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irenepele

Buying House That Needs Work

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Hi – I am hoping to get an advice here as to whether I am making the right decision to take such a big job on my shoulders.

I have started to look at properties in my area (SE London and Kent) about 2 month ago and discovered that in spite of house price crash talk – one segment of the housing market is recovering slowly: houses with potential that need work, repossessed properties and in good areas (near best schools). And unfortunately that what I am after….

It all began when I divorced from my husband in June and decided that I need a decent house for the future where I can raise my daughter. She is only one but looking into perspective – one must is to be near good school and probably has potential to be extended. In my search it became obvious that on my budget of 235k I can only afford small terrace on average street or, due to market downturn, larger house that need work in very much thought after area: though there is a catch…..I have seen 5 of those during last two month and they are flying away in days. Example: lovely semi in Eltham that needed work (new plumbing, plastering, rewiring etc.) 6 asking price offers was given after one week it came on the market and it was sold to cash buyer.

So when I saw chalet style house in need of complete renovation of 230k but with potential to be amazing family home I’ve made an offer of asking price because I new it would go. One the same street 2 houses were sold last year but both were extended with 4th bedroom and bathroom in June and March this year for £280k and £311k and this is down at least £40k from peak in 2007.

Now the question – going to opt for full survey I know that surveyor will make a 10 page report with all the faults this house has. I envisage going back to the seller and ask to reduce the price to cover at least some work. At the same time I worry whether it’s appropriate as I have seen the house and condition it’s in; Is it the usual practice to ask for price reduction in the middle of sale process and is there a chance that seller can pull out as a result of my offer? 25k on work that I plan to spend isn’t a small amount either so ideally I would hope to get at least some back.

Edited by irenepele

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Not necessarily encouraging you do do this because many would tell you it is immoral etc, but if you want to get the best chance of a deal wait til the day before you exchange and then say that for whatever reason you can only afford 10k less or whatever. 95% chance the seller will be p1ssed off but go ahead anyway. Do not muck around any later than that, since the minute that the contract is signed you are under legal obligation to proceed at the agreed price.

This is gazundering and many would say it is highly immoral but given the lack of liquidity in the housing market I wouldn't worry too much about it personally. I did it around the turn of last year although that was slightly different as the market was still falling fairly fast then, but it saved us around 5% of the purchase price.

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It's quite normal to renegotiate after a survey. Although you can see visually what is wrong with a house, the survey can often return problems that you didn't pick up. The other time to negotiate is when the bank values it.

We made an offer on a house a few years ago but the survery was so bad that we pulled out. I don't consider that this was immoral or dishonest. We tried to negotiate with the seller and in the end we could not come to an agreement. We lost out as we had paid for the survey, legal fees had tradesmen around for quotes and wasted a lot of time. Given what has happened to the market since then it was a lucky escape.

It does sound as if you intend to use the survey as part of a pre-planned strategy and although others will argue that this is dishonest, it's a very common strategy. The seller can pull out of course, they may feel that the property is being sold "as seen" and not wish to negotiate. It depends on their own moral compass and if they genuinely need to sell.

Edited by Flopsy

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Thanks for the advice – it gives me confidence to know that I’m doing right.

Of course I have a second thought whether I’m overpaying in the current market but at the same time if there would be even a small rise in the property – I won’t be able to afford house of this size in the area for a long time.

Seller in my situation is really keen to sell as house in unliveable condition and I presume is a liability – but he knows where he stands as “offers were only expected above xxxâ€. I plan to instruct solicitor to write a letter stating that “As a result of survey findings buyer is offering yyy†- but giving a scope for negotiations is case seller decides I’m taking the Mickey and rules me out completely.

I also thought to approach agency explaining my situation: single mum – £10K in price reduction will make a lot of difference in terms of 15% or 25% deposit following type of mortgage following affordable monthly payments but afraid its probably too late at this stage.

Edited by irenepele

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