Info regarding Property Purchase Price Reductions

In the increasingly litigious society we now live, everyone is trying to cover their backside, meaning conveyancers and surveyors will often air on the side of caution and look at worst case scenarios, as opposed to taking a more balanced, pragmatic approach. This can often lead to buyers looking to renegotiate over the most inconspicuous reasons, ultimately leading to sales falling through. If there is good reason to renegotiate then absolutely go for it, but deciphering what is and isn't grounds to renegotiate is crucial before looking to have that conversation.

Generally the following are acceptable/common grounds for a discussion about renegotiation.

Down Valued by the mortgage company

If the mortgage lenders surveyor down values the property and the estate agent isn't able to provide tangible comparable properties, you may have grounds to renegotiate for two reasons. Firstly, if the property is down valued, the lender may not be able to lend the required amount for the agreed purchase price, meaning the price would have to renegotiated or you would need to find another lender or pull out of the purchase altogether. Secondly, even if it doesn't effect your loan amount as you have a big deposit, no one wants to pay over the odds and you may choose to renegotiate if you are no longer happy or comfortable at the agreed price.

However, in a rising market like we've experienced in recent years, there is a chance surveyors will down value the property as they are struggling to find anything comparable that matches the price being paid. Although a buyer may feel it fair grounds for a reduction, there may well be a queue of buyers lining up to take their place. Why would the seller renegotiate if they are confident of getting the same price back on the open market!

Issues highlighted by the surveyor

This could be anything, such as rising damp, roof repairs or structural damage. Much of what is highlighted on a survey may not be obvious to the untrained eye and may come as shock to both buyer and seller quite often leading to a reduction on the agreed price.

However, If you're buying a house that clearly needs work and that has been reflected in the asking price, the seller is less likely to be flexible on the agreed price regardless of what the survey highlights. It's also important for buyers to understand, particularly when a buying an older property, there will be always be remedial work and room for improvement/repair. If you want a completely clear survey, go and buy and brand new flat with a 10 year new homes warranty.

Short Lease

Again this will have a lot do with how much information is provided by the seller from the outset. The number of years remaining on the lease is usually something made clear from day one but the cost of extending it may not be known, so it can be difficult for a buyer to factor an unknown cost when offering on a property. If sellers declare the length of the lease and have written confirmation as to the cost of extending (something we always recommend) it's straight forward but if the figure comes to light during the sale process, it may well be grounds for renegotiation.

"To be a good estate agent, you need to be a good mediator"

Major Works or Section 20 notice

A common problem when buying flats within local authority developments are section 20 notices, which may not come to light until the sale process is well underway, or the exact cost may not be clear when agreeing the sale. This is often grounds for renegotiation. We will always urge a seller to get as much information on proposed works before coming to market so the buyer can make an informed decision at the point of offering, saving any talk of renegotiation down the line.

All of the above, in the right context, can and quite often should be grounds for renegotiation but it is never black and white and there are arguments for both sides.