Negotiate after Sale Agreed?

Smiley012

Hi all,

I was wondering if anyone has any advice for negotiating on a sale agreed price? We have had surveyors come into the property, and they have identified a damp issue that will cost around 5k-7k to fix.

This wasn't budgeted for, and we won't be able to fix it.

I know they went sale agreed previously, and it fell through - I know they are very eager to sell as quickly as possible.

We are obviously eager to buy as quickly as possible - but need to have some sort of give in the agreed price, so we can fix the damp.

If this sort of thing is out of the question - fair enough, I just wanted to reckon my options here before going to talk to the Estate Agent - so I can be a little more prepared then I currently am!

Thanks!
Smiley

Cyrus

Was your offer subject to a satisfactory survey?

it should have been, but even if not i would go back to them and try negotiate for this

Smiley012

Good advice, I actually don't think I wrote that in my email, but said it verbally to the estate agent.

So, I guess - if I don't ask, I don't get right?

It's not like, if I ask to reduce the price, they would say 'no' and pull out right? Like, they'll say no, and see if we hang around I assume...

davo10

Smiley012 wrote: »

Good advice, I actually don't think I wrote that in my email, but said it verbally to the estate agent.

So, I guess - if I don't ask, I don't get right?

It's not like, if I ask to reduce the price, they would say 'no' and pull out right? Like, they'll say no, and see if we hang around I assume...

Not necessarily, if you open the agreement for re-negotiation, this can work both ways. If there has been any subsequent interest in this type of property the EA can advise the vendor to re-open negotiations with other bidders. It really depends on whether another person has shown interest in this specific house or this type of house in this location. You probably won't have anything to lose by asking but just be prepared to walk away or have to pay more if the vendor/EA comes back to you before contracts are signed and tells you that the vendor is considering an offer from another party.

Surveys always throw up a few small issues, a patch of damp usually isn't a huge issue and if that's the only problem shown up, you got off lightly.

SB_Part2

davo10 wrote: »

Surveys always throw up a few small issues, a patch of damp usually isn't a huge issue and if that's the only problem shown up, you got off lightly.

I wouldn't say they got off lightly. They've said it'll cost 5-7k to fix which they don't have.

davo10

SB_Part2 wrote: »

I wouldn't say they got off lightly. They've said it'll cost 5-7k to fix which they don't have.

The op doesn't say how old the house is but 5-7k is not a big amount for necessary post purchase renovations/structural issues.

SB_Part2

davo10 wrote: »

The op doesn't say how old the house is but 5-7k is not a big amount for necessary post purchase renovations/structural issues.

It might not be a bit amount for you but the OP has said they don't have the money.

yankinlk

davo10 wrote: »

The op doesn't say how old the house is but 5-7k is not a big amount for necessary post purchase renovations/structural issues.

I'm currently selling and it is dragging on. A hint of any carry on like this and I will pull out as the price has gone up in the months since I took an offer that wasn't highest bid. 5 to 7k? U better be sure....

Nomis21

I thought all agreed prices were 'subject to survey'.

Isn't that the whole point of a survey, to find out if there are any issues?

It isn't like you are asking for a reduction just because you feel like it.

You have a genuine reason to negotiate further.

Smiley012

House is old enough - 1970s build, and there's a lot of other work that needs to be done too. All kinds of insulation, wiring, windows, heating etc etc

This is an additional that we are just going to struggle to fund. The bank won't give us anymore money.

If I put money into this, then it means I can't afford other work that needs doing.

I guess I'll put out the feelers with the Estate Agent, and if he reckons I shouldn't even approach the subject, then maybe I'll leave it be...?

Claw Hammer

All "sale agreeds" are subject to contract. The o/p can attempt a gazunder. The EA will naturally try to discourage it. The o/p should be prepared to take the deposit back and walk away in an attempt to bring down the price. It all depends on the usual factors in the negotiation. Is the vendor prepared to go back on the market rather than discount?

Staplor

Remember, the more you pay, the more the EA makes in commission. EA's are sales people, not your friend in house buying. The job is to bleed every penny out of you.

davo10

Staplor wrote: »

Remember, the more you pay, the more the EA makes in commission. EA's are sales people, not your friend in house buying. The job is to bleed every penny out of you.

Given that EAs work for approximately 1% of sale price, every €10k extra is worth about €60 net to the EA, that's not a lot of blood.

davo10

Smiley012 wrote: »

House is old enough - 1970s build, and there's a lot of other work that needs to be done too. All kinds of insulation, wiring, windows, heating etc etc

This is an additional that we are just going to struggle to fund. The bank won't give us anymore money.

If I put money into this, then it means I can't afford other work that needs doing.

I guess I'll put out the feelers with the Estate Agent, and if he reckons I shouldn't even approach the subject, then maybe I'll leave it be...?

Sorry OP but you should have known that the survey on a 40 year old house was going to throw up a few problems with insulation/electrics/plumbing etc. If you are going to be stretched, ask for a reduction but be prepared to be rebuffed unless the seller needs to urgently sell.

