The best way to revise a house price after a poor survey report is to be realistic and open with the seller.
As your offer is still pending, you are not the legal homeowner, so the terms of the purchase can still be revised. You can use the survey findings to adjust the house price to cover the repair costs.
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What to Do with Bad Survey Results?
Your first step should be to talk to the surveyor. They’ll walk you through the necessary repairs and their associated costs, so you’ll be aware of what needs to be done. You can also get a second opinion from another RICS surveyor.
Research by Quick Move Now found that more than one-quarter of property sales collapsed in the second quarter of 2019. 23% of these fell through due to the buyers withdrawing after the survey identified issues.
It’s worth noting that some issues can be easy to fix. Surveyors have to point out even the most basic and obvious problems, so don’t be intimidated by these.
Only serious issues and red flags in the survey should necessitate a renegotiation of the price with the seller. If the report is positive and there are no major issues, it’s generally not recommended to try and reduce the house price.
The seller could reject the offer, especially if they have other bidders.
Common Issues Found After a House Survey
When considering renegotiations, it’s important to understand the potential issues that may be highlighted in a survey.
- Damp is common in older properties, and a damp survey can cost between £150 and £300. Minor damp issues can be remedied by damp proofing, which costs around £70 per metre on average. For more extensive work, the cost can be much higher.
- Japanese Knotweed is another issue that can be found, and the cost of removal will depend on the extent of the growth, the damage it has caused, and how difficult it will be to remove. A small patch could cost £2,000 – £3,000 for herbicidal removal, while larger sites may cost tens of thousands of pounds.
- Roof issues can also be present, with minor defects costing around £100 to repair, and re-tiling costing between £5,000 and £7,000.
- If Urgent electrical issues are found, an electrician can be called to undertake an Electrical Installation Condition Report, which can cost up to £3,200.
- If Subsidence is identified, a RICS Home Survey Level 3 can be conducted to provide an analysis. Minor issues can usually be fixed by removing obstructing trees or vegetation, repairing damaged drains or pipes, or demolishing and rebuilding garages or extensions that have caused the instability.
What Are the Options After Bad House Survey Results?
- Research the Repair Costs
Gather quotes from various builders, electricians, and other professionals who can help you with the defects. Use your calculations to negotiate with the seller and save yourself from repair work.
The Royal Institution of Chartered Surveyors (RICS) reports that 80% of property buyers do not have surveys conducted.
Those who don’t have a survey may have to spend an average of £5,750 on repair work they weren’t aware of. Moreover, 17% had to pay £12,000 to make their new property liveable. You could either pull out of the transaction or ask the seller to negotiate and cover the costs.
- Ask the Seller to Fix the Issues
Some sellers may be willing to repair the issues themselves. However, they may be less eager if major work is required.
A survey by Which? found that two-thirds of homeowners who had a survey conducted in 2016 were able to negotiate a lower price or get the seller to fix the issues. If they agree to fix the issues, make sure they finish the work before exchanging contracts.
The only issue with asking the seller is that they may hire workers or attempt to repair work themselves, and they may add the cost of the repair to the house price.
- Accept the Offer
If the survey results don’t show major problems, you should calculate the cost of repairing them yourself. If the property is being offered at a reasonable price, you can continue with the purchase.
- Pull Out of the House Sale
If your offer is still Subject to Contract, you can legally walk away from the sale. You will lose money for the work already done, such as the conveyancing searches or surveys.
Pulling out of a house sale after exchanging contracts will result in a large fine and penalties, and the seller will keep your deposit.
- Negotiate the House Price Down
Negative survey results can reduce the value of a property. This means you can ask for a reduction in the price to reflect its current condition. Even if an offer has been accepted, you can still make changes to the contract as long as they haven’t been signed.
A survey by Barclays Mortgages in 2017 showed that 51% of first-time buyers regretted not negotiating the house price. On average, 1 in 5 buyers overpaid by £8,000 – in London, this was up to £13,000.
Who Do You Renegotiate a House Offer With?
Many people prefer speaking directly to the seller, which can be easier but not always possible. To negotiate the house price, contact the estate agent associated with the property. Let them know the results of the report and provide them with the report itself.
The estate agent will then speak to the seller and inform them of your concerns. After this, you will be contacted by the estate agent regarding the seller’s decision on the information provided.
How to Proceed With the Renegotiation?
Identify the current market value of the property and compare it to the condition of the house based on the survey results. Consider only major issues when renegotiating.
Calculate the cost of renovating the property until it is in good condition to support your case. Include the results of the second surveyor too.
Once you have a comprehensive report, send it to your estate agent and conveyancer. The seller may request follow-up reports to conduct their inspection. Be ready to haggle and make sure you’re realistic with the price you’re willing to accept.
There is no way to predict how long the negotiation will take and whether it will be successful.
Tips for Renegotiating a House Price After Survey
If you’re looking to renegotiate the price of a house after a survey, here are some tips to help you out:
- Do your research – Investigate the property thoroughly to provide evidence of its condition, which could encourage the seller to renegotiate.
- Hire another surveyor – Consider getting a different type of house survey such as the RICS Home Survey Level 3 in addition to a Level 2 Survey.
- Be honest and transparent – Back up your findings with confidence and present them to the seller in full.
- Listen to the advice from your estate agent and conveyancer – They are experienced in their field and are there to provide helpful advice.
- Be patient – Do not come across as hostile or frustrated as this can damage your relationship with the seller.
- Prepare to compromise – You may have to negotiate several offers before a new agreement is accepted. Additionally, bear in mind the possibility of being gazumped, so it’s best to be realistic.
How Does it Affect Your Mortgage Offer?
If the renegotiation is successful, you should contact your mortgage lender right away. You can reach out to them during the negotiation process, but it’s important to contact them once it’s complete.
The mortgage application will need to be adjusted to reflect the new property value, which will also be true if you experience a down-valuation.
The amount of time it takes for the lender to change the contract varies. Some may finish the process on the same day, while others may take up to a week.
If you don’t contact your mortgage lender, you’ll still be borrowing the same amount as was initially agreed, even though the property is now worth less.
EPC Survey
An Energy Performance Certificate (EPC) is a legal requirement when renting or selling a property. It provides information on the energy usage and costs of the property, as well as ideas on how to reduce these.
If you’re buying a property, it’s important to check the EPC. This will give you an indication of the future energy costs and can be useful when negotiating.
The survey typically takes an hour to complete and the certificate costs at least £35.
Vendor Won’t Negotiate After Survey
If the seller won’t accept your renegotiated offer, you have a few options.
- You can keep trying to get them to be open to negotiations – have your evidence and quotes ready to negotiate.
- If you carry on with the sale, create a budget to fix any serious issues.
- Alternatively, if the damage is serious, you can still pull out of the sale, as contracts haven’t been exchanged yet.
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