How to Negotiate a House Price Down After a Bad Survey
After your house survey, you have 3 main options. These include accepting the agreed price, pulling out of the sale or renegotiating the house price. You should always try to renegotiate first.
After a property survey has uncovered issues, you can use the results to renegotiate the house price to cover the cost of repairs. As your offer is still Subject to Contract, you’re not the legal owner of the property and it’s still possible for the terms of the contract to be altered.
It’s normal to be nervous after a house survey. The thought of having to negotiate the price can be daunting, but any buyer is eligible to do so if they uncover serious issues with the property. Compare My Move’s guide will take you through the process of how to negotiate a house price after a survey.
What to Do with Bad Survey Results
If you’ve received the survey results and are concerned by the defects uncovered, you may begin to re-think the purchase and consider pulling out of the house sale. Whether there was a red condition rating in your homebuyers survey or serious structural problems highlighted in the building survey, you might be thinking, “What do I do now?”.
It should be noted that some problems can be easily fixed. Surveyors have to highlight even the most common and obvious issues. Don’t be scared off by these, as they’re often to be expected and may not require much work. Only major issues should require renegotiation with the seller. If there are no defects that require a lot of time and money to solve, or if the report was overall positive, it’s not usually advised to negotiate a house price down, as the seller might just reject the deal, particularly if they have other interest or offers.
Your first line of action should be to speak to the surveyor who conducted the inspection. They should be happy to take you through the issues step by step, so that you’re fully aware of the repairs needed and their likely costs. It might even be wise in certain cases to get a second opinion from another RICS surveyor to compare results and ensure their consistency.
What Are the Options After Bad House Survey Results?
If you’re still unhappy with the results and the survey issues raised, it’s time to consider your options. There are a few ways to handle the situation.
Research the Repair Costs
Previous research by The Royal Institution of Chartered Surveyors (RICS) warns of the importance of property surveys. It revealed that 4 in 5 property buyers did not have a survey conducted and many later found faults throughout the building. With over 1,000 buyers surveyed, the researchers discovered that those who didn’t have a survey had to subsequently spend an average of £5,750 on repair work they weren’t initially aware of.
Around 17% had to pay an eye-watering £12,000 to make their new property liveable. This research highlights the importance of property surveys and the key issues they uncover when buying a house. You could save yourself from this repair work by pulling out of the transaction early enough, or you could use the results to renegotiate and cover the costs.
Before making a final decision, it would be wise to calculate the repair costs. Find different quotes from a variety of builders, electricians, anyone who can work with you on the defects. You can then produce your calculations to the seller who might even suggest making the necessary repairs themselves. There are a variety of options before you.
Damp is a common issue found in house surveys. Many older properties will have some sort of damp-related issue, so you shouldn’t panic if you see it highlighted in the report. Discuss the situation with your surveyor to see how bad the damp is before you start researching the different types of repair work.
To assess the situation is more detail, it’s advisable to have a damp survey conducted to accurately assess the repair work and how bad the damp really is. A damp survey can cost anywhere between £150-£300, depending on the size of your property and its location.
The cost of the repairs will depend on the extent of the damage. Minor causes of damp can usually be remedied with special damp proofing, costing an average of £70 per metre of interior wall, depending on who you hire and where you’re located. If you discuss the issue with your surveyor, you can find the cause and the most appropriate steps to continue.
For larger jobs, such as an external wall suffering damp, the price can increase greatly, depending on the nature and extent of the work required.
2. Japanese Knotweed
Japanese Knotweed is not a plant you want on your property - it can cause a lot of damage to the building’s structure if left to grow and can cost you a lot in repairs. The cost of removing Japanese Knotweed varies as it all depends on the extent of its growth, the damage caused and how difficult it will be to remove.
The cost of remedy can vary widely depending on the extent of growth and the type of fix required. A relatively small patch of Japanese knotweed could cost around £2,000 - £3,000 for herbicidal removal, or might involve potentially tens of thousands of pounds for full excavation and disposal of larger sites. For further information, we've put together a guide on plants that can damage properties.
3. Roof Issues
Issues with a property’s roof can vary in severity, ranging from a couple of cracked tiles to an unstable structure in need of replacing. Minor defects like cracked tiles can be done by any qualified handyman who is experienced at working at heights, but for the more serious problems, you’ll need to find a specialist roofing contractor.
If the issue seems serious, you may want to consider having a roof survey conducted to review the problem more thoroughly. The cost of a roof survey varies widely depending on the size of the property. A single-storey property could cost anywhere between £150-£250, but if scaffolding is required, it could be up to £1,000.
In terms of costs, this varies widely, depending on the severity and extent of the issue. As a broad indication, you should expect to pay around £100 to replace up to 6 broken tiles or professional gutter cleaning, and £5,000 to £7,000 to completely re-tile the roof (based on the UK average for a 3-bedroom house).