Smiley012

davo10 wrote: »

Sorry OP but you should have known that the survey on a 40 year old house was going to throw up a few problems with insulation/electrics/plumbing etc. If you are going to be stretched, ask for a reduction but be prepared to be rebuffed unless the seller needs to urgently sell.

I'm prepared to be rebuffed - I mean, we want this house, we may have to sacrifice on something else?

I knew it would throw up problems, with decent cash behind us to do major work, I guess we just didn't see this one!

Thanks for your input!

davo10

Smiley012 wrote: »

I'm prepared to be rebuffed - I mean, we want this house, we may have to sacrifice on something else?

I knew it would throw up problems, with decent cash behind us to do major work, I guess we just didn't see this one!

Thanks for your input!

Before you do anything, do you know any builders/plasterers/block layers?, if someone in your family has a mate, ask them to take a quick look at the damp area. It may be a leak around a window or a lose ridge tile, the plaster outside may need attention, the surveyor may have given you a high estimate, get one from someone who knows how to do it, it may not be anywhere near the amount quoted.

Smiley012

We actually have had two surveyors in - the second one was a damp specialist who identified what it is, the cause, etc.

And provided me a quote. I called around and asked a few others for quotes, all came in around the 5-7k mark.

I'll keep the thread updated with the outcome!

Staplor

davo10 wrote: »

Given that EAs work for approximately 1% of sale price, every €10k extra is worth about €60 net to the EA, that's not a lot of blood.

I'd take an extra 60 quid any day of the week. Higher prices they get means more business and more 60 quids

davo10

Staplor wrote: »

I'd take an extra 60 quid any day of the week. Higher prices they get means more business and more 60 quids

1% on a 300k house is 3k, would you jeprodise your €3k ( the sale) to try and bump the sale price by €10k, for the sake of €100? Have you any business acumen? EAs are employed by the vendor to achieve the best price, they only get paid when the sale go through.

Claw Hammer

davo10 wrote: »

1% on a 300k house is 3k, would you jeprodise your €3k ( the sale) to try and bump the sale price by €10k, for the sake of €100? Have you any business acumen? EAs are employed by the vendor to achieve the best price, they only get paid when the sale go through.

EAs also want to get the next house in. If the neighbours think that the agent didn't get a good price they will go elsewhere withe heir own business.

davo10

Claw Hammer wrote: »

EAs also want to get the next house in. If the neighbours think that the agent didn't get a good price they will go elsewhere withe heir own business.

True but success is best measured in sales. In the words of Glengarry Glenross, ABC, Always Be Closing.

daheff

davo10 wrote: »

Given that EAs work for approximately 1% of sale price, every €10k extra is worth about €60 net to the EA, that's not a lot of blood.

huh?? 1% is 100 EUR on 10K.:eek:

Deer

As someone who has gone sale agreed on a not so very perfect property I fully expect the purchaser to come back with a lower offer after the engineer report. I'm being realistic about it. If it was just up to me and the purchasers engineer finds a fault then I would pay ball with the purchaser should they wish to lower their offer.

On the other hand my brother who is selling the house with me has an over inflated perception of the value of the property faults and all and will fight any argument re the value of said property.

So I think you should bring it up, chance your arm. You will either encounter a seller like me who will negotiate or one like my brother who will fight it and decide in that case whether it's worth the fight.


If that makes any sense

colm_mcm

daheff wrote: »

huh?? 1% is 100 EUR on 10K.:eek:

Tax

davo10

daheff wrote: »

huh?? 1% is 100 EUR on 10K.:eek:

Check the meaning of "net"

Staplor

Claw Hammer wrote: »

EAs also want to get the next house in. If the neighbours think that the agent didn't get a good price they will go elsewhere withe heir own business.

Exactly, EA's work for the seller, not the buyer. You need to keep the seller happy to get the next sale. When you're buying a house you don't choose to buy from a certain agent, you buy a house. The seller is the customer and the one to keep sweet.

yankinlk

Truth is the EA is not so worried about making the seller top price as you think. They are much more worried of losing the sale entirely and getting zero commission.

As a contingency for my buyer messing about I will advertise renting to students. Complete this month or I'll just pack them in and sell for 20k more next year.

Henry Ford III

Sale agreed means nothing legally.

If a survey throws up a problem of course it's possible to renogotiate.

daheff

davo10 wrote: »

Check the meaning of "net"

I understand the meaning of net thank you very much.


Cant see how the poster works out that EA pays 40% on the additional fee though.

lawred2

davo10 wrote: »

The op doesn't say how old the house is but 5-7k is not a big amount for necessary post purchase renovations/structural issues.

said the seller

mitresize5

Every week the same question...

The house is 40 years old. Of course the engineers report is going to throw up issues. The house was originally built to 70's standards and has aged 40 years since.

Your doing quite well if you get change out of 10k to bring it to modern standards.

Not a pop at you OP but there is a element of naivety with most people buying older houses ... I'm amazed at what people expect from an engineers report

You can ask to renegotiate but I'd expect you'll get short shift

Claw Hammer

mitresize5 wrote: »

Every week the same question...

The house is 40 years old. Of course the engineers report is going to throw up issues. The house was originally built to 70's standards and has aged 40 years since.

Your doing quite well if you get change out of 10k to bring it to modern standards.

Not a pop at you OP but there is a element of naivety with most people buying older houses ... I'm amazed at what people expect from an engineers report

You can ask to renegotiate but I'd expect you'll get short shift

The o/p has already said that this in an additional expense on the sums he was intending to spend to bring the house up to modern standards.

davo10

daheff wrote: »

I understand the meaning of net thank you very much.


Cant see how the poster works out that EA pays 40% on the additional fee though.

The marginal rate of tax is approximately 40% of gross subject to deductions above a certain threshold of income. Most EA's will surpass that threshold. EA's typically get paid around 1% of the purchase price in commision so for every €10k the sale price increases, the EA gets an additional €100 gross in commision, €60 after tax.

I don't think you understand the meaning of net as well as you think you do.

daheff

davo10 wrote: »

The marginal rate of tax is approximately 40% of gross subject to deductions above a certain threshold of income. Most EA's will surpass that threshold. EA's typically get paid around 1% of the purchase price in commision so for every €10k the sale price increases, the EA gets an additional €100 gross in commision, €60 after tax.

I don't think you understand the meaning of net as well as you think you do.

you are assuming that the EA is a sole trader here. In a lot of cases they aren't. Company taxes are paid at 12.5%, not 40%.

<mod snip: please familiarise yourself with the forum charter>

Cyrus

daheff wrote: »

you are assuming that the EA is a sole trader here. In a lot of cases they aren't. Company taxes are paid at 12.5%, not 40%.

and then the employee EA will get his commission, which is even less, so even less worth his while

boatsandhoes

I would definitely try and get money off the purchase price if its possible. I recently bought a house and when i got the surveyors report back the work totaled about 43k. some necessary, some suggested. I went back to the estate agent saying it was a good 20k over what i had budgeted etc etc can he try and see if the vendors can move on it. I sent on the surveyors report and they agreed to knock 10k off the price. They had also gone sale agreed and lost the first seller. If you dont ask you wont get. The same situation happened with a friend of mine also so its 100% worth asking. They can only say no.

McGrath5

The OP's attitude to this surprises me, a property that was built in the 70's will surely throw up some issues that take time and money to fix.

The OP is obviously stretching themselves to their financial limit to purchase this property, IMO you need at least €10k contingency fund in a scenario like this.

Askthe EA

daheff wrote: »

you are assuming that the EA is a sole trader here. In a lot of cases they aren't. Company taxes are paid at 12.5%, not 40%.

Maybe you don't understand the meaning of net as well as you patronizingly think?

I can assure you, I would be very slow to walk away from a deal I had broken my balls on over a few k. Its not about the money its about the time invested in the deal. As another poster said, a jump or fall of 10k is worth approximately €100 -€200 to the firm. To me (as an employee), its actually worth a fraction of that. My time is far more valuable.

Obviously we want to maximise sale price, goes without saying, but ultimately a successful sale is far more beneficial to us. Never underestimate the power of a sold sign. We are also paid to advise our client and I'm sure the EA on this example will do the same.

In the example above, the simple fact of the matter is that the property had previously been sale agreed and fell through. At least three engineers have been through the building and all have recognised the issue. This is most likely why the sale fell through in the first place. Unfortunately, this suggests that the vendors are not willing to agree a lower sale price otherwise the original sale may have progressed, but who knows.

100% go back armed with the engineers report. The vendors may not come down the full 7k but they may meet you halfway!

daheff

Askthe EA wrote: »

Obviously we want to maximise sale price, goes without saying, but ultimately a successful sale is far more beneficial to us. Never underestimate the power of a sold sign. We are also paid to advise our client and I'm sure the EA on this example will do the same.

Theres an inherent contradiction in this advising the client. Once the sales price gets to a certain level where the seller is happy to sell, the agent would view it as generally not worth their while to push on with viewings etc. As you say above the company might make 100Eur more on a 10K increase. 100Eur isnt a good return on the time invested by staff...but 10k is big for the seller. In my experience (and i'm in the middle of selling) the agent is happy to take their fee once the sales price comes close to a level the seller is happy to accept at...not to push the price to the absolute max.

Askthe EA

daheff wrote: »

Theres an inherent contradiction in this advising the client. Once the sales price gets to a certain level where the seller is happy to sell, the agent would view it as generally not worth their while to push on with viewings etc. As you say above the company might make 100Eur more on a 10K increase. 100Eur isnt a good return on the time invested by staff...but 10k is big for the seller. In my experience (and i'm in the middle of selling) the agent is happy to take their fee once the sales price comes close to a level the seller is happy to accept at...not to push the price to the absolute max.

A good agent will always maximise price. If I do a good job and you're happy you would recommend me. However, there are areas of concern which I'd relay to my client. Sometimes the highest bidder may not be the best bidder. I may have concerns over their willingness to close for instance. They may be in a chain. If you progress with the higher bidder and it falls apart, the client may be left with nothing.