Thanks for all the replies.
I'm no getting it cheaper. That's the problem. As it stands, I'm not getting it at all.
I did. I think it's worth less than this. It needs an awful lot of work (circa £50k) to bring it up to a good standard. Any increase over what I value it at eats into my margin when I have done the work. Buying it at £400k is better than buying it at £450k. When the work is complete it may be worth in the region of £500k, so if I end up paying £450, I make £50k less than I would have done if the disposal company accepted our offer.
I agree, and the estate agent has said the same thing. However, we are interested in the house, which is why we've been trying to buy it for the last 3 months. Conversely, I get the impression that the disposal company/estate agents are messing me about. It's obviously in their interest to sell for as much as possible. When we made the initial offer we were the only people interested. We said at the time that the offer was only on the table for a finite period. I know nobody else is offering on it (I accept that could change), and so we tried to stress to the EA that taking our offer now would be best for everyone. As they didn't, it's hardly fair to say that they can change their mind, and we can't. I get the impression that they think another buyer will come in and that they may then spark a bidding war. It's a gamble on their part. As they could have had the higher price previously and missed out because they made a bad call, logic would dictate that they don't make the same mistake twice. To me, that seems straightforward.
I know from experience that these repos follow a pattern most of the time. They list the property for a while and then gradually reduce it until it reaches the point where buyers are interested. I offered them an opportunity at a specific price. They didn't take that offer. They subsequently reduced the price, and so the older price is irrelevant now. Offers are based on the current asking price, not what they listed it for when it wasn't selling.
I've had this discussion with EAs before. They will always say "well it was £500k before so now that the price is £450k you're already getting a £50k discount". It's nonsense. At £500k nobody was interested enough to make an offer so there is no £50k discount. There is a more realistic asking price. Even then though, it's not necessarily the actual value. That is determined by what somebody will pay on the day. Tomorrow, there may be two buyers and so the price they're willing to pay may go up. With one buyer, the price is what that one buyer wants to pay.
My real question though, is what redress does the previous owner have? Whilst I'm negotiating and (hopefully) buying his old house, his debt is increasing. Whilst I want as much of a bargain as possible, I do still think that the bank etc should actually do what they are instructed to do by the law, i.e. obtain the best price, and sell it when a viable offer is on the table. My higher offer is no longer on the table so obtaining that price isn't an option now. If they do the same again, knowing full well that this offer will not be on the table indefinitely, I can't see how they can avoid the accusation.
Disposal companies are the ambulance chasers of the property market. They don't like their methods being questioned, I suspect because the majority of the public don't even know they exist and they'd like to keep it that way. There would be public outrage if they understood that these people are making millions out of a pointless market that shouldn't even exist. The bank should list the property with the estate agent themselves with an instruction to reject below a certain price, refer below another, and accept above that. This is after all the only thing that the disposal company does. It just means that yet another company generates a non-existence market to force a commission where there doesn't need to be one.