4. Electrical Problems
The electrical issues found on a property survey can vary from small wiring problems to larger, more potentially dangerous situations that require a full rewiring of the property. If the issues uncovered are classed as ‘urgent’, then you should immediately contact a professional electrician who can then undertake an Electrical Installation Condition Report.
Costs will vary depending on the extent of the work that’s needed. However, to fully rewire an average three-bedroom house, the cost could be in the region of £3,200 and up to 10 days worth of work - this is the worst-case scenario.
Subsidence is when the ground beneath your property collapses or sinks lower, creating an unbalanced foundation. This instability can cause major structural damage to your property, causing issues like sinking foundations and cracking. If your property survey uncovers evidence of subsidence, then you should begin seeking professional advice to help you understand how to deal with it.
If you discover signs of subsidence, you should also check if your insurance covers it. Your insurer can then help you decide the best course of action. You may need to have a Building Survey conducted to provide a more thorough analysis of the property’s condition.
If the cause determined is minor, then it should be easily fixed. The cost will vary depending on the severity of the issue, the size of your property and its location. Only an expert can provide you with the most suitable course of action, but for minor issues, this could be:
- Removing any obstructing trees or vegetation
- Repairing damaged drains or pipes
- Demolishing and rebuilding garages or extensions that have caused the instability
However, for the more extreme cases, the treatment needed for subsidence is called underpinning. This is where construction work is carried out to strengthen the property’s foundation. According to research by My Job Quote, the average price for traditional underpinning is £12,000, taking an average of 4 weeks to complete.
Ask the Seller to Fix the Issues
Another option is to ask the seller to fix the issues presented in the property survey before proceeding with the transaction. Some sellers may be happy to do so if the repairs required are fairly small. However, they may be less willing if major work is needed.
After a survey carried out by the Consumers' Association, Which? it was discovered that two-thirds of homeowners who had a survey conducted in 2016 were successfully able to either negotiate a lower price or get the seller to fix the issues before completion. This means that 67% of buyers were able to come to some agreement with the seller after receiving bad survey results.
If they agree to fix the issues like many of the sellers in the study above, then it would be wise to ensure that they finish the work before exchanging contracts and before ownership is legally transferred to you.
The only issue with asking the seller is that they will hire workers on their accord or may even attempt to do the repair work themselves. They may also ask to add the cost of the repair onto the overall cost of the property. Many won’t do this and will simply put it down to ‘goodwill’ but it’s important to check before signing any legal documents. Be sure to double-check the quality of work completed if they agree to fix the issues.
Accept the Offer
If the issues uncovered are minor, the seller may not want to negotiate the price at all. Most old properties will have small issues that need repairing, it can be impossible to dodge. If the results don’t uncover major problems, you may want to calculate how much it would cost to repair them yourself. If the property is already being offered at a reasonable price you can continue with the purchase as planned.
Pulling Out of a House Sale
If you’re not legally bound to the property and your offer is still Subject to Contract (STC) you’re legally within your rights to walk away from the transaction and pull out of the sale. If the work required is too costly or too daunting for you to proceed, you don’t have to continue with the purchase. You’ll need to contact your solicitor or conveyancer who will then inform you of the necessary steps to take.
It’s possible to pull out of a sale before exchanging contracts as no legal documents have been signed. You will lose money for the work already carried out, like the conveyancing searches or surveys, as you don’t get reimbursed for these costs. You'll still be expected to pay for any other conveyancing work that has been carried out but then the process stops there.
Research by Quick Move Now discovered that more than one in four property sales fell through in the second quarter of 2019, proving that you’re not alone when it comes to pulling out of a sale. 23% of the sales failed due to the buyer pulling out after the property survey highlighted issues, proving that it’s quite a common reason for property sales to fail.
However, once the buyer and seller have exchanged contracts, the buyer is legally bound to the property. Pulling out of a house sale after exchanging contracts will result in a large fine and hefty penalties as you’ll be breaking a legally binding contract. The seller will also be expected to keep your deposit, meaning you’ll be losing thousands of pounds on top of the fine and other costs.
Negotiate the House Price Down
A survey conducted by Barclays Mortgages in 2017 revealed that 51% of first-time buyers who had bought their first home in the last five years regretted not negotiating the house price prior to the transaction. One in five buyers had overpaid the asking price by an average of £8,000 - in London this was even higher again soaring up to £13,000.
Negative survey results can affect the value of a property so the buyer can legally ask for a renegotiation of the price to reduce it by the repair costs to reflect its current condition. Even if an offer has been accepted, no contracts have been signed and so the buyer isn’t the legal owner of the property yet. It’s still possible to make changes to the contract as they haven’t been signed and so there’s an opportunity for renegotiation the house price.
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Who Do You Renegotiate a House Offer With?
To negotiate a house price down after a survey, many people prefer to speak directly to the seller. This can be easier but not always possible. Once you’ve spoken to the surveyor and have determined that the issues raised are worth renegotiating over, the next step would be to contact your estate agent to provide them with the report. You want to ensure there’s still a good relationship between you and the seller and they can help with this. They’ll speak to the seller and pass on your concerns beginning the renegotiation process and giving you advice on how to continue.
You should also communicate with your conveyancer. Like your estate agent, they should provide you with expert advice on how to move forward. Conveyancers can help you with any legal advice and suggest whether it’s possible to successfully renegotiate a price.
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How to Proceed With the Renegotiation
Now we get to the main body of the negotiation work! An important way to continue is to do your research. You need to identify the current market value of the property and compare it to the condition of the house based on the survey results. Only major issues will encourage a renegotiation as minor issues will be found in most properties and are easily fixed.
Calculating the cost of renovating the property until it’s in ‘good condition’ can help your case when speaking to the seller. It would be wise to include the results of the second surveyor to support your findings. Once you have a relevant and thorough report, you can email your estate agent and conveyancer to begin.
The seller may ask for follow-up reports so that they can conduct their own inspection and make their own estimations. To lower the risk of re-marketing, it's recommended to wait for this to be completed. Be prepared to haggle and be realistic with the price you’re willing to accept.
Don’t be afraid to walk away if the price and condition of the property aren’t up to your standards. There’s a chance the seller may offer to complete the repairs themselves to keep the initial price up, but you must consider how reliable of a job they can provide. If you’re happy, you may accept the deal or insist on renegotiating.
Tips for Renegotiating a House Price After Survey
There’s no way to determine how long the negotiation of the house price will take or if it’ll be successful. Depending on the seller and how soon they need the property sold, the negotiation could be dealt with instantly or one of the parties may even decide to terminate the deal.
However, we understand how daunting the process can be and so we’ve provided you with a list of useful tips for negotiating a house price after a survey:
- Do your research - Thorough research can provide the seller with evidence of the property’s condition, encouraging a renegotiation. Ensure that all calculations for the repair costs are correct before presenting them.
- Hire another chartered surveyor as a second opinion - This can greatly improve your findings and provides both parties with a comparison. You might need a different type of house survey such as a Building Survey instead of a Homebuyers Survey.
- Be honest and transparent - Be confident in your findings and present them to the seller in full.
- Listen to the advice from your estate agent and conveyancer - They’re professionals in their field and are there to help you with the process and offer expert advice.
- Be patient - Don’t come across as aggressive or impatient as it can ruin the relationship between you and the seller, possibly ending the transaction.
- Prepare to compromise - You have to be realistic with the new price you want to set. There may be a lot of haggling and multiple offers presented before a new deal is accepted. There's also the risk of being gazumped and so the more realistic you are the better.
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How Does it Affect Your Mortgage Offer?
If the renegotiation is successful and you’re purchasing the property with the aid of a mortgage, you’ll need to contact your mortgage lender. You can also contact them during the renegotiating of the house price to prepare earlier, but if it’s successful then it’s vital to contact them immediately as it may affect your mortgage offer. The application will have to be altered and updated based on the property’s new value. This will also be the case should you encounter a down-valuation.
If you neglect to contact your mortgage lender, you‘ll be borrowing the same amount as initially agreed upon even though the property costs less. The amount of time it takes to change the contract is up to the lender. Some may finish the same day it’s discussed, others may take up to a week. However, the process should be straightforward as it’s simply updating the application with no new forms or tests to be completed.
Another survey you need to consider, especially when selling a house, is an EPC survey. EPC stands for Energy Performance Certificate which is an energy efficiency rating for your property - it’s required by law when renting and selling a property. It will provide information on the property’s energy usage and costs and will also provide recommendations on how to reduce energy usage and make it more efficient.
Every EPC is valid for 10 years and you must have an in-date one to put your house on the market. If you’re buying a property, don’t forget to check the current EPC and see how energy efficient the house really is. This will give you a good estimation for your future energy costs when living there and may be useful when negotiating.
If you’re selling a property, make sure you have had an EPC survey carried out and have an in-date EPC. The survey will take, on average, 1 hour to complete and the certificate can cost at least £35 depending on the size of the property. However, it is a necessity.
As a seller, you can use your EPC to improve your property before putting it on the market or if you feel there has been little interest since it’s been advertised. Read the energy efficiency ratings and use the recommendations to make your property as appealing as possible to potential buyers. This will then decrease the risk of buyers pulling out of a sale.
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