In relation to negotiating a 10% reduction after sale agreed, at what stage is this ethically acceptable? What's the very latest point that you could do this? I know it's frustrating for the seller but if its all part of the game, EAs and Sellers have no issue driving prices up way higher and now the shoe is on the other foot, if done at the right time I would have thought the seller faces the choice of taking the reduced offer or going through an equally painful process with another buyer and taking another 3 months, I would imagine many will just want rid of the property, especially ex landlords and executor sales
Is it ethical to ask for a price reduction due to Covid after having gone sale agreed?
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Gordon Gekko
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There is a difference between looking for a higher price before any deal has been done and seeking to renegotiate after you’ve ‘shaken hands’. Imagine the outrage if some kind of supply shock occurred and a vendor sought to renegotiate an agreed sales price upwards!
Brendan Burgess
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That is subjective.
If you have signed contracts, ethics don't enter into it. You are tied in to the deal.
If you have not signed contracts, you are free to change your mind for any reason.
If you still want to buy the house, you should ask for a reduction as soon as possible to avoid the cost of the legal work.
And, of course, you should ask for the price reduction before you spend any money on surveying and legal fees.
If you have had it surveyed, the seller will probably be less likely to give you a reduction as you have some commitment to it.
Brendan
Thanks for the different perspectives.
If a survey had been carried out then depending on findings then I guess that would provide an opportunity to reduce an offer. It also sounds like banks valuations might also create situations where sellers have to come down. The difficulty right now is understanding true value. Saying you are going to reduce offer by 10% is all well and good but it obviously depends on the agreed price. I do think it's difficult to understand what represents good value at the minute. Do we think that we might go back to 2010 prices?
If a survey had been carried out then depending on findings then I guess that would provide an opportunity to reduce an offer. It also sounds like banks valuations might also create situations where sellers have to come down. The difficulty right now is understanding true value. Saying you are going to reduce offer by 10% is all well and good but it obviously depends on the agreed price. I do think it's difficult to understand what represents good value at the minute. Do we think that we might go back to 2010 prices?
I know patience will be needed as like some have said, it might take 1-2 years for the market to start showing more availability, but in my opinion the affluent South Dublin suburbs still might not present many properties for sales, therefore maintaining a fairly high floor, in areas outside the desirable areas where there's more supply is where we will most likely see bigger drops and opportunities for buyers to negotiate better deals.
When it comes to property, there is no deal until contracts have been signed and exchanged.
Until that point, potential purchasers are perfectly free to revise or withdraw any offer previously made. Equally, vendors are perfectly free to withdraw from a potential transaction.
Nobody should have any scruples about revising an offer made prior to the pandemic.
Until that point, potential purchasers are perfectly free to revise or withdraw any offer previously made. Equally, vendors are perfectly free to withdraw from a potential transaction.
Nobody should have any scruples about revising an offer made prior to the pandemic.
Are ethics involved in this as regards negotiating prices. A seller can walk away at any point up to contract, as can a buyer. And either does not need to consider ethics. In a market where property prices drop, and incomes fall, then of course buyers are going to revise their offers downwards, they'd be stupid not to. In a rising market, owners can accept an offer, and then reject it demanding a higher price. Totally legal. If there are ethics involved, then the law stands in the way of those ethics as both those scenarios are perfectly legal.
This is exactly what happens in a supply shock. Pretty stupid vendor if he didn't seek a higher price.
Gordon Gekko
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I am appalled at people’s attitude to be honest; what ever happened to ‘a deal is a deal’?
For the avoidance of doubt, if a purchaser’s financial circumstances have changed, that’s another matter, but reneging on deals is poor form.
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Baby boomer
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Totally agree. My word is my bond. By all means, if I was a vendor, I'd work with a purchaser who ran into bank valuation problems for instance. See if we could work something out. Hell would freeze over before I'd do business with someone who tried to stiff me.