- August 21, 2023
- Posted by: legaleseblogger
- Category: Related News
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Feeling Trapped: Seeking Advice on a Tricky Real Estate Situation
Hi everyone! I find myself in quite a predicament and I could really use some insights and opinions from all of you.
Back in 2021, my partner and I made a significant 10% deposit towards a turnkey property that is scheduled to be completed in just two weeks from now. Imagine our surprise when we received the house valuation today and discovered that the property’s QV has taken a more substantial hit than we anticipated, plummeting by a staggering 16%. This revelation prompted our mortgage advisor to advise us to consider renegotiating the price with the developers. Frankly, I didn’t even know that was a possibility, especially since I have already signed the S&P agreement. Nevertheless, I’m willing to give it a shot.
I’m curious if any of you have ever found yourselves in a similar situation. If so, how did you navigate it? Did you directly approach the developers or did you involve your solicitor in the negotiations?
To provide some additional context, it’s worth mentioning that the developers currently have another house, identical to ours, listed at a price that is 150k lower than what we have agreed upon. In the event that renegotiations fail, I have considered a few potential options:
1. Option A: Accept the original agreed price and instantly face a remarkable 16% decrease in equity.
2. Option B: Forfeit our deposit, but purchase the other listed property instead, thus still putting ourselves in a better financial position by 50k compared to the current deal.
3. Option C: Simply walk away from the deposit and move forward without this property.
Would it be wise to mention option B during negotiations as a means to exert some pressure and potentially sway the outcome in our favor?
Any advice or personal experiences shared would be immensely appreciated. Thank you all in advance.
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****** just grabbed a
ThereÔÇÖs a problem with option B unfortunately: not only will you lose the deposit but if the house you were signed to buy goes for less than you had it signed up for the developer is within their rights to go after you for the difference.
I would try to negotiate your current contract, I think itÔÇÖs worth asking the question.
See your solicitor first, go over the S&P with a fine-tooth comb. As others have said, there is a risk of you losing big time with B & C.
A. Join the club
i am in the exact same situation and the developer declined it. they had clauses in there for this exact reason which is where we had to bite the bullet we were down the same around 13% from deposit but we were only lucky because we had loads of equity in the house we sold in 2021 so our deposit was around 50%. Wish you all the best.
Is this where a sunset clause would come in handy?
You can try but itÔÇÖs no different to taking over the property at the time of signing. ItÔÇÖs like them asking you for more because the market went up since signing.
Option B and Option C runs the risk that the developer will sue you for the difference in what you agreed to pay, and what it eventually sells for.
Your best bet is to try to get the developer to lower the price, perhaps imply the bank is not willing to lend you the money and you will be struggling to complete the purchase.
-16 seems bad now but buying a house is a long term game, in 5 years you probably won’t be bothered by it, I’d try negotiating but if it doesn’t work I wouldn’t be too upset, you will never time the market, be happy with what you were happy to get for that money when you signed.
You canÔÇÖt negotiate a contract that has gone unconditional. Your only hope is the sunset clause? When does this kick in? Have you sought legal advice?
A. Suck up your losses. It’s a home.
Ouch.
I’d play hardball, through a solicitor.
Offer them a slightly lower price. Higher than what it’s worth today maybe but less than your contract. Tell them the’ll have to chase you if they want the full price. It’ll cost them in legal fees and they won’t want the hassle.
They could respond with “no, pi$$ off” but I reckon it’s worth the cost of a solicitors letter.
Option A seems silly without exploring option B as a negotiating tactic.
Option C is up to you.
Option B seems like a obvious choice to use a negotiation point. Ask for the same sale price, and either settle there or at $100k reduction.