices'.

 

[Camry]

Personally, I think gazundering is bad form. I hold the same view of gazumping.

That is why on other threads here I advocate pitching low offers at the moment.

 

[moneygrower]

sounds to me like you need to pull out rather than gazunder. Personally, like most people, I think gazundering and gazumping should be illegal or at least penalised in some way.

 

[angela59]

Hi Jimmy47,

Even though I'm a vendor myself and should be backing up vendors - if you're not happy with the house you put a bid on - don't go for it - it is one of the biggest decisions of your life financially and emotionally - you'd want to be 100% sure - and from what you're saying don't think the vendors have dropped the price of the semi d you were looking at - cerainly from my side of the fence we've all had to wake up and smell the coffee regarding reducing but sadly some vendors don't. If you and vendor can come to mutual agreement then everyone's happy but if I were in your shoes - suit yourself and you're pocket - every buyer at the moment is. Best of luck and let us know how you get on

 

[jimmy47]

Personally, I think gazundering is bad form. I hold the same view of gazumping.

Fair point. And equally its bad form to pull out at the last minute.

I know I would be very upset if it was me.

I guess I should only pull out *if I am seriously unhappy* to pay the price for the house as it stands, and leave it at that.

Then I am free to buy another house or sit on the sideline as I choose.

Equally, they are free to come back and offer to reduce the price, and get the contracts signed asap, or else put it back on the market.

Note: cross posted with Angela and Moneygrower

 

[robd]

I haven't seen the inside of the bungalow yet, but am hoping to soon.

I'd say the EA saw you coming considering you jumped in and offered money for a house you had never stepped inside. I'd certainly think all my Christmas's had come at once if someone started bidding on my property without ever seeing the inside.

Have you even bothered to get a survey done? A couple of years ago, an ex work colleague didn't want to get one in case it might show anything up. To say we were all shocked with this would be an understatement.

You're worried about what the EA might think and that they might get annoyed !!! This should be the least of your worries. You're not the EA's mate. Buying a house (although often emotional) should be a clinical, cold and calculated business decision based on criteria. It's not bad form to pull out at any stage during the buying process. It's a business decision. It's bad form to yourself to take on €300k of debt to please a seller when you're not totally 100% happy. The only person you owe anything to is yourself.

Your gut feeling is kicking in. Alarm bells are going off rather loudly and so they should be. I doubt, given your story, you'll manage to successfully negotiate the EA down, who don't forget is a seasoned professional negotiator. Run away quick before your naivety sends you hurdling off a rather large cliff.

Take a deep breath. In a few months look again. Look at a number of properties. Take your time, lots of your time. Put a below asking price offer on one you like and negotiate slowly. You have time. An average negotiator will generally manage to agree a price around 50:50 between the asking price and the first bid price. EA's being professionals try and out perform this using various tactics.

 

[jimmy47]

I'd say the EA saw you coming considering you jumped in and offered money for a house you had never stepped inside. I'd certainly think all my Christmas's had come at once if someone started bidding on my property without ever seeing the inside.

No, I didn't. I have not offered on the bungalow, I have been told how much they would sell for.

Have you even bothered to get a survey done?

On the semi-D, yes of course.

You're worried about what the EA might think and that they might get annoyed !!!

Again, no I'm not *worried*. I am merely trying to anticipate the course of events and plan accordingly.

You're not the EA's mate.

None of my post would indicate that I think that.

Buying a house (although often emotional) should be a clinical, cold and calculated business decision based on criteria. It's not bad form to pull out at any stage during the buying process. It's a business decision. It's bad form to yourself to take on €300k of debt to please a seller when you're not totally 100% happy. The only person you owe anything to is yourself.

I hear you. However, I prefer where possible not to treat others unfairly. Also, I don't want to be too clever and cause myself problems.

Your gut feeling is kicking in. Alarm bells are going off rather loudly and so they should be. I doubt, given your story, you'll manage to successfully negotiate the EA down, who don't forget is a seasoned professional negotiator. Run away quick before your naivety sends you hurdling off a rather large cliff.

Take a deep breath. In a few months look again. Look at a number of properties. Take your time, lots of your time. Put a below asking price offer on one you like and negotiate slowly. You have time. An average negotiator will generally manage to agree a price around 50:50 between the asking price and the first bid price. EA's being professionals try and out perform this using various tactics

Thanks for the advice, some useful stuff in there.

 

[MrMan]

I'd certainly think all my Christmas's had come at once if someone started bidding on my property without ever seeing the inside.

Personally I'd think the very opposite. If someone offered me a price on a house without actually seeing it you can safely say the following would happen. Sale agreed, person then views it finds there is alot of 'work' to be done and re-assesses their initial offer and tries to work price backwards. I wouldn't entertain an offer until the property was viewed.

OP you are at a late stage and everything you are saying points to just pull out. The house isn't the one you desire (you prefer a bungalow), you think that the price is too high (in 6 weeks the bottom has dropped! is this what you have seen or is it what a helpful mate is telling you). Like others have said its a huge personal transaction, you are not doing anybody any favours by going into it half hearted. Make a decision today to at least give the vendor the decency of having the chance to put it back on the market. You are lucky that you were allowed drag it out so long, 6 weeks and no contracts signed is a bit much.

 

[jimmy47]

MrMan, from your previous posts I respect your opinions as as someone who seems to be a reasonable, balanced EA, so thanks for your input.

For the record, once again, in case anyone thinks otherwise, I did not bid on the semi-d sight unseen - see above. Also, I have not bid yet on the bungalow. I am considering my options and trying to work out the possible courses of action and the probable ramifications of each.

I do not think the bottom dropped out in the last 6 weeks, I think the penny dropped with many vendors locally and with this naive buyer during the last couple of months. I have good reason to believe this - I have been actively looking for quite some time and in contact with all local EAs. It is only recently that they have started dropping the asking prices or seriously considering significantly lower offers.

There seems to be an accepted realisation now that there is more bad economic news all the time, that many more voices for a variety of sources are negative, and that buyers are even thinner on the ground than ever, because sentiment is very bad and money to buy is very very hard to get.

Sorry if I am slow on the uptake, but that is the situation.

Having said all that, I will try my best to make a descision asap. By Monday at latest.

For the record, I did not drag it out, I have been hounding the vendors to get the contracts signed up until this week, when I started to have second thoughts. They missed their own self-chosen date for signing.

 

[BYG]

why don't you explain to the agent as you have done here and advise him of the price you would be willing to buy if the owners still wanted to do a deal with you. If not you've pulled out and move on.

Any EA who hits the roof at a prospective buyer is stupid and I'd be surprised if this situation doesn't happen in a large amount of sales its a natural reation to a crashing market. But you need to inform the EA of your doubts as soon as possible so the vendors can plan accordingly.

 

[robd]

No, I didn't. I have not offered on the bungalow, I have been told how much they would sell for.

Apologies jimmy47, I didn't notice you were talking about 2 different houses.

My only advice is to suit yourself when it comes to buying a house. You are under no obligation to anyone, especially not someone you don't know at all. Remember, once you've bought a place, you generally never have to deal with the vendor or EA again so don't worry about building a relationship with them. Anyone referring to being nice and fare and decent and doing the right thing when it comes to buying or selling a house is quite simply living on a fluffy pink cloud, IMO of course. It's your money (including the mortgage which you'll have to repay) so guard it jealously and part with it scroogingly and unwillingly.

 

[jimmy47]

Fair comments. Only thing to bear in mind in that regards is that in a small town I WILL deal with the EA again, and more importantly I am almost certain to meet the vendor (thru schools etc), plus if I really screw anyone over it will be the talk of the neighbours, I know that for a fact. So apart from anything else, from my own self interest, the human side is VERY important.
If it was up in the smoke, it would prob be *less* of an issue.

But yes, I do guard my own money and money that I borrow very jealously, without letting it blind me to other factors including tripping myself up by trying to be too cute.

Thanks again for the comment.

 

[MrMan]

Well it sounds like they have screwed themselves over by nmot getting contracts signed. In the cold light of day any rational person will understand that nobody is going to pay more than the going rate for a commodity that has plenty of supply. From your posts I take it that there are other similiar properties on the market and if the prices are down on those ones you owe it to yourself to withdraw and start again. You have the knowledge now of the local market and you have had a cheap lesson in house buying so use it to your advantage and don't dwell on morals, because you aren't screwing anybody over (unless you wait even longer before withdrawing